_________________________________________________________________________________________

On March 30, 2004, NESCA will join other construction industry organizations from across the state in sponsoring a Lobby Day to protest extraordinarily high liability insurance costs and to focus the Legislature’s attention on the primary culprit – Sections 240 & 241 of the New York State Labor Law. Both commercial and residential contractors and subcontractors from all regions of the State will converge on Albany on March 30^th to give a loud and clear message to the politicians; reform the Labor Law now!

Over the last several years, contractors and subcontractors have seen their general liability insurance premiums skyrocket. At the same time, policies now contain more exclusions, thereby providing less coverage at a far greater cost. All but a few liability insurance carriers have abandoned the construction marketplace in New York State.

This has occurred because New York is the only state in the country with a law like Sections 240 & 241, the so-called “Safe Place to Work” law. Sections 240, 241(1)-(5) and 241-a create a cause of action which results in absolute liability for owners and contractors when an employee is injured without regard to negligence. This liability is then transferred down to subcontractors through contractual indemnification. No other state in the country recognizes such a cause of action. That’s why liability premiums for subcontractors operating in other states are so much less than here in New York.

It’s now time to fight back! For years the Legislature has ignored pleas from the construction industry to reform the Labor Law while insurance premiums have increased by 100, 200, even 300 percent or more. The primary beneficiaries, of course, are the trial lawyers, who happily collect their 30 percent while not having to prove anything.

The Construction Industry Lobby Day will be held from 10:00 a.m. – 7:00 p.m. and will begin with a rally on the steps of the State Capital. NESCA members are urged to sign up and attend the rally even if you are unable to participate in the rest of the day’s activities. Signs and placards will be prepared protesting lawsuit abuse under 240/241 and the resulting impact on insurance premiums. It is extremely important that have a large number of contractors and subcontractors at the rally. We can’t compete with the money the trial lawyers and labor unions throw at the politicians, so we have to find other ways to focus attention on this problem.

If you’re tired of the “heavy hitters” advertising for clients on television so they can sue you, and you want to do something about the cost and availability of general liability insurance, please register for Construction Industry Lobby Day. Enclosed with the Newsletter is a registration form and agenda for Lobby Day. Please complete the form and mail it back with your registration fee to the Empire State Subcontractors Association, and remember, if you can’t attend the full Lobby Day, please still register to attend the morning rally.

The March 30^th Lobby Day represents the best chance we have in 2004 to convince the politicians that they must do something about 240 & 241 of the Labor Law. This is a problem that affects everyone in the construction industry, so please register!

NESCA Membership Meeting

March 11, 2004

Century House – 6:00 p.m.

6:00 Open Bar/Registration

6:30 Dinner: Sirloin Steak

7:10 Business Announcements

7:30 Program: General Contractor Showcase

Featuring Bast Hatfield, Inc.

Bast Hatfield is one of the largest general contractors in Northeastern New York, completing over $85 million in projects annually through a variety of methods including general contracting, construction management and design-build. Join us to meet Bast Hatfield’s leadership team and learn more about this company’s philosophy, market niche and how they run their projects.

Open Bar, Dinner, Tax & Gratuities - $35

PRESIDENT’S MESSAGE (Go Top)

At NESCA’s March 11, 2004 membership meeting, we’re going to do something a little new and different that has been very popular with some of our affiliated subcontractor organizations around the country. At the March meeting, NESCA will hold its first-ever “General Contractor Showcase” as our meeting program. The purpose of the General Contractor Showcase is to offer a local general contractor the opportunity to provide information about the company to NESCA members and to forge new business relationships with the subcontractor and supplier community.

Last fall, NESCA’s Program Committee contacted Capital District general contractors in an effort to determine which companies would be interested in participating in such a program. From those who expressed interest, one company was randomly selected for our first try at this. That company is Bast Hatfield, Inc. On March 11^th, Bast Hatfield will bring 4-5 key decision makers to our meeting to make a presentation about their company. Some of the key elements we have asked them to cover include:

· Type of work they do

· Project delivery systems used

· Recent notable projects

· Company history, philosophy and business practices

· Current projects in the pipeline

· Unique characteristics of the company

· What they expect from subs and what subs can expect from them

· How to get on their bidder’s list

· How they run a job including scheduling, payment processing and change orders.

After the presentation, we will open the meeting up for a question and answer session.

NESCA’s Program Committee and the Board of Directors are hoping that our first General Contractor Showcase will prove to be of great interest to our members and will present a unique opportunity for subcontractors and suppliers to learn more about one of the region’s largest general contractors. This meeting has been designed to promote positive interaction between our members and Bast Hatfield. It is not intended to serve as a “gripe session”. If the meeting generates the interest we think it will, we plan to hold additional General Contractor Showcase meetings periodically (perhaps once or twice a year) featuring a different contractor each time.

Also this month, NESCA will be co-sponsoring a Construction Industry Lobby Day to be held in Albany on March 30^th. Members were previously mailed information about the Lobby Day, and registration forms are also enclosed with this Newsletter. I can’t urge you enough to register for this important event. We have to put an end to the lawsuit abuse that is wreaking havoc with our liability insurance costs, and Lobby Day will present us with a great opportunity to take our case directly to our elected officials. We can’t match the money the trial lawyers contribute to politicians each year, so we have to make up for that with numbers. If you can’t attend the full Lobby Day, at least register for the morning rally to be held on the steps of the Capital. I urge your participation.

Jeffrey B. Senft, President

RHODE ISLAND COURT

STRIKES DOWN LIEN LAW (Go Top)

On April 23, 2003, a Superior Court Judge in the State of Rhode Island decided the case of Sells/Greene Building Company LLC and Gem Plumbing & Heating Co., Inc. v. Robert V. Rossi and Linda A. Rossi. Both Sells/Greene and Gem were contractors working on construction of an office building and other improvements to the property owned by the Rossis. Both Sells/Greene and Gem filed mechanic’s liens on the property pursuant to the Rhode Island Lien Law. In response to both Sells/Greene and Gem’s petitions to enforce the lien, the Rossis challenged the constitutionality of the mechanic’s lien statute. The Rossis central argument was that the mechanic’s lien statute of Rhode Island provided for the taking of property without any right of due process in violation of the Fourteenth Amendment to the United States Constitution and the Rhode Island Constitution. Specifically, the Rossis asserted that the statute allows any person who claims to perform work or who provides materials in construction to place a lien on the same property without any pre or post-deprivation hearing procedure to determine the validity or liability for alleged debt underlying the claim.

The Court, after review of recent developments of the lien law in Rhode Island and recent decisions in the United States Supreme Court concluded that the Rhode Island Mechanic’s Lien Law authorized the taking of a significant property interest protected by the Fifth Amendment and that the private interest affected by the mechanic’s liens was of considerable importance. The Court rejected the argument advanced by Sells/Greene and Gem, which suggested that in order for a private interest to be significant, that property must be seized. The Court further held that the negative repercussions caused by the mechanics lien statute to the property owner occurred before the property owner had any opportunity whatsoever to challenge the truth, accuracy or the validity of the amounts claimed under the lien.

In conclusion, the Court held that the Rhode Island Lien Law failed to provide the procedural due process rights required by the Fourteenth Amendment to the United States Constitution and by the Rhode Island Constitution. The case is currently on appeal to the Rhode Island Appellate Court.

While New York State law does not require pre-lien filing hearings, this case may stimulate owners to challenge the constitutionality of the New York Lien Law statute. Such a hearing requirement would certainly add to increased caseload in the courts causing delays in the lien filing process and jeopardizing the rights of the lien owners. Sales of property and mortgages placed on property before liens are perfected would, in effect, cut off or subordinate the lien rights of lienors on the property. The New York Lien Law provides adequate protection to owners and contractors and subcontractors. Furthermore, a hearing requirement would result in contractors and subcontractors demanding more upfront security in the nature of bonds or undertakings to protect them against the risks of losing their lien rights.

Terence J. Burke, Esq.

NESCA Legal Counsel

CALENDAR OF EVENTS (Go Top)

March 10, 2004

NESCA/GBC/ECA Seminar

Steel Erection Standard

Building Industry Center, 3 pm

March 11, 2004

Board of Directors Meeting

Century House, Latham, 5 pm

March 11, 2004

NESCA Membership Meeting

Century House, Latham, 6 pm

March 24, 2004

NESCA/GBC/ECA Seminar

Dealing With Workplace Mistakes

Building Industry Center, 6 pm

March 25, 2004

19^th Annual Car/Cash Giveaway

Shaker Ridge CC, 7 pm

March 30, 2004

Construction Industry Lobby Day

Empire State Plaza, 10 am

Don’t Forget to Order Your Ticket for NESCA’s

19^th Annual Frank Campito Memorial Car/Cash Giveaway!

Nearly $35,000 in Prizes to be Awarded Including a Grand Prize Worth $25,000!!

Shaker Ridge Country Club

7:00 – 9:30 p.m.

$200 Per Ticket

WELCOME NEW MEMBERS (Go Top)

A.M. Partitions, Inc.

21 Woodridge Street

Albany, New York 12203

(518) 452-4992; FAX (518) 452-4997

Contact: Tony Moffre

Aquatic Commercial Solutions

P.O. Box 428, 523 South Main Street

Mechanicville, NY 12118

(518) 665-0006; FAX (518) 665-0007

Contact: Bill Flanigan

Collett Mechanical, Inc.

20 Corporate Circle

Albany, NY 12203

(518) 862-2214; FAX (518) 862-2217

Contact: Jack Collett

Metal Supermarkets, Inc.

88 Railroad Avenue

Albany, NY 12205

(518) 435-0024; FAX (518) 435-0265

Contact: Keith Watters

Wilcox Building Specialties, Inc.

27 Royal Road

Ithaca, NY 14850

(607) 257-4569; FAX (607) 257-4639

Contact: Gene Wilcox

MEMBER ANNIVERSARIES (Go Top)

Five Years

Lewis Crane Service, Inc.

Fifteen Years

B & L Control Service, Inc.

Colonie Block & Supply Co., Inc.

Kingsley Arms, Inc.

Twenty Years

Moisture Barriers, Inc.

Twenty-Five Years

D & M Tile Corporation

MEMBER PROFILE – F.R. FOOTE CO., INC. (Go Top)

The F.R. Foote Co., Inc. is a manufacturer’s representative for heating, ventilating and air conditioning products serving eastern New York, western Massachusetts and Vermont for the past 66 years. Founded by Franklyn R. Foote in 1938, F.R. Foote represents such noteworthy manufacturers as Armstrong Pumps, Marley Cooling Towers, Loren Cook Fans, Ruskin Dampers and Louvers, and Titus Air Terminal Units. Currently located at 898 Route 146 in Clifton Park, New York, F.R. Foote’s customer base primarily consists of mechanical, sheet metal and general contractors; wholesalers; service dealers; architects and engineers; industrial facilities; hospitals; temperature control contractors; schools; and owners of commercial and industrial buildings.

Company president Donald F. Ferguson, Jr. leads F.R. Foote’s sales and support staff of 6 employees including Chris Butler, Paul Goody, Derek Zeh, Bob Davis and Linda Bondi. He took over this post from his father, Donald F. Ferguson, Sr., in 1992. The company has supplied HVAC equipment on many noteworthy projects such as the Albany International Airport Expansion; State Police Forensics Laboratory; RPI Biotechnology Building; State Office Campus Chiller Plant Expansion; MetLife Building; and DASNY Headquarters.

A member of NESCA since 1993, F.R. Foote also maintains memberships in ASHRAE and the Albany-Colonie Chamber of Commerce. With its recent relocation to a larger facility, F.R. Foote continues to grow, and has won many sales awards from the manufacturers it represents. The company takes pride in providing excellent technical support, professional service, high quality equipment, prompt delivery and competitive pricing to its customers.

NESCA members who would like to be profiled in a future Newsletter should contact the NESCA Office.

MEMBERS ASKED TO COMPLETE ANNUAL BPI INFORMATION FORM (Go Top)

One of the most important services NESCA offers its members is the 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.

All members were recently mailed, and asked to complete our annual Business Practices Interchange listing form. The BPI is a referral service, and we merely ask members to provide us with the names of contractors you have done business with during the preceding twelve months. This information will be entered into NESCA’s database. Members seeking information about a particular contractor may then contact the NESCA office and will be referred to other members who have reported they have recently done business with that company.

Members are encouraged to return your completed BPI form to the NESCA office as soon as possible. This service is totally member-driven and will only work if completed forms are returned.

PRICEY WORKERS’ COMP. BENEFITS INCREASE INTRODUCED (Go Top)

A union-backed workers’ compensation bill has been introduced that would raise compensation benefits significantly without enacting any of the cost-saving reforms long-sought by business. The bill, (S.6135/A.9736), sponsored by Senator Guy Velella and Assemblywomen Susan John , chairmen of the Senate and Assembly Labor Committees respectively, would ultimately raise the maximum benefit to a level that is equal to 2/3 of the state average weekly wage. This bill would also allow unions to select a workers’ compensation carrier for the employer. Specifically, the bill would:

· Increase the maximum benefit using the following schedule: December 1, 2004 - $475; May 1, 2005 - $550; December 1, 2005 - $625; December 1, 2006 – 2/3 of the statewide average weekly wage; Beginning December 1, 2007, annual increase to reflect the increase in the statewide average weekly wage.

· Designation of Insurance Carrier: On an annual basis, allows a union to select and designate for compensation coverage from either the insurance carrier selected by the employer or the State Insurance Fund.

· Unsafe Workplace: If an injury results from a condition which was the subject of federal or state citation within the preceding five years for a serious, willful, or repeat violation, the injured worker may elect to waive normal workers’ compensation benefits and instead sue the employer directly for negligence.

· Posting of OSHA citations: Require employers to post OSHA citations within five days of receipt of such citations at a prominent place or places at the worksite as a method of informing employees. Failure to post results in a fine up to $1,000 for each business day in which the notice is not posted.

· Creation of Medical Trust Fund: Employers who do not provide health insurance for their employees would be required to contribute to a Workers’ Compensation Medical Trust Fund. The purpose of the Trust Fund would be to compensate medical providers treating an injured employee prior to a determination of compensability of the claim.

· Earner Protection Policy: Permits high wage earners to purchase an earner protection policy for additional benefits. If the benefits are never used, such employee would be entitled to a rebate of some of the premiums paid upon retirement.

· Attorney Fees: Allows the Workers’ Compensation Board to charge an employer for a claimants attorney fees if the employer has unsuccessfully argued against a claim.

The Business Council of NYS has initially estimated that the benefit increase alone could raise employer’s rates by 25 percent or more. The business community has long fought against the idea of benefit increases without corresponding reforms to contain costs. A business-supported reform bill, (S5320/A.8862), was introduced in 2003 and would:

· Limit to 10 years the duration of benefits given to injured workers in cases where benefits are not prescribed by statutory schedules. Unlike other states, New York does not have durational limits on either permanent total or permanent partial disabilities. This is a huge cost driver for New York’s workers’ compensation system.

· Provide for Social Security and pension offsets – that is, reductions in workers’ compensation benefits applied when workers receive Social Security and/or pension benefits.

· Give injured workers only half of remaining scheduled benefits if they return to work before scheduled benefits expire.

· Implement meaningful objective medical guidelines to determine the degree of disability and the ability of workers receiving benefits to meet occupational demands.

Since the maximum workers’ compensation benefit of $400 per week has not been increased since 1992, and, since it is an election year, it is likely that some version of a benefits increase bill will be acted on by the Legislature during the 2004 session. The Governor’s office has also indicated that they plan to do a comp. bill this year. What remains to be seen is whether the Legislature will pass a strict benefits increase bill or a bill that contains some level of reform.

SUPREME COURT DENIES PETITION CHALLENGING ANNUALIZATION OF PREVAILING WAGE SUPPLEMENTS (Go Top)

On January 12, 2004, the U.S. Supreme Court let stand a July 2003 U.S. Court of Appeals for the Second Circuit ruling that New York State’s “annualization” regulation for supplements paid on public works projects is not preempted by the National Labor Relations Act. In the case of Rondout Electric v. New York State Department of Labor, the high court denied Rondout’s petition to hear the appeal from the lower court, thereby allowing DOL to continue enforcement of the controversial annualization regulation.

The annualization regulation deals with supplemental fringe benefits paid by contractors and subcontractors to their employees on public projects subject to New York’s prevailing wage law. The controversy first surfaced in April, 1999 when the Department of Labor promulgated a “Notice” to contractors stating 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.

Rondout had argued that the annualization regulation, in effect, injects the State improperly into the labor-management bargaining process by dictating employee supplements that the employer must pay on private construction projects. A U.S. district court judge originally agreed with Roundout’s position, but the appeals court later held that while the annualization regulation may impose an additional cost on non-union contractors through indirect taxes on the cash payment option, this increase does not effect the bargaining process that is the subject of the NLRA.

NESCA continues to advise members to either annualize prevailing wage supplements or pay them in cash.

OSHA APPEALS DECISION PROHIBITING PER-EMPLOYEE CITATIONS (Go Top)

The Occupational Safety and Health Administration (OSHA) has issued an appeal to the U.S. Court of Appeals for the Fifth Circuit to reverse an Occupational Safety and Health Review Commission (OSHRC) decision regarding OSHA’s long-standing policy to cite for each instance of a flagrant violation. Currently, when an employer commits egregious violations of safety and health requirements, OSHA cites for each instance (per-employee) of the violative conduct.

In the September 29, 2003 decision, however, OSHRC determined that the cited employer, Eric K. Ho, who failed to provide protective equipment or training to 11 workers exposed to asbestos, committed only a single violation of OSHA’s personal protective equipment and training requirements. OSHA had charged that the employer violated OSHA’s training and protective equipment standards 11 times, once for each worker he failed to protect. The employer challenged the citations before the Commission and an administrative law judge upheld them. On review of the judge’s decision, however, the full Commission held that the employer was only liable for a single violation of each of those standards, regardless of how many workers he failed to protect. It reduced the proposed penalty for these violations by more than 80 percent, from $858,000 to $140,000.

While the Commission clearly agreed that the employer egregiously violated the OSHA standards in question, it declared “….we cannot allow harsh facts to result in bad law – a result which would clearly follow should we accept the Secretary’s proposed penalties….we find nothing in the plain language of the cited standard…..to support her claim that violations of this standard can be cited per-employee.” The Commission concluded that the two standards in question are stated in general performance terms which refer to employees collectively rather than individually, and therefore do not provide fair notice to an employer that it may be penalized on a per-employee basis for violations of the standards.

In a statement released on January 28, 2004, OSHA administrator John Henshaw said, “OSHA has appealed a decision that could harm its ability to protect worker safety and health. When an employer commits especially flagrant violations of its requirements, OSHA has a longstanding policy of citing each instance of the violative conduct. We are asking the United States Court of Appeals for the Fifth Circuit to reverse that decision.”

LABOR DEPARTMENT REVERSES POLICY ON U.I ELIGIBILITY (Go Top)

The New York State Department of Labor has changed its policy to recognize that unmarried individuals who leave jobs to follow a partner to another locality may be eligible for unemployment benefits.

In a letter dated February 9, 2004, Labor Department Counsel Jerome Tracy advised the state’s Unemployment Insurance Appeals Board that an unmarried individual may have “good cause” for leaving a job to follow a partner (and thus be eligible for benefits) “provided sufficient proof of a long term committed relationship exists.”

NYS Labor Law provides that persons who voluntarily separate from employment without “good cause” shall not be eligible for unemployment insurance benefits. In 1987, the law was amended to delete the disqualification for a voluntary separation that was due to following a spouse to another locality. The Labor Department then established a policy that provided that voluntarily leaving employment to follow a spouse could be “good cause” under appropriate circumstances. “This policy recognizes that there exist in certain long-term committed relationships certain financial, legal and emotional commitments that justify voluntarily separating from employment to follow a marital partner. However, this rationale can apply equally to persons who are in a committed unmarried relationship, so long as there are objective indicia that demonstrate that financial, legal and emotional commitments exist to justify a claimant voluntarily separating from employment to follow an unmarried partner.”

Unfortunately for employers, DOL has not clearly defined the “objective indicia” to be used, nor has it defined just what constitutes a “long-term committed relationship.”

DID YOU KNOW….. (Go Top)

…..No deductions may be made from wages paid to an employee except those required by law or government rules and regulations (e.g. payroll taxes, child support orders, wage garnishments), except those which are expressly authorized, in writing, by the employee and are for that employee’s benefit. Nor may an employer require an employee to make any payment by separate transaction, unless such a payment would be permitted as a deduction from wages. Such authorized deductions are limited to insurance premiums, charitable contributions, pension, health and welfare benefit payments, union dues, United States bond purchases and payments for similar purposes.

It is a violation of labor law for an employer to make any other deduction from an employee’s wages. For example, if an employee takes or damages property belonging to the employer, the employer may not recoup the value of that property by withholding all or a portion of that employee’s wages. The employer, like any other party aggrieved by the neglect or criminal behavior of another, must pursue whatever remedies are available at law. He may not simply confiscate wages due to his employee without a court order permitting him to do so.

An employer is not obliged to pay an employee for hours that he did not work, but in making a deduction from wages for lateness or absence, may deduct only the value of the time missed; the deduction of a penalty for lateness or absence is illegal. Nor may an employer make a deduction from wages because he judges the employee’s work to be deficient.

It is illegal for an employer or any of his agents to request, demand or receive any part of a worker’s wages or any other thing of value upon the understanding or representation that failure to comply with the kickback demand will prevent the worker from obtaining or retaining employment.

Employers are required to maintain payroll records showing the hours worked, gross wages, payroll deductions and net wages for each employee and must furnish this information to employees with every payment of wages.

March 2004

NESCA Members Urged to Fight Back on Strict Liability Under the Labor Law

RHODE ISLAND COURT

Aquatic Commercial Solutions

Metal Supermarkets, Inc.

Wilcox Building Specialties, Inc.