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DOL Annualization Rule Upheld by NYS Court of Appeals (Go Top)

In a May 3, 2005 decision, the NYS Court of Appeals unanimously upheld the State Department of Labor’s annualization requirements for prevailing wage supplements on NYS public projects. In affirming a previous decision by the Appellate Division in Chesterfield v. New York State Department of Labor, the Court of Appeals concluded that annualization is a reasonable methodology for valuing fringe benefits under the NYS prevailing wage law.

NESCA members may recall that the annualization controversy first surfaced in April 1999, when the Department of Labor promulgated a “Notice” to contractors which stated that DOL would not allow credit for prevailing wage supplement payments used “to obtain benefits for individuals other than those on whose behalf the payments were made” nor for payments used “to obtain benefits for a period of time during which the worker was engaged on a private project.” In other words, DOL stated that benefits may not be “pooled” and that they must be “annualized”. DOL annualizes the benefits provided by a contractor by dividing the actual contribution or cost of providing such supplement by the total hours worked on both public and private projects in order to determine the amount of credit a contractor will receive toward meeting his prevailing supplement obligation. Since 1999, DOL’s annualization rule has been repeatedly challenged by contractors in both the state and federal court systems, but to no avail. DOL has won each and every case.

In the Chesterfield case, Chesterfield disputed the use of the annualization rule to calculate the hourly cash equivalent of its contributions for pension benefits, arguing that annualization violates Labor Law Section 220(3) by penalizing contractors unless they provide for supplements at the prevailing rate on both public and private work. The Court disagreed, stating that DOL’s determination to annualize Chesterfield’s contributions is “entitled to deference”.

As NESCA has advised in the past, it continues to be apparent that the only alternative subcontractors may have to the annualization rule is to pay prevailing wage supplements in cash.

NESCA Officers to be Elected at June 9^th Membership Meeting (Go Top)

In accordance with NESCA’s Bylaws, the June 9, 2005 membership meeting will serve as the association’s “Annual Meeting”, at which time an election of officers to serve during the 2005-2006 fiscal year will be held. The term of all officers elected at the meeting will begin on July 1, 2005 and will end on June 30, 2006. All members of NESCA are encouraged to attend this meeting and cast your vote. NESCA’s Nominating Committee has recommended, and the Board of Directors has confirmed, the following slate of officers for member approval:

PRESIDENT

Hal Hatfield –Maximum Security Products Corp.

VICE PRESIDENT

Toni Cristo – Cristo Demolition, Inc.

TREASURER

Peter Clechenko – Albany Interiors, Inc.

SECRETARY

Tony Whaley – Henderson-Johnson Co., Inc.

NESCA Membership Meeting

June 9, 2005

Century House – 6:00 p.m.

6:00 Open Bar/Registration

6:30 Dinner: Sliced Grilled Pork Loin

7:10 Business Announcements

7:30 Program: Legislative/Regulatory Update

Speakers: Terry Burke, ESSA Counsel

Mike Misenhimer, ESSA Exec. Director

Open Bar, Dinner, Tax & Gratuities - $35

PRESIDENT’S MESSAGE (Go Top)

It has been my distinct pleasure to serve as NESCA’s president during the last 12 months. While I began my term last July with a considerable appreciation for the work NESCA does on behalf of subcontractors and suppliers, I leave office with the thorough knowledge that there is not a subcontractor or supplier in Northeastern New York who does not directly benefit from NESCA’s activities. These activities include advocacy in the Legislature, state contracting agencies, and the courts on behalf of NESCA’s 450 members – correction – on behalf of NESCA’s 450 members and every other subcontractor and supplier doing business in New York State. Yes, I said every other subcontractor and supplier doing business in New York State. You see, every time NESCA is involved in passing a law that benefits subs and suppliers, or stopping a bill that would harm them, every time NESCA works with state agencies to improve contract administration procedures, every time NESCA goes to court or files an amicus brief on an important case, every subcontractor and supplier benefits. That is why I am so grateful to all members -- those subs, suppliers and service organizations that belong to NESCA -- because it is your dues money that pays for the advocacy so many other subs and suppliers benefit from.

I have spent the last year strongly encouraging existing members to recruit these non-member subcontractors and suppliers for two basic reasons. First and foremost is the fact that the more members we have in NESCA, the stronger the association will become and the more we will be able to accomplish for everyone. The second reason I encourage members to recruit is a more selfish one, that being the desire to “spread the load” a little bit more. Think about it. NESCA members are the companies who finance the many legislative and regulatory accomplishments of the association, while all those non-member subs and suppliers directly benefit but don’t contribute to the effort financially. In effect, those companies are getting a free ride (and YOU’RE pulling the wagon). We need more new members to help shoulder the burden and assist in paying the cost of promoting pro-subcontractor, pro-supplier regulations and laws.

As I wind down my term as president, I encourage all members to take thorough advantage of NESCA’s many member benefits and the expertise of our full-time staff. At the same time, I urge you to think about how you can more fully contribute to the success of the association. You may choose to contribute in a variety of ways, to include serving on a committee, purchasing an advertisement in the membership directory, becoming a sponsor at NESCA events, making a donation to the NESCA PAC or NESCA Legal Defense Fund, writing letters to your Senator and Assemblyperson in support of our legislation, and yes, by recruiting a new member.

An often overlooked or at least taken for granted aspect of the association are the behind the scenes efforts of the NESCA staff. Mike in my view is a national quality Executive Director, who keeps his "fingers on the pulse of the industry". I believe he could easily be in Washington advocating for subs on a national level. Without his efforts an already volatile industry would be even more difficult. We are very lucky to have him. Sue and Lorraine in the office make us all more effective and deliver first class support; any call to the office evidences that. Your Board of Directors, Officers and Committee Chairs and members are hard working volunteers as well. It is important to remember, these are all people with businesses to run that take the time to go the "extra mile" for the association and the industry. They don't get enough thanks. A special thank you to Mark Woodward and Roger Jones for all their help on the Membership and Social fronts. The President gets the "spot light", but there are so many people that make this a great association and carry the load.

Thank you for the opportunity to serve as NESCA president during our 2004-05 year. The experience was both educational and personally fulfilling.

Kevin J. Garrity, President

Court Holds Injured Non-Employee Not Protected by the Scaffolding Act (Go Top)

On April 11, 2005, the Supreme Court of New York, Appellate Division, Second Department, decided Juan Martinez Morales, et al. v. 569 Myrtle Avenue, LLC., et. al. The plaintiff in this case was an individual who was hurt when struck by falling cement as he walked adjacent to a construction site. The premises were owned by the defendant 569 Myrtle Avenue, LLC who contracted with Maximum Distributors, Inc. for the construction of a gas station at the premises. Prior to the day of the accident, Maximum retained the services of defendant Regional Construction Corporation to perform work at the premises. The plaintiff and his wife commenced the instant action against 569 Myrtle, Maximum and Regional, to recover damages for common law negligence and for violations of Labor Law §§200, 240(1), and 241(6). Maximum moved for summary judgment dismissing the complaint and all cross-claims insofar as asserted against it. The Appellate Court held that the Supreme Court should have granted that part of Maximum’s summary judgment motion which was for summary judgment dismissing the cause of action alleging violations of Labor Law §§ 200, 240(1), and 241(6), insofar as asserted against it since the plaintiff was not a member of a class of a persons intended to be protected by those provisions of the Labor Law.

This case clearly illustrates that the New York State Scaffolding Act as contained in the Labor Law was intended to protect employee workers who were injured at the construction site. Such protection does not extend to non-employees such as pedestrians walking on sidewalks adjacent to a construction site.

Terence J. Burke, Esq.

DOT Issues Bond Rating Notice to Contractors and Surety Companies (Go Top)

The New York State Department of Transportation has issued a notice stating that effective May 5, 2005, DOT will only approve bid bonds, performance and labor & material bonds provided by surety companies that are: licensed to do business in New York State, listed in the current US Treasury Circular 570 and have, at least, an “A-“ rating in the current Best’s Key Rating Guide.

NYCIRB Proposes a 16.1% Workers’ Compensation Rate Increase (Go Top)

The New York Compensation Insurance Rating Board (NYCIRB) has recommended a 16.1 percent increase in workers’ compensation manual rates to take effect on October 1, 2005. NYCIRB announced the proposed rate change on May 17, 2005. NYCIRB is a non-profit association of insurance carriers, including the State Insurance Fund, charged by the Superintendent of Insurance with collecting data and developing workers’ compensation rates and assessments. NYCIRB also administers the workers’ compensation classification system, which assigns employers to the proper rate category. The Insurance Department will consider NYCIRB’s proposal and will then issue a final decision on rate changes for 2005-06. Last year, the Insurance Department rejected a 29.3 percent increase proposed by NYCIRB.

Several Construction-Related Bills Passed in New York State Senate (Go Top)

Workers’ Compensation Payroll Limitation Law – Legislation that would make the Construction Employment Payroll Limitation Law permanent was approved by the Senate on March 8, 2005. The payroll limitation law was enacted in 1998 to provide a more equitable distribution of workers’ compensation premium between high wage paying and low wage paying employers in the construction industry. This law applies to approximately 80 classifications currently in use for the construction industry. Unless extended or made permanent, the law is due to sunset in December 2005. This bill has been referred to the Assembly Labor Committee.

Independent Contractor Disclosure – On May 5, 2005, the Senate passed a bill that would require all contractors and subcontractors to submit a list of all “independent contractors” used on a public project to the Labor Commissioner within 30 days after completion of the project. The legislation further requires the list to include the name, social security number, job title and address of each independent contractor, and assesses a $10 fee per independent contractor listed. This bill has been referred to the Assembly Ways & Means Committee.

Failure to Post Workers’ Compensation Notice – On May 10, 2005, the Senate passed a bill to increase the penalty against employers for failing to post a workers’ compensation notice from $250 to $500. This bill has been referred to the Assembly Labor Committee.

Welcome NewMembers (Go Top)

Bott Bros. Electric, Inc.

50 Haig Avenue

Wynantskill, NY 12198

(518) 238-4366; FAX (518) 268-1377

Contact: Joseph Bott

Constructive Copy, LLC

3 Northway Lane

Latham, NY 12110

(518) 783-6044; FAX (518) 783-3841

Contacts: Todd Duval; Harry Cohn

Emerson-Swan, Inc.

120 Broadway

Albany, NY 12204

(518) 433-1000; FAX (518) 433-0475

Contact: Kevin McCashin

Louis N. Picciano & Son, Inc.

320 North Jersen Road, PO Box 448

Vestal, NY 13851

(607) 729-1111; FAX (607) 797-6666

Contact: Wayne Howard, Sue Kendall

Wood Pro 2 Installers

7 Short Street

Cold Spring, NY 10516

(845) 265-2341

Contact: Denis Dillion

CALENDAR OF EVENTS (Go Top)

June 2, 2005

Board of Directors Meeting

Century House, Latham, 6 pm

June 9, 2005

NESCA Membership Meeting

Century House, Latham, 6 pm

June 13, 2005

Mid-Hudson Golf Outing

Wiltwyck Golf Club, Kingston

BIE Summer Meeting Scheduled for July 21-24 (Go Top)

The Building Industry Employers of NYS (BIE) will hold its Summer Meeting July 21-24, 2005 at the Gideon Putnam Hotel in Saratoga Springs. NESCA members are eligible to attend the BIE Summer Meeting because the Empire State Subcontractors Association is an affiliate of BIE. The deadline for making reservations is June 20, 2005. Enclosed with this Newsletter are registration materials and additional information.

ASHRAE to Hold Mechanical Product Show (Go Top)

The Northeast New York Chapters of the American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) and the Capital Region Chapter of the American Society of Plumbing Engineers (ASPE) will be hosting a Mechanical Product Show & Seminars on Wednesday, June 1, 2005 at the Saratoga Springs City Center in Saratoga Springs.

Products and seminars will feature heating, ventilating, air conditioning, refrigeration, fire protection and plumbing products used in commercial, industrial and residential applications. Seminars will run from 9:30 am to 11:45 am. The product show will run from 11:30 am to 7:00 pm. For more information contact Bob Wilson at 518-694-3660 or email him at rwilson@RedOakEngineering.com.

Shoring Scaffold Frames For Sale

Western Building Restoration has 300 Shoring Scaffold Frames for sale with jacks, braces and accessories. Contact Ron Moore at 518-482-8655 or 518-461-7261.

MEMBER ANNIVERSARIES (Go Top)

In June, the following members have reached milestone anniversaries as members of NESCA. Thank you very much for your continued support!

Five Years

BPI Piping General Mechanical Group

Hudson Valley ECM, Inc. KHM, Inc.

Rainbow Sheet Metal SAFECO Surety

Ten Years

Oneonta Block Company

Twenty-Five Years

N.E. Harris Associates, Inc. RAMSCO

Vol. 23, No. 12

Bott Bros. Electric, Inc.

Constructive Copy, LLC

Emerson-Swan, Inc.

Louis N. Picciano & Son, Inc.

Wood Pro 2 Installers