Inside
this Edition: ESSA Adopts 2006 Legislative Program, Governor Vetoes Off-Site Custom Fabrication
Legislation, President’s
Message, Federal
Court Qualifies Application Of New York’s Hold Harmless Statute, Contractors
Use New Tool For Pre-Bid Communication Flow, Two More Labor Bills
Vetoed By Governor Pataki, Question Of The Month, Welcome New Members, Calendar Of Events, Member Anniversaries
Retainage Reduction – This legislation would require a 50% reduction in retainage on all public works projects upon completion of 50% of the project. This bill would get more money held as retainage by the public owner into the pockets of subcontractors sooner than is currently the case.
Prohibition of Additional Insured/3rd Party Hold Harmless Requirements – This legislation would prohibit an owner and/or contractor from requiring a subcontractor to list such owner and/or contractor as additional insureds on the subcontractors’ insurance policy for the purpose of covering damages caused by the owner or contractor. This bill would also close a long-standing loophole in the law by prohibiting hold harmless clauses that require a subcontractor to indemnify the contractor or owner for damages caused by the negligence of 3rd parties.
Design Delegation - This legislation would require architects
and engineers to unequivocally review and approve all design work that has been
delegated to contractors and subcontractors.
Statute of Limitations on Payment Bond Claims – This legislation would
clear up the confusion caused by several recent court cases about when the
statute of limitations for initiating payment bond claims on public projects
begins.
Notice of Lien – Service to P.O. Box – This legislation would allow the service of a notice of lien to the owner at a P.O. box as an alternative to personal service or service by mail at the owner’s street address. This bill would make it easier for subcontractors and suppliers to serve the owner in cases where the only available address is a P.O. box.
Lien Foreclosure Actions – This bill would exempt
owners as necessary parties to lien foreclosure actions where the lien has been
“bonded off.”
Governor Vetoes Off-Site
Custom Fabrication Legislation
(Go Top)
Legislation that would have required the payment of prevailing wages for work performed connected to the drafting and fabrication of certain items off-site has been vetoed by Governor Pataki. Specifically, this bill would have applied the prevailing wage law to the off-site fabrication and drafting related to the fabrication of woodwork, cases, cabinets or counters and the fabrication of plumbing, heating, cooling, ventilation or exhaust duct systems, and mechanical insulation specifically designed and engineered for installation in a public works project. This bill would have also required contractors and subcontractors to maintain certified payroll records for such off-site employees.
In an October 19th veto message, the Governor justified his veto on the grounds that: (1) drafting has never been subject to the prevailing wage law; (2) the bill failed to specify whether the applicable prevailing wage would be that of the site of the public work project or the site where the work actually is performed; and (3) the bill would result in drafting and fabricating business being driven out of the State to businesses not subject to New York’s prevailing wage law.
NESCA Membership Meeting
November 10, 2005
Century House – 6:00 p.m.
6:00 Open Bar/Registration
6:30 Dinner: Chicken Marsala
7:10 Business Announcements
7:30 Program: “Disaster Preparedness”
Presented by: James W. Tuffy, Director
NYS Emergency Management Office
James W. Tuffy will
make a presentation on how well the Capital Region is prepared for a disaster,
natural or man-made, and what the construction industry’s role would be in the
aftermath of local disaster.
Open Bar, Dinner, Tax & Gratuities - $37
PRESIDENT’S MESSAGE (Go Top)
Over the last four months, in my role as NESCA’s president I’ve had the privilege of representing the association at a number of interesting meetings and events. For example, on September 21st I attended an Empire State Subcontractors Association (ESSA) Board of Directors meeting held at the Building Industry Center in Albany. ESSA is NESCA’s state affiliate, was formed in 1974, and is comprised of subcontractor groups in New York City, Albany, Syracuse, Rochester and Buffalo. In essence, ESSA is our government relations/ lobbying arm. The primary purpose of the September 21st meeting was to adopt a legislative program to pursue during the 2006 session of the NYS Legislature. ESSA’s legislative program will include a variety of bills dealing with such issues as retainage, contractual indemnification, additional insured requirements, design delagation and payment bond claims (see story on page 1 for details). Over the years, ESSA has accumulated an impressive list of accomplishments in the Legislature. Since 1975, ESSA has drafted and successfully lobbied 34 pro-subcontractor bills into law addressing such matters as improvements in the lien law, prompt payment requirements, and retainage reform to name a few. Based on what I witnessed at the recent Board meeting, in 2006 ESSA will continue its exceptional legislative advocacy on behalf of all subcontractors and suppliers doing business in New York State.
I also recently attended a meeting of the National Subcontractors Alliance (NSA) held on October 15th in Saratoga Springs. The NSA is an organization made up of seven of the largest regional subcontractor associations in the country located in Albany, New York City, Boston, Chicago, Akron, Tucson and South Florida. The purpose of NSA is to exchange useful information between the member associations and to foster opportunities for representation at the national level on construction industry issues. Through its affiliation with the Associated Specialty Contractors, NSA has the opportunity to provide input on important matters such as the drafting of the new AGC subcontract document and the proposed changes to the AIA A401 standard subcontract document.
On October 19th I had the pleasure of representing NESCA at a political reception hosted by Senator Neil Breslin. While at the reception, I spoke with Senator Breslin about the state of the general liability insurance marketplace for contractors and subcontractors, and particularly about the primary culprit for our continuing insurance woes – Sections 240 & 241 of the NYS Labor Law. I’m pleased to report that Senator Breslin expressed his support for our efforts to reform Sections 240 & 241.
Finally, I strongly encourage all members to attend NESCA’s monthly membership meetings at the Century House, including our upcoming meeting on November 10th. There is so much to be learned at these meetings, and the more information we accumulate as business owners, the better off we will all be in the operation of our businesses. We’ve got a very interesting speaker coming in November, so please think about coming to this meeting.
Harold M. Hatfield, President
Federal Court
Qualifies Application of
New York’s
Hold Harmless Statute (Go Top)
In
a recently decided federal court case, George
Martin v. Metro-North Commuter Railroad v. Granite Halmar Construction Company,
Inc. and Halmar Builders of New York, Inc. f/k/a Halmar Builders of New York,
Inc. v. Verde Electric Corp. (2005 U.S. Dist. LEXIS 14771, the court
addressed an issue concerning an indemnification clause as governed by New York
State General Obligation Law Section 5-322.1.
In
this case, plaintiff, a railroad employee, sued to recover for injuries
allegedly sustained after he tripped and fell on a snow covered cable while
working on a construction project. The
defendant railroad impleaded the contractor who then impleaded the
subcontractor.
Both
the claims of the railroad against the contractor and the contractor against
the subcontractor were based on indemnification clauses purporting to require
indemnification for damages caused by the promisee’s negligence. Such broad form hold harmless clauses are
invalid under New York’s General Obligation Law Section 5-322.1. The court, however, would not grant summary
judgment invalidating the clause since the clause contained the phrase “to the
fullest extent permitted by law”, which negated the language that otherwise
would have been repugnant to the statute.
The
court concluded that an indemnification clause purporting to indemnify the
promissee for its own negligence is not invalid on its face as prohibited by
Sec 5-322.1 of the NYS GOL where it contains the phrase “to the fullest extent
permitted by law.”
Contractors Use New Tool For Pre-Bid
Communication Flow (Go Top)
General contractors and
prime subcontractors in the Capital District are starting to take advantage of
a new tool from McGraw-Hill Construction to improve the communication of plans,
specs, addendum and other bid information.
As major subcontractors in this marketplace, NESCA members are likely to get an email sometime soon from a GC asking you to visit their private plan room located on the McGraw-Hill Construction site. Once there, you will be able to view/download plans, download specs and even do take offs to see if you are interested in submitting a bid.
The new tool, called Bid
Management Service or BMS, streamlines the scattered and often chaotic process
so general contractors and prime subcontractors can focus their energies on
what’s really important: winning more jobs and growing their business.
Primes are using this tool to communicate with their vendors and
sub-subcontractors. General contractors
are using it for their entire team. Get
ready for the next big leap in electronic communication for contractors! For a demonstration, call Drew VanRoyen at
McGraw-Hill Construction (518) 869-5375 x 207.
Two More Labor Bills Vetoed by Governor Pataki (Go Top)
Governor Pataki has
vetoed two more bills that had been pursued by the building trades, bringing
the total to at least six labor-oriented bills he has vetoed in the last
several months.
Daily Head Count – This legislation would have
amended the Labor Law to require the engineer-in-charge (EIC) or the on-site
supervisor representing a contracting agency on prevailing wage projects to
record a daily headcount of all workers on the project site, separately
enumerated regarding each classification of worker, including hours worked and
the rate of pay. Under the bill, these
records would have been required to be submitted to the Commissioner of Labor
and maintained for three years. The
Governor’s stated reason for the veto was that the bill would have imposed
significant burdens on state agencies.
Prevailing Wage Notification - This legislation would have
required contractors and subcontractors on public works projects to provide
written notification to all workers of the prevailing wage rates and
supplements for their particular job classification. The bill mandated that such written notice be given at the
beginning of a project and every eight weeks thereafter with the worker’s
paycheck. The notice required a
statement that workers are entitled to be paid the prevailing rate of wage, the
Department of Labor’s address and phone number, and a statement that it is the
worker’s right to contact the Department if he is not receiving the proper
wage. The Governor disapproved this
bill, stating that it is unnecessary and would unfairly burden construction
employers.
Question of the Month (Go Top)
Q.
Is there any other recourse to non-payment when I lose my lien rights
due to the fact that the general contractor has been paid in full by the owner?
A. Yes. If you lose your right to file a lien
because the owner has paid the contractor in full, you should investigate
whether there has been a violation of the trust fund provisions of Article 3-A
of the Lien Law. Under Article 3-A, a
trust relationship is established on construction projects in New York
State. When the contractor receives
payment from the owner for the work you have performed, he has a fiduciary
responsibility to pass your portion of that payment along to you. These funds are in effect trust funds, and
you are a beneficiary of the trust. If
the contractor applies these trust funds to purposes outside of the project,
such misapplication would be considered a diversion of trust funds under
Article 3-A, which carries both civil and criminal penalties.
When
payment to you is more than 30 days late, as a trust fund beneficiary you have
the right to demand an accounting of the trust, whereby the contractor must
provide you with a verified statement within ten days of your demand setting
forth the entries in their books and records regarding trust funds received and
receivable and trust funds paid and payable.
The contractor’s failure to keep such books and records or to provide you with an accounting of the trust would be presumptive evidence that it applied the trust funds for purposes other than the purpose of the trust.
Article 3-A of the Lien Law is a logical extension of your normal lien rights in New York. If the owner has paid its bill in good faith, the logical question then becomes, what has the contractor done with the money?
Welcome
New
Members (Go
Top)
5 Maxwell Drive, Suite 100
Clifton Park, NY 12065
(518) 373-7351; FAX (518)
373-7373
Contact: Paul Coluccio
1710 Erie Blvd.
Schenectady, NY 12308
(518) 372-8200; FAX (518) 372-9900
Contact: Ron Martin
2 Boxwood Close
Hopewell Junction, NY 12533
(845) 896-7423; FAX (845) 896-6679
Contacts: Don & Mary Ann Mesuda
CALENDAR OF EVENTS (Go Top)
November 5, 2005
Seminar: 2005 Electrical Code
Italian American Center, 8 am
November 10,
2005
Board of
Directors Meeting
Century House,
Latham, 5 pm
November 10,
2005
NESCA
Membership Meeting
Century House,
Latham, 6 pm
November 15,
2005
NESCA/GBC/ECA
Seminar
Notary Public
Building Industry
Center, 12 Noon
One of the most important member-only services NESCA offers is our Business Practices Interchange (BPI). The BPI allows members of NESCA to obtain accurate, first-hand information on the business and payment practices of general contractors, developers and owner-builders. In an era of slow payments, doing business with reputable companies has become more important than ever, and the NESCA BPI can help you do just that.
Once a year, members provide the NESCA office with the names of contractors they have done business with during the preceding twelve months. This information is then entered into NESCA’s database. Members seeking information on a particular contractor may then call the NESCA office and receive the names of other members who have recently done business with that company. By contacting fellow members directly, members receive solid, valuable, first-hand information on such things as payment practices, contract language, backcharges, change order administration and other information that helps to maximize their ability to make intelligent choices as to who they do business with. Try the NESCA BPI…….it works!
Member
Anniversaries (Go Top)
OC Iron Works, LLC – 5 Years
Brockway Mechanical Systems, Inc. – 10 Years
Patent Construction Systems – 10 Years