Requiring that retainage on private projects be placed into an interest-bearing escrow account, and reforming the strict liability provisions of New York’s “Safe Place to Work Law”, top the list of legislative priorities recently adopted by the Empire State Subcontractors Association (ESSA) for the 2002 legislative session. The Board of Directors of NESCA’s state affiliate approved the legislative program at an October 3^rd meeting of the Board.

ESSA’s 2002 program consists of a variety of proposals intended to protect the rights of construction industry subcontractors and suppliers, as follows:

Retainage held in interest-bearing escrow account - This legislation would require that retainage on public and private projects in NYS be deposited into an interest-bearing escrow account for the benefit of those from which retainage is being held. Several other states already have such escrow account laws.

Reform of 240/241 Labor Law – This legislation would provide much-needed relief to NYS contractors and subcontractors who must currently cope with an absolute liability standard (no defense) when sued for gravity-related injuries. The current law has resulted in runaway litigation which has had a huge cost and insurance impact on the construction industry since injured workers don’t have to prove negligence. ESSA will join others in seeking amendments to this onerous and costly law.

Retainage Reduction - This legislation would require a 50% reduction in retainage on all public works projects upon completion of 50% of the project. Retainage held on state and local public works projects can amount to a significant amount of money for many subcontractors. This bill would get a large portion of the money held as retainage by the public owner into the pockets of subcontractors sooner than it now is.

Bid Listing/Standard Subcontract/Direct Pay - This is “back burner” legislation only intended to be pushed if it appears the Wicks Law is in jeopardy. It would require bid listing of subcontracts in excess of $25,000, a standard form subcontract, and direct payment to listed subcontractors by public owners.

Payment Bonds - This legislation would require a payment bond be posted on certain “hybrid” projects in New York State such as those where a private owner leases property from a public entity and then constructs a building on this property for the benefit of the private owner. Currently, subcontractors and suppliers have no lien rights on these hybrid projects. This bill would provide payment bond protection to subs and suppliers.

Hold Harmless - 3rd Parties - This legislation would close a long-standing loophole in the general obligations law by prohibiting hold harmless clauses which require subcontractors to indemnify the general contractor or the general contractor to indemnify the owner, for damages caused by the negligence of 3rd parties.

Delay Damages - This legislation would impact on all public works projects in New York State by allowing contractors and subcontractors to recover delay damages where such delay is for an unreasonable period of time and is the fault or responsibility of the public owner.

Bond to discharge a lien - Currently in New York State, undertakings to discharge liens, which are usually in the form of a bond, are required to be set by a judge with or without a stipulated agreement between the surety providing the bond and the lienor. The time and expense of this procedure can be eliminated by statutorily setting the amount of the undertaking at given percentage of the lien amount. This legislation is modeled after the New Jersey law which sets the amount of the undertaking at 110% of the amount of the lien.

PRESIDENT’S MESSAGE Go Top

NESCA held its annual holiday meeting and reception on December 13th at the Century House in Latham, a meeting attended by approximately 200 members and their spouses. This event proved to be both an entertaining and rewarding evening for all who attended. Our Toys for Tots campaign yielded a van-load of toys -- not to mention the $1,600 check we turned over to representatives of the Marine Corps. Thank you to all who donated a toy for this worthy program. A special thank you to Rose & Kiernan who donated an additional $150 and to Jim Stants who won the 50/50 drawing and donated his $454 winnings to Toys for Tots. After dinner our members were entertained by comedian Artie Treffiletti. Artie’s appearance, along with a 3-hour open bar and a fantastic menu, were co-sponsored by NESCA’s Board of Directors and Past Presidents. I’d like to thank the following companies for their generosity in co-sponsoring this meeting:

· AFSCO Fence Supply Co., Inc.

· AWESCO

· Albany Interiors, Inc.

· Albany Ladder Co.

· All-Lifts, Inc.

· Associated Construction, Inc.

· Breakell & Couch, P.C.

· Burjon Construction Co., Ltd.

· Terence J. Burke, Esq.

· CNA Surety Corp.

· Campito Plumbing & Heating, Inc.

· Cristo Demolition, Inc.

· A.J. Eckert Co., Inc.

· Gomez Electrical Contractors, Inc.

· KAMCO Supply Corp.

· Maximum Security Products Corp.

· McNamee Lochner Titus Williams

· Precision Glass & Aluminum, Inc.

· Rose & Kiernan, Inc.

· S & O Construction Services, Inc.

· Schenectady Steel Co., Inc.

· Stants Combustion Associates, Inc.

· Stone Bridge Iron & Steel, Inc.

· Teal, Becker & Chiaramonte CPAs

· Valley Equipment Co., Inc.

· John V. Warren, Inc.

· Weather Guard Industries, Inc.

· The Woodward Company

On December 1^st & 2^nd, I attended a meeting in Las Vegas along with Campito Plumbing & Heating’s Roger Jones and NESCA executive director Mike Misenhimer. The purpose of the meeting was to bring a half dozen former ASA chapters together to network and trade ideas on legislative initiatives, member benefits and services, and other association activities. We also discussed the advantages of having our six independent organizations communicate on a more regular basis and generally maintain closer ties. In addition to NESCA, the groups involved included subcontractor organizations located in Chicago, New York City, south Florida, Tuscon and Boston. All who attending this meeting left believing it was very productive and felt there are advantages to keeping in closer contact, particularly since the organizations involved are all of similar size and structure. There didn’t seem to be any interest in creating an overly formal structure for doing this, but everyone agreed that increasing communication and meeting at least once per year would be a worthwhile endeavor.

I encourage all members to make plans to attend NESCA’s first meeting of the new year, to be held on January 10, 2002 at the Century House. Our speaker will be Tim McGrath with the Dormitory Authority. We’ve asked Mr. McGrath to make a presentation on upcoming DASNY projects and also to discuss DASNY’s project closeout procedures. This meeting will be NESCA’s annual joint meeting with the National Association of Women in Construction (NAWIC).

Finally, I remind members NESCA’s 17th Annual Car/Cash Giveaway will be held on February 21^st at the Century House. Over $35,000 in prizes will be awarded including our grand prize, which will be the winner’s choice of a variety of prize packages or $25,000 cash! Tickets are on sale at the NESCA office for $200.

Bob Kind

President

INVOICE DATES DO NOT COMMENCE 120 DAY NOTICE REQUIREMENT UNDER §137 OF THE STATE FINANCE LAW Go Top

In a recent decision of the Supreme Court, Appellate Division, Third Department, dated October 18, 2001 (Specialty Products & Insulation Company v. St. Paul Fire & Marine Insurance Company), the Appellate Division, in reversing an Order of the Supreme Court in Broome County, rendered a decision interpreting the notice provisions of §137 of the New York State Finance Law. Section 137 in part, provides “Every person who has furnished labor or material to the contractor or to a subcontractor of a contractor, in the prosecution of the work provided for in the contract and who has not been paid in full therefore…..shall have the right to sue on such payment bond in his own name….; provided, however, that a person having a direct contractual relationship with a subcontractor of the contractor furnishing the payment bond but no contractual relationship expressed or implied with such contractor shall not have a right of action upon the bond unless he shall have given written notice to such contractor within 120 days from the date on which the last of the labor was performed or the last of the material was furnished.

The plaintiff had furnished material for the project and submitted eight separate invoices. The defendant had asserted as a defense that the plaintiff furnished the material on an open account and that each invoice constituted a separate contract and that the plaintiff failed to give timely notice (within 120 days in the case of each invoice) of its claim to the contractor pursuant to the State Finance Law, §137. The Appellate Court, on review and reversing the Supreme Court’s determination held that the clear language of the State Finance Law, §137(3) provides that the 120 notice period commences on the date of the furnishing of the last material on the project and that each separate invoice does not constitute the basis of a separate contract. The separate contract interpretation espoused by defendant would lead to an absurd result – a flood of notices to general contractors and each based upon a single delivery by a single supplier of labor and material.

Terence J. Burke, Esq.

NESCA Legal Counsel

APPRENTICESHIP AUTHORIZATION BILL DELIVERED TO GOVERNOR Go Top

Legislation which would authorize state agencies, municipalities and school districts to include language requiring apprenticeship programs on public work contracts has been sent to Governor Pataki for his consideration.

The bill, S5355, was passed in both the Senate and Assembly in June, 2001 but only delivered to the Governor on December 7^th. As of the writing of this Newsletter, Governor Pataki had not yet signed nor vetoed the bill.

Sponsored by Senator Nicholas Spano and Assemblywomen Catherine Nolan, the bill authorizes public owners to “…require that any contractors and subcontractors have, prior to entering into such a contract, apprenticeship agreements appropriate for the type and scope of work to be performed, that have been registered with, and approved by” the Department of Labor. The sponsors assert that “There is a long and productive history of participation between labor and management for the training of skilled craft workers in our state”, and that the bill will “enhance the effort to promote apprenticeship training.” If signed by the Governor, the legislation would go into effect immediately.

Last year, Governor Pataki vetoed a similar bill which would have allowed public authorities to require approved apprenticeship programs as a condition of contract. The Governor had expressed concern that that bill did not provide guidance as to the preferred content of an apprenticeship program and failed to provide direction with respect to the contracts for which an apprenticeship requirement may be appropriate.

This year’s legislation is even broader in that it not only authorizes public authorities to require apprenticeship programs, but allows virtually all “governmental entities”, including state agencies, municipalities and school districts, to require such training programs.

Opponents of the bill believe its provisions will result in blocking otherwise qualified and competent contractors and subcontractors from bidding public work. Historically, the Department of Labor has been reluctant to approve new apprenticeship program applications where an existing apprenticeship program is in place in a given locality. As a practical matter it is very difficult for a small subcontractor, acting on its own, to establish an apprenticeship program which meets all DOL requirements.

WELCOME NEW MEMBERS Go Top

Alexis Mechanical, Inc.

313 Ushers Road

Ballston Lake, NY 12019

(518) 877-5040; Fax (518) 877-0580

Contacts: Frank Alessandrini

William Barton

Hydro-Tech Reclamation, Inc.

8031 Main Street

Troy, NY 12180

(518) 274-4428; Fax (518) 274-4428

Contacts: Dean VanAlstyne

Roger McMillen

Precision Directional Drilling, Inc.

P.O. Box 384

East Greenbush, NY 12061

(518) 286-7576; Fax (518) 286-7678

Contacts: Nicholas Teliska

Morris Warner

RLA Construction, Inc.

184 Snyderville Road

Elizaville, NY 12823

(845) 756-3304; Fax (845) 756-3214

Contacts: Rick Aragona

Melanie Aragona

NESCA TURNS OVER $1,600 TO TOYS FOR TOTS Go Top

At NESCA’s December 13^th membership meeting, President Bob Kind presented representatives of the U.S. Marine Corps with a check for $1,600 as a donation toward the Marines’ annual Toys for Tots campaign. The money donated by NESCA was raised at the association’s annual Trade Show, which was held on October 11^th. In addition to the check, many members who attended the meeting contributed toys of their own.

OGS ANNOUNCES CHANGE TO VISITOR PARKING Go Top

Ken Ringler, Commissioner of the New York State Office of General Services, has announced that effective December 3, 2001, all visitors to the Empire State Plaza will be required to park in the visitors lot, or “V” lot, which was formerly named the P3 North lot. These measures are being implemented as part of the new security program at the Plaza. NESCA members who submit bids or attend bid openings at OGS are advised that the P-I North and P-3 South lots will no longer be open to visitors.

OSHA TO DELAY ENFORCEMENT OF RECORDKEEPING RULE Go Top

The Occupational Safety and Health Administration (OSHA) has agreed not to cite employers for violations of its new recordkeeping rule for the first 120 days of 2002. The agreement was part of a settlement OSHA reached with the National Association of Manufacturers (NAM), which had filed a lawsuit challenging the agency’s recordkeeping rule.

A key provision in the settlement is the agreement that OSHA compliance officers will focus initially on compliance assistance, rather than enforcement. As a result, no citations will be issued for violations of the recordkeeping rule during the first 120 days after January 1, 2002, provided employers strive to meet their recordkeeping obligations and agree to make corrections necessary to bring their records into compliance.

One of the principal issues in NAM’s lawsuit was what constitutes a work-related injury. In the settlement, OSHA explains that a case is work-related if, and only if, a work event or exposure is a discernible cause of the injury or illness, or if a significant aggravation to a pre-existing condition and none of the rule’s exceptions to work-relatedness applies. Employers must determine whether it is more likely than not that work events or exposures caused or contributed to the injury or illness, or significantly aggravated a pre-existing condition. Should an employer decide a case is not work-related, and OSHA subsequently issues a citation for failure to record, the burden of proof would then be on OSHA to show the injury or illness was work-related.

The language specified in the settlement will be incorporated into the compliance directive which guides OSHA’s compliance officers in enforcing the recordkeeping rule and ensures consistent procedures are followed.

OSHA revised its recordkeeping requirements last January and the rule is effective on January 1, 2002; however, OSHA previously announced that three provisions of the rule will be delayed for one year. They are the criteria for recording work-related hearing loss; the rule’s definition of “musculoskeletal disorder” (MSD); and the requirement that employers check the MSD column on the OSHA log.

OGS TO ACCEPT CREDIT CARDS Go Top

Kenneth Ringler, Jr., Commissioner of the New York State Office of General Services (OGS) has announced that New York State will now be accepting credit cards for many of its transactions that have in the past required cash or check payment. Contracts with Global Payments and American Express have been established to allow state agencies to accept credit cards as payment for transactions that include permits, fees, licenses, plans and specifications, and other related transactions. Under this program, the State will be able to accept popularly used cards such as Mastercard, Visa, American Express and others.

This contract is a direct result of legislation passed in 1999 that called for the development of a centralized electronic commerce solution for all state agencies that would make conducting business and interacting with New York State government more convenient.

PREVAILING WAGE SUPPLEMENTS SHOULD BE ANNUALIZED OR PAID IN CASH UNTIL FURTHER NOTICE Go Top

NESCA members who engage in public works construction are advised to continue to either “annualize” all prevailing wage supplements or pay such supplements in cash until further notice. Payment by employers of benefits into supplement programs without annualizing the payments could subject those employers to significant underpayment liability.

Members may recall that in April 1999, the Department of Labor (DOL) issued a notice stating that it would not allow credit for payment used “to obtain benefits for a period of time during which the worker was engaged in a private project” -- referred to as “annualization of benefits”. In addition such benefits could not be used to pay for other individuals (“pooling”). Supplements are annualized by dividing the total number of prevailing rate hours by the total hours of all plan participants to arrive at a percent which will be applied to the actual supplement contribution in order to determine the amount of credit a contractor will receive toward meeting his prevailing supplement contribution.

The 1999 notice was challenged in court, and the Department of Labor ultimately won the lawsuit. In the meantime, however, NESCA and other construction industry organizations have urged DOL to promulgate new prevailing wage supplement regulations which would provide contractors and subcontractors with some flexibility to comply with the law. At a December 5^th meeting with Labor Commissioner Linda Angelo, the Commissioner confirmed to NESCA that it is the intention of the Department to issue new regulations, probably in early 2002.

Until such time as new regulations are promulgated which may provide employers with additional compliance options, contractors and subcontractors will continue to have only two choices available: (1) annualize all prevailing wage supplement contributions or (2) pay such supplements in cash. NESCA will keep members advised as to the development of the new regulations.

INSURANCE ASSOCIATION ANALYSIS CONCLUDES “SCAFFOLD ACT” IS VERY COSTLY Go Top

A recent analysis by the American Insurance Association on the impact of New York’s “Scaffold Act” (Labor Law §240 & 241) concludes that this law adds significant costs to construction industry general liability claim losses. The analysis, developed with loss cost data obtained from the Insurance Services Office (ISO) compared data from New York with seven other states, and examined thirteen risk classes presumed to involve high potential exposure to claims brought under §240/241. For New York risks (located outside NYC) the average difference in loss costs is 232%. In New York City the average difference in loss costs is even greater – a whopping 500%. The most extreme difference is in structural steel erection where the loss costs in New York City are 745% higher than in the other states examined.

GOVERNOR VETOES PENALTY INCREASE FOR PREVAILING WAGE VIOLATIONS Go Top

On November 28^th, Governor Pataki vetoed legislation which would have, among other things, increased penalties for prevailing wage violations.

The bill (A9191) would have amended the Labor Law and the State Finance Law with regard to prevailing wages in three respects. First, the bill would have increased penalties that could be imposed against public works contractors and subcontractors for prevailing wage and payroll recordkeeping violations. Second, the bill would have increased the number of criminal offenses which qualify to have a public works contractor debarred. And finally, it would have expanded the time under which a payment bond is available for the recovery of unpaid prevailing wages.

In his veto message, the Governor explained he disapproved the bill for two reasons. First, he believes the provision related to the expansion of the ability of employees to recover unpaid prevailing wages from payment bonds is flawed. This provision would have authorized an employee to recover against the contractor, subcontractor or issuer of a payment bond for unpaid wages within one year of the date of an order by either the Commissioner of Labor or the appropriate local fiscal officer that there has been an underpayment of wages, or within one year of review of the order in an Article 78 proceeding. Under current law, an employee may recover against the bond within one year of the date of the last underpayment of wages. Thus, this provision could have potentially rendered contractors and subcontractors liable for payments many years after the work had been completed and would have made it even more difficult for contractors and subcontractors to obtain surety bonds for prevailing wage projects.

The Governor’s second objection to the bill involved the expanded criminal provisions, which would have taken effect on January 1, 2002. He expressed concern that absent extraordinary circumstances, statutes enacting new criminal offenses generally take effect the succeeding November 1^st so as to give sufficient advance notice of the new crimes.

MEMBERSHIP COMMITTEE ANNOUNCES MEMBER GET A MEMBER CAMPAIGN Go Top

NESCA’s membership committee has launched its 2002 membership recruitment campaign, a program that will reward each and every member who recruits and sponsors a new member into the association. The “Member Get a Member” campaign is designed to get as many NESCA members involved in recruiting a new member as possible – and then rewarding you for your efforts.

Membership Committee Chairman Mark Woodward outlined the new membership campaign to the Board of Directors on December 6^th, and explained that NESCA’s strength and ability to improve business conditions for all subcontractors and suppliers has always been vitally dependent upon having as many subs and suppliers “on board” as possible. If every member recruited just one subcontractor or supplier per year, NESCA would have the strength in numbers and the resources to accomplish even more.

To kick off the Member Get a Member campaign, the membership committee simply requests that all members provide the name, address and phone and fax numbers of at least one non-member subcontractor or supplier to the NESCA office. Enclosed with this Newsletter is a form that can be used for this purpose. You will be listed as the sponsor for each prospect you provide. The NESCA office will mail an information packet to your prospects and will work with you to recruit them as a new member of NESCA.

Members will also be encouraged to bring your prospects to a future NESCA membership meeting. As an incentive, all prospects that attend a meeting will receive dinner free of charge, and the sponsors who bring a prospect to a meeting will receive 10 free 50/50 tickets.

For every subcontractor or supplier you sponsor as a new member of NESCA, the Committee will reward you $50 cash! In addition, each month sponsors who have recruited a new member that particular month will be eligible for a special $100 drawing to be held at that month’s membership meeting.

Members are reminded that NESCA is a full-service organization committed to serving the needs of commercial, industrial and institutional subcontractors, specialty contractors and material suppliers located in the Capital District, Hudson Valley, North Country and Binghamton areas. NESCA concentrates exclusively on the payment and other business issues commonly affecting all specialty trade subcontractors and material suppliers. All members are encouraged to participate in the Member Get a Member campaign.