Vol. 23, No. 8
(518) 869-9800
February 2005
Regarding
Contingent Payment Clauses,
President’s Message,
NYS Court Of Appeals Revisits
Strict Liability Under The Scaffolding Act, Reminder Regarding Payment Of Employee Benefits,
Calendar Of Events,
Welcome New Members,
New Sales Tax Certification Requirement, Member
Anniversaries
STATE COMPTROLLER
CRITICAL OF LABOR DEPARTMENT’S WAGE INVESTIGATION PROCESS (Go Top)
For the second time in two years, the Office of the State Comptroller has criticized the NYS Department of Labor’s investigation process regarding the enforcement of the prevailing wage law on public construction contracts.
In February of 2003, the Comptroller issued a report pursuant to an audit performed to determine whether the Department of Labor’s prevailing wage complaint investigation process was effective and conducted in accordance with the law. The Comptroller’s report concluded that comprehensive changes were needed in the Department’s complaint investigation process. The Comptroller determined that Bureau of Public Work investigations generally were not completed within six months as required by law, and often take more than two years to complete. It was also pointed out that investigations were slow to be initiated and often were not even assigned to an investigator for at least six months. Further, the Comptroller found that improvements were needed in the Bureau’s controls over the funds held for restitution payments. It was determined that unclaimed payments were not always remitted to the Office of the State Comptroller after one year, as required by law, and the duties relating to the funds were not adequately separated among different employees. As a result, funds could be misappropriated without detection.
In responding to the audit report, Labor Department officials had claimed there were no simple solutions to dealing with employers who violate prevailing wage laws. They further claimed that although every effort is made to complete an investigation in a timely manner, it is the volume and complexity of the investigations, as well as a lack of cooperation from employers that precludes their ability to meet the six-month time frame required by law.
In a January 10, 2005 letter to Labor Commissioner Linda Angello, the Comptroller’s Office pointed out that while some progress had been made, the Department had failed to implement five of the nine audit recommendations made two years prior. It appears that timeliness in prevailing wage investigations will continue to be a problem for contractors.
COURT ISSUES
ANOTHER FAVORABLE DECISION REGARDING CONTINGENT PAYMENT CLAUSES(Go Top)
On December 16, 2004,
subcontractors were handed another victory in the contingent payment battle
when the Appellate Division, Third Department upheld a lower court decision in J
& K Plumbing & Heating Company v. William H. Lane, Inc. The case stemmed from a construction project
on the campus of Hartwick College. The
payment provisions in William H. Lane’s subcontract with J & K Plumbing
& Heating provided that if Hartwick failed to pay Lane, then the
subcontractor’s sole recourse for nonpayment would be a claim against Hartwick
College directly without any recourse against Lane itself.
The Appellate Division found
that Lane’s payment provisions violated public policy under the Court of
Appeals decision in West-Fair Electrical Contractors v Aetna Casualty
& Surety Co., in that they impermissibly transferred the risk of
Hartwick’s failure to pay from Lane to the subcontractors. It was also noted that contrary to Lane’s
contention, the Court did not construe the payment provisions as merely fixing
a time for payment, which would not be a violation of public policy.
This decision comes on the
heels of the December 8, 2005 Gomez Electrical Contractors, Inc. v Bast
Hatfield, Inc. Supreme Court decision, which also found that the
contingent payment clause in question in that case violated West Fair.
NESCA Membership Meeting
February 10, 2005
Century House – 6:00 p.m.
6:00 Open Bar/Registration
6:30 Dinner:
Prime Rib
7:10 Business
Announcements
7:30 Program: Reconstruction of the World
Trade
Center
Speaker: Mike Wilton, NYS Econom.
Devel.
Open Bar, Dinner, Tax & Gratuities - $35
PRESIDENT’S MESSAGE (Go Top)
A recent report from the Business Council has found that the cost of
doing business in New York State is substantially higher than in most other
states because employers here must pay more for employee benefits, energy,
taxes, and other costs. Just the
Facts, a newly updated compendium of data on job-creation costs in all 50
states, includes 31 tables comparing major business expenses, along with other
indicators. Just the Facts
presents some pretty sobering statistics for New York employers, such as:
·
Average
employer costs for work-based health insurance in New York are the second
highest in the country at $6,671.
·
The
average cost of a workers’ compensation case in New York is the third highest
in the nation, some 80 percent higher than the median figure for all states.
·
The
overall average cost of electricity in New York is the second highest in the
country.
·
New
York’s business tax climate is among the least favorable in the country, based on
elements including the overall burden, complexity, and cost of compliance.
·
New
York ranks last among the states on the U.S. Economic Freedom Index, which
includes measures of fiscal burdens, size of government, welfare spending, and
other elements.
Overall, Just the Facts shows that the burden of these high
costs clearly outweighs New York’s advantages, such as technology and labor
force, in terms of the state’s overall competitiveness. Add to these problems, an out-of-control
tort system, a dysfunctional legislature and multi-billion dollar state budget
deficits projected for the next three years, and the picture painted of New
York State isn’t exactly a rosy one.
However, this is precisely why, now more than ever, that NESCA members
must stay unified and become fully engaged in the political process. It’s not enough anymore to quietly run your
business and pay scant attention to the many outside forces that can make
staying in business so much more difficult.
That’s where NESCA comes in.
NESCA presents subcontractors and suppliers with a strong, unified voice
in the political process. Thirty-four
times, NESCA and the Empire State Subcontractors Association have been
successful in enacting laws that benefit our members. Equally as important, NESCA and ESSA have helped to stop
innumerable measures that would harm our members. NESCA has also enjoyed success in the courts on behalf of our
members, as with the recent Gomez v Bast Hatfield case concerning
contingent payment clauses.
Unfortunately, NESCA’s efforts on behalf of subcontractors and suppliers
require financial support from subcontractors and suppliers. Therefore, when you are asked to make a
modest contribution to the NESCA PAC or the Legal Defense Fund, please give it
every consideration. For instance, in
December we mailed members a letter asking for contributions to replenish
NESCA’s Legal Defense Fund, and I’m sorry to say that less than 4 percent of
our membership responded. The bottom
line is, if we can’t replenish the Fund, our efforts in the courts will have to
cease. On the other hand, if all
members make just a small contribution, NESCA will be able to continue to fight
for the rights of all subcontractors and suppliers on important legal issues. Enclosed with this Newsletter is a NESCA
Legal Defense Fund contribution form.
If you haven’t done so already, please consider making a
contribution.
Kevin
J. Garrity, President
REVISITS
STRICT LIABILITY UNDER THE SCAFFOLDING ACT
(Go Top)
On December 21, 2004, the
New York State Court of Appeals decided the case of Timothy Cahill v. The Triborough Bridge and Tunnel Authority. In
that case, the Court held that where an employer has made available adequate
safety devices and an employee has been instructed to use them, the employee
may not recover under Labor Law §240(1) (the “Scaffolding Act”), for injuries
caused solely by his violation of those instructions, even though the
instructions were given several weeks before the accident occurred.
The plaintiff was employed in
the reconstruction and repair of the Triborough Bridge. He attended frequent
safety talks that included instruction in the use of safety lines. Plaintiff
chose not to use the safety lines and instead used a “position hook” on his
safety harness; this hook was designed not for use in climbing put to hold
plaintiff stationary while he worked. He fell while climbing from a height of
approximately 10 to 15 feet and was injured. The Court of Appeals citing Blake v. Neighborhood Housing Services of
New York City, Inc. (1 NY3d 280 (2003)), pointed out that the Scaffolding
Act created a liability that is strict, or absolute, in two senses: the duty it
imposes is non-delegable, and thus contractors and owners are liable under the
statute whether or not they supervise or control the work; and where an
accident is caused by a violation of the statute, the plaintiff’s own
negligence does not furnish a defense. The Court further stated that it was
still necessary, however, for the plaintiff to show that the statute was
violated and that the violation proximately caused the injury. Where a
plaintiff’s own actions are the sole proximate cause of the accident, there can
be no liability.
The Court then stated that the
controlling question in this case was whether a jury could have found that the
plaintiff’s own conduct rather than any violation of the Scaffolding Act was
the sole proximate cause of the accident. The Court found that the factual
findings in this case would lead to the conclusion that the defendant had no
liability under the Scaffolding Act.
The Court of Appeals in this
case has restated the Blake rule for
establishing strict liability under the Scaffolding Act; namely, the defendant
must have been in violation of the statute and that violation must proximately
caused the injury. Owners and Contractors who have complied with the
requirements of the statute will not be subject to liability for workers
injuries.
NEW MINIMUM WAGE POSTERS AVAILABLE
The New York State Department of Labor will provide business owners with copies of the new, mandatory, minimum wage poster in PDF format through their website. The DOL website is www.labor.state.ny.us. The New York State minimum wage increased to $6.00 per hour on January 1, 2005. It will increase again to $6.75 per hour on January 1, 2006 and to $7.15 per hour on January 1, 2007.
REMINDER REGARDING PAYMENT OF
EMPLOYEE BENEFITS (Go Top)
NESCA members are reminded that Section 198c of the NYS Labor Law provides that any employer who agrees to provide benefits or wage supplements to employees or to a third party or fund for the benefit of employees and who fails, neglects or refuses to pay the amount or amounts necessary to provide such benefits or furnish such supplements within thirty days after such payments are required to be made, are guilty of a misdemeanor punishable by a fine of between $500 and $20,000 and imprisonment for up to one year. Where the employer is a corporation, the president, secretary, treasurer or officers exercising corresponding functions shall each be guilty of a misdemeanor. The term “benefits or wage supplements” includes, but is not limited to: reimbursement for expenses; health, welfare and retirement benefits; and vacation, separation or holiday pay. This requirement does not apply to any person in a bona fide executive, administrative, or professional capacity whose earnings are in excess of six hundred dollars a week.
NESCA TO COMMUNICATE MORE WITH MEMBERS BY EMAIL
Beginning in January, NESCA has begun to use Email as another means to communicate with members. For example, many members may have noticed that recent flyers for NESCA/GBC/ECA seminars have been sent by Email. We now have valid Email addresses for about 80% of our membership. If you haven’t received the last several seminar flyers by Email, it means that we don’t have your Email address in our records. We ask that those of you in this category please consider providing us with your Email address.
CALENDAR OF
EVENTS (Go Top)
February 3,
2005
Board of
Directors Meeting
Century House,
Latham, 6 pm
February 10,
2005
NESCA
Membership Meeting
Century House,
Latham 6 pm
February
16-17, 2005
NESCA/GBC/ECA
Seminar
OSHA 10-Hour
Course
Building Industry
Center, 1 pm
February 17,
2005
NESCA/GBC/ECA
5-Week Course
STP Unit #10
Building Industry
Center, 6 pm
February 23,
2005
NESCA/GBC/ECA
5-Week Course
Basic Computer
Skills
Hudson Valley CC,
6 pm
March 3, 2004
Board of
Directors Meeting
Century House,
Latham, 6 pm
March 7-10,
2005
NESCA/GBC/ECA
Seminar
OSHA 30-Hour
Course
Building Industry
Center
March 12, 2005
St. Patrick’s
Dinner Dance
Century House, 6
pm
March 31, 2005
20th
Annual Car/Cash Giveaway
Shaker Ridge
Country Club, 7 pm
WELCOME NEW MEMBERS
(Go Top)
A&K Slipforming
PO Box
250
Cobleskill,
NY 12043
(518)
234-1944; Fax (518) 234-1945
Contact:
Donna Bartholomew
Allsteel Structures, Inc.
242
Glenwild Road
Middle
Grove, NY 12850
(518)882-9105;
Fax (518) 882-9038
Contact:
Ed Hahn
Flex Electrical
Constructors, Inc.
123
Sheridan Avenue
Albany, NY
12210
(518)
449-1407; Fax (518) 449-3197
Contact: Kevin Haggerty
Hanes Supply, Inc.
156 Railroad Avenue
Albany, NY 12205
(518)438-0139;
Fax (518) 438-5343
Contacts: Bill Hanes, Bill Kenny
Parker
Hammond Construction
2868 County Route 46
Ft. Edward, NY 12828
(518) 365-8580; Fax (518) 747-5005
Contact: Kevin Hammond
Pioneer Savings Bank
21 Second Street
Troy, NY 12180
(518)274-4800; Fax (518) 274-8693
Contact: Joseph Mahon
NEW SALES TAX CERTIFICATION
REQUIREMENT (Go Top)
Effective January 1, 2005 the NYS Tax Law was amended and applies to contracts resulting from solicitations to purchase products or services by state agencies for contracts valued in excess of $15,000. The law requires that contractors certify that they, their affiliates, subcontractors and the affiliates of their subcontractors have a valid certificate of authority to collect sales tax if they, their subcontractors, or affiliates have made sales of tangible personal property or taxable services having a cumulative value in excess of $300,000 during the four quarterly periods which immediately preceded the quarterly period in which the certification is made. Covered contracts include those for the maintenance, servicing and repairing of real property, as well as the installation, maintenance and repair of tangible personal property. Contractor certification must be completed on NYS Department of Taxation and Finance form ST-220. NESCA members are advised to consult with your accountants to determine whether you may be covered by this new law. Please refer to the Tax Department website for more detailed information at www.nystax.gov/sbc/nys_contractors.htm.
MEMBER ANNIVERSARIES (Go Top)
In
February, the following members have reached milestone anniversaries as members
of NESCA. Thank you very much for your
continued support!
Ten Years
D & R Jones Construction
Corp Harkins
Mechanical & Construction
Southern Tier Masonry, Inc.
Fifteen Years
AFSCO Fence Supply Co., Inc.