Inside This Edition: Education Dept.
Enforces Design Delegation Rule, ESSA “Retainage In Escrow
Account” Bill Reported Out Of Senate Judiciary Committee, President’s
Message, Closing The Interest On Retainage Loophole In The
Prompt Payment Law, “Scaffold Act” Bills Introduced In
Both Houses, Nation’s Tort Costs Reached 50-Year Record
High In 2001, Calendar Of Events, Welcome
New Members, Sample Forms & Letters Available
EDUCATION DEPT. ENFORCES DESIGN DELEGATION RULE Go Top
After
13 months of prodding by the Empire State Subcontractors Association (ESSA),
the New York State Education Department has finally compelled an unwilling
structural engineering firm to approve (rather than simply review) shop
drawings submitted by a subcontractor in accordance with the Rules of the New
York State Board of Regents.
This
case involved the AOL Time Warner Center project in New York City where the
structural engineer, The Cantor Seinuk Group, Inc., had stamped the shop
drawings submitted by the steel fabricator, Skyline Steel Corp, with the
following language: “Reviewed only for Capability of Structure to Sustain
Loads Imposed by Equipment Shown…..”
When initially contacted by Skyline Steel about their failure to approve
the shop drawings, Cantor Seinuk had refused to modify their stamp.
Subcontractors
who are required to provide design services in connection with specific portions
of a construction project are entitled to have that design approved by the
project’s principal design firm in accordance with Regents Rule Section
29.3(b)(2), which governs the delegation of design responsibility. Section 29.3(b)(2) states in part:
(v.) The delegator shall
be required to review and approve the design submitted by the delegatee for
conformance with the established specifications and parameters and such
determination shall be in writing.
(vi.) The delegator
shall be required to determine that the design prepared by the delegatee
conforms to the overall project design and can be integrated into such design
and such determination shall be in writing.
In
February 2002, ESSA contacted the Education Department about Cantor Seinuk’s
apparent violation of the Regents Rule and asked for the Department’s
assistance After a year of numerous
phone calls and letters, ESSA finally received notification from the Education
Department in March 2003 that Cantor Seinuk had agreed to modify their stamp
and will now approve/disapprove shop drawings submitted by subcontractors.
ESSA “RETAINAGE
IN ESCROW ACCOUNT” BILL REPORTED OUT OF SENATE JUDICIARY COMMITTEE (Go Top)
On
March 4, 2003, ESSA’s top priority legislation, a bill that would require
retainage on private projects to be placed into interest-bearing escrow
accounts, was reported out of the Senate Judiciary Committee to the floor of
the Senate.
The
bill, S.1089/A.4672, sponsored by Senator Kemp Hannon and Assemblyman Ron Tocci, would require private construction
owners to deposit retainage withheld from contractors and subcontractors into
interest-bearing escrow accounts for the benefit of those from whom retainage
has been held. ESSA has long held the
position that retainage represents funds that have been duly earned by
contractors and subcontractors for work they have properly performed, and which
therefore should be protected by requiring owners to deposit those funds into
escrow accounts, with the earnings accruing to the benefit of the contractors
and subcontractors.
A
minor inconsistency with the new private sector prompt payment law has been
identified in the bill, and an amendment will therefore be made. ESSA will then seek to have the bill placed
on the Assembly Judiciary Committee agenda for consideration by that Committee.
PRESIDENT’S MESSAGE (Go
Top)
One
of the most important services NESCA offers its members is our Business Practices Interchange (BPI). The BPI allows members to obtain accurate,
first-hand information on the business practices of general contractors,
developers and owner-builders. We are
truly in the “information age”, and those businesses that take steps to stay
information-rich will undoubtedly enjoy certain key advantages over those that
don’t. As the economy slows down, doing
business with reputable companies has become more important than ever, and the
NESCA BPI can help members do just that.
In Mid-February NESCA mailed to all members the 2003 Business Practices
Interchange update forms. To date, only
about 50 members (roughly 12%) have completed and returned the forms to the
NESCA office. The BPI is an important
NESCA service, but it can only work well if all members let us know who you
have worked for. The information you provide is
entered into NESCA’s database. Members
then seeking information about a particular contractor may call the NESCA
office and receive the names of other members who have recently done business
with that company. By contacting fellow
members directly, all members have the opportunity to receive solid, valuable,
first-hand information that will help maximize your ability to make intelligent
choices as to who you do business with.
I urge you to complete the BPI Standard Listing Form previously mailed
to you and return it to the NESCA office as soon as possible. All you have to do is list the names of the
contractors you have done business with during the last twelve months. It’s that simple. The more names members give us, the better the system will
benefit us all.
Update forms for NESCA’s 2003-04 Membership Directory will be mailed out to all members in Mid-April. Like the BPI forms, it is important that we receive updated information from members to be included in the 2003-04 Directory. To ensure your proper listing in the membership and classified listing sections, please complete the Directory update forms when you receive them and return the completed forms to the NESCA office as soon as possible.
Coming up in April, in
addition to NESCA’s regular monthly membership meeting at the Century House, we
have scheduled a spring regional meeting in the Mid-Hudson area, to be held on
April 16th, and one to be held in Binghamton on April 29th. In addition to these meetings, on April 9th
the NESCA/GBC/ECA Educational Partnership will hold a seminar on “Sales Tax
Requirements for the Construction Industry” at the Building Industry
Center. Members were recently sent
informational flyers about this seminar. Since sales tax issues are so confusing in New York State, this
has long been one of our most popular annual educational programs. Every attendee will receive a comprehensive
sales tax manual that NESCA first put together last year, and has updated this year. I encourage you to register for this
important seminar.
Finally, thank you to the
Center for Organizational Energy for sponsoring NESCA’s March membership meeting.
James M. Elacqua, President
CLOSING THE
INTEREST ON RETAINAGE LOOPHOLE IN THE PROMPT PAYMENT LAW (Go Top)
The new New York State Prompt Payment Law (Article 35-E of the New York State General Business Law), which became effective as of January 14, 2003, included a provision allowing subcontractors on certain private projects to receive interest on retainage from the date the retainage was due to be released, if the retainage had not been released. The Law does not provide for interest on retainage prior to the scheduled retainage release date. It has always been the subcontractors’ position that retainage constitutes monies due and owing the subcontractor for work completed and approved, and that any withholding of those monies as retainage should be subject to interest. In order to correct this oversight in the Prompt Payment Law, the Empire State Subcontractors Association has introduced a bill amending the Prompt Payment Law S1089/A4620 sponsored by Senator Kemp Hannon and Assemblyman Ronald Tocci which would require owners on certain private projects to place retainage in an interest bearing escrow account until the scheduled retainage release date. This bill, if enacted into law, would prevent certain private project retainages from being misused or lost by the owner and also would assure that the escrowed retainage would earn interest while being withheld. Subcontractors interested in supporting this bill should address letters of support to their local State Senator and Assemblyperson and to Assemblywoman Helene Weinstein, Chairwoman of the New York State Assembly Judiciary Committee. The bill currently resides in that Assembly committee. A sample letter to Assemblywoman Weinstein is enclosed with this Newsletter.
Terence J. Burke, Esq., NESCA Legal Counsel
“SCAFFOLD ACT” BILLS INTRODUCED
IN BOTH HOUSES (Go Top)
A number of bills designed to provide the construction industry with some relief from Sections 240 & 241 of the Labor Law (commonly know as the “safe place to work law” or the “scaffold act”) have been introduced in both houses of the Legislature. In addition to several bills that were introduced in prior years and would change the absolute liability for contractors and owners under Sections 240 & 241 to a negligence based standard, a new bill has been introduced by Senator Dale Volker that attacks the problem from a little different angle. Instead of applying comparative negligence to the issue of liability, S1710 applies comparative negligence to the issue of damages. That is, an employee’s culpable conduct would serve to limit the amount of damages recoverable under a 240/241 claim. The new Volker bill does not amend Sections 240 & 241 of the Labor Law directly. Rather, it would add a new Section 1414 to the Civil Practice Law & Rules (CPLR). One advantage to this approach is that the bill has been referred to the Codes Committee rather than the Labor Committee. The Codes Committee just happens to be chaired by Senator Volker. Assemblyman Joseph Morelle will soon be introducing this same bill in the Assembly. Assembly Morelle has expressed optimism that members of the Legislature are finally beginning to understand the devastating impact that 240/241 lawsuits are having on the construction industry and on the availability and affordability of liability insurance.
NATION’S TORT COSTS REACHED 50-YEAR RECORD HIGH IN 2001 (Go Top)
The cost to defend and pay liability claims grew to $205 billion in 2001, $25 billion more than the previous year and a 50-year record, according to U.S. Tort Costs: 2002 Update, a report by Tillinghast-Towers Perrin, a consulting firm that serves the financial services industry. The study tracks the cost of the tort system from 1950 to 2001 and compares the growth of tort costs with various U.S. economic indicators.
At current levels, tort costs are $721 per U.S. citizen, equivalent to a 5% tax on wages. Tillinghast estimated that annual increases in these costs would be in the 7-11 percent range for several years, which would increase tort costs to $1,000 per citizen by 2005. The study also found:
Ø Over the last 50 years, tort costs have increased by over 100-fold – from less than $2 billion in 1950 to $205 billion in 2001.
Ø Tort cost growth has far outstripped U.S. economic growth as measured by GDP, which increased by a factor of 34 during that time.
Ø Growth in tort costs since 1950 has far exceeded the U.S. population growth. Even after adjusting for changes in the consumer price index, the tort cost per citizen has risen by a factor of more than eight since 1950.
April 3, 2003
Century House, Latham, 6 pm
April 9, 2003
Building Industry Center, 6
pm
April 10, 2003
Century House, Latham, 6 pm
April 16, 2003
Reservoir Inn, West Hurley,
6 pm
April 29, 2003
Niko’s CharPit, Binghamton,
8 am
May 8, 2003
Century House, Latham, 5:30
pm
May 8, 2003
Century House, Latham, 6 pm
Many Thanks to the Center For Organizational Energy
For Sponsoring NESCA’s March 13, 2003 Membership Meeting. If Your Company Would Like to Sponsor a
Future Meeting, Please Contact the NESCA Office.
WELCOME NEW MEMBERS (Go Top)
Albany
WinWater Works Co.
76 Exchange Street
Albany, NY 12205
(518) 438-9717; Fax (518)
438-9713
Contacts: William Dietrich, Phil Connell
BMI Supply
571 Queensbury
Avenue
Queensbury, NY
12804
(518) 793-6706;
Fax (518) 793-6181
Contacts: Chris
Edwards, Bill Knapp
DeCicco’s Cabinetry
22-24 VanDusen
Street
Kingston, NY 12401
(845) 339-3118;
Fax (845) 339-0595
Contact: Sal DeCicco
Kingston Equipment Rental, Inc.
78 Stone Road
West Hurley, NY
12491
(845) 338-6025;
Fax (845) 338-3425
Contacts: Rudie
Baker, Rita Kosonen
F.S. Lopke Rock Products
3430 State Route
434
Apalachin, NY
13732
(607) 687-1114; Fax (607) 687-1856
Contact: Dolene
Riley
Mid-Orange Mechanical Corp.
P.O. Box 479
New Hampton, NY
10958
(845) 343-7926; Fax (845) 343-7436
Contact: William
Hadden
Nelcorp Electrical Contracting Corp
2500 Watson Blvd.
Endwell, NY 13760
(607) 754-8428;
Fax (607) 785-8783
Contacts: Dean Rempka, Donn Webber
Six County Erectors, Inc.
802 Craigville Road
Chester, NY 10918
(845) 469-4764;
Fax (845) 469-3073
Contacts: Pippa
Keeling, Tom D’Auria
Tiano Electric, Inc.
117 Clinton Avenue
Kingston, NY 12401
(845) 334-1059; Fax (845) 334-8733
Contact: John
Tiano
With 439
members, NESCA is the largest
regional
subcontractors association in
the
country. With 1,000 members, our
statewide affiliate ESSA is the largest state
subcontractors association in the country.
SAMPLE FORMS & LETTERS
AVAILABLE (Go Top)
Over the years, NESCA has developed a significant inventory of sample forms, letters, policies and programs that members have successfully utilized for a variety of purposes. As follows are some of the many sample documents available to members:
Bond Claim Letter * Stop Work Notice * Lien Waivers & Releases * Lien Extension Form * Written Safety Program * Alcohol/Drug Policy * Application for Payment * Joint Check Agreement * Certified Payroll Form * Contested Backcharge Letter * Personal Guarantee * Pre-Contract Information Form * Written HazCom Program * Smoking Policy * Small Claims Procedures * Subcontract Addendum * Trust Fund Violation Letter * EEO Policy * Pay-if Paid Disclaimer * Fall Protection Program * Subcontract Addendum * Late Payment Letter * Disciplinary Policy * And many more!!