Vol 21, No. 6

(518) 869-9800

January 2003

 

Inside This Edition:  ESSA Adopts 2003 Legislative Program, President’s Message, Contractual Claim For Indemnification Not Permitted Where Contractor is Partially Responsible, Top Court Refuses To Expand Sub’s Liability in Thruway Crash, Welcome New Members, Social Security Administration Wage Base Changes for 2003, New Prompt Payment Law Becomes Effective January 14th, What Human Resource Records to Keep and for How Long, NLRB Raises Concern Over “Labor Neutrality” Law, OSHA Exceeds Inspection Targest for 2002 Fiscal, OGS Solicits Interest in Emergency Contracts, Tips to Avoid a Bad Check

 

 

 

 

 

ESSA ADOPTS 2003 LEGISLATIVE PROGRAM  (Go Top)

                The Empire State Subcontractors Association (ESSA) has adopted a legislative program for the 2003 session of the New York State Legislature.  Requiring that retainage on private projects be placed into an interest-bearing escrow account and reforming the strict liability provisions of sections 240/241 of the labor law continue to top the priority list. ESSA’s 2003 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.

Lien Law Technical Amendment – This legislation would correct an inconsistency in the lien law.  Several years ago ESSA amended section 18 of the lien law to extend the duration of public improvement liens from six months to one year.  Section 21 of the lien law still contains a reference to the old six month duration period.  This bill will make section 21 consistent with section 18 of the law.

 

President’s Message  (Go Top)

On December 12th, NESCA held its annual holiday meeting and reception at the Century House in Latham, a meeting attended by close to 200 members and their spouses.  The meeting was very enjoyable and proved to be both an entertaining and rewarding evening for all who attended.  Our Toys for Tots campaign yielded a van-load of toys – in addition to the $2,100 check we turned over to representatives of the Marine Corps.  Thank you to all who donated a toy for this worthy program.  Following dinner, everyone was surprised and entertained with an appearance by “Sadie the Bag Lady”.  Our entertainment along with 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:

·         AWESCO

·         Albany Interiors, Inc.

·         All-Lifts, Inc.

·         Breakell & Couch, P.C.

·         Burjon Construction Co., Ltd.

·         Terence J. Burke, Esq.

·         CNA Surety Corp.

·         Campito Plumbing & Heating, Inc.

·         Clemente Latham Concrete

·         Cristo Demolition, Inc.

·         Gomez Electrical Contractors, Inc.

·         KAMCO Supply Corp.

·         Maximum Security Products Corp.

·         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

·         Weather Guard Industries, Inc.

·         The Woodward Company

                I’d like to give a quick reminder to all members about two upcoming NESCA events.  First, after an 8-year hiatus, on February 15, 2003 NESCA will once again hold a Valentine Dinner Dance at the Century House.  We have a fantastic menu and great music and dancing lined up for the Dinner Dance, so I hope every marks February 15th on your calendars.  Flyers and registration forms for the Dinner Dance will be mailed out to all members in early January. 

Also, NESCA’s 18th Annual Frank Campito Car/Cash Giveaway will be held at Wolfert’s Roost Country Club on March 27, 2003.  Because we’ve scheduled the Dinner Dance for February, we’ve moved the car raffle to March.  As many of you know, this event is great fun and we give away many prizes including a terrific grand prize valued at $25,000!!  Tickets are on sale for $200 at the NESCA office and each ticket includes a very nice cocktail reception for two on March 27th.

                Finally, I encourage all members to make plans to attend NESCA’s first meeting of the new year, to be held on January 9, 2003 at the Century House.  Our speaker will be David Biggs with Ryan-Biggs Associates.  Mr. Biggs was a member of the ASCE-FEMA Building Performance Study team for the World Trade Center Disaster.  His presentation will address the activities of the team and its findings. 

 

James M. Elacqua

President


CONTRACTUAL CLAIM FOR INDEMNIFICATION NOT PERMITTED WHERE CONTRACTOR IS PARTIALLY RESPONSIBLE  (Go Top)

 

                On November 25, 2002, the Appellate Division, Second Department, issued a decision in Carriere v Whiting Turner Contracting et al. (2001 NY App Div Lexis 11420).  In this case, Whiting Turner Contracting was the contractor on a construction project who subcontracted with Westchester Acoustics, Ltd. for the erection of a plywood platform.  Westchester constructed the platform pursuant to the specifications provided by Whiting; however, these specifications violated 12 NYCRR 23-1.22 (b) (3) as the proscribed width of plywood was too narrow.  Thereafter, plaintiff fell through the platform and commenced an action against Whiting, who in turn commenced a third-party action against Westchester based upon an indemnification clause in the subcontract.  Following trial, the jury determined Whiting violated Labor Law §241(6) and apportioned liability by finding plaintiff 5% at fault, Westchester 25% at fault and Whiting 70% at fault.  However, the trial court, based upon the contractual indemnification provision, then held Westchester responsible for 95% of the damages award.

                On appeal, the Appellate Division, Second Department, reversed much of this decision that enforces the indemnification provision.  General Obligations Law §5-322.1 prohibits contractual indemnification where the beneficiary of the indemnification provision is responsible, in whole or in part, for the injury.  Here, the jury specifically determined that Whiting and Westchester acted in concert in negligently constructing the platform and apportioned liability therefore at 70% and 25%, respectively.  Thus, with Whiting’s negligence responsible “in part” for the accident, it is against public policy to enforce the indemnification provision.  Accordingly, Westchester’s liability for the jury award was reduced from 95% to 25%, representing its apportioned share of liability for the accident.

 

Terence J. Burke, Esq.

NESCA Legal Counsel

 

TOP COURT REFUSES TO EXPAND SUB’S LIABILITY IN THRUWAY CRASH  (Go Top)

                In a very important case for subcontractors statewide, the New York State Court of Appeals has refused to expand the limits of tort liability, holding that a subcontractor who had worked on a Thruway project owed no duty of care to the plaintiff, who was severely injured in an automobile accident years later.  The November 19th decision by the Court of Appeals affirmed an earlier decision of the Appellate Division.

                The case arose out of a 1992 accident on the New York State Thruway.  The plaintiff, a passenger in a car driven by his mother, sought to impose tort liability against Callanan Industries, Inc. and its subcontractor, San Juan Construction and Sales Company, for injuries suffered in the accident.     The project called for a guardrail of a certain length, but during construction the length of the guardrail was altered on site (shortened), and this change was approved by State inspectors.  While Callanan, the general contractor, settled with plaintiff before trial, San Juan did not settle and moved for summary judgment arguing that it owed no duty of care to the general public after the work was completed and accepted by the State.  The trial court denied San Juan’s motion, but on appeal, the Appellate Division reversed, ruling that San Juan owed no continuing duty to the public at large.

                The Empire State Subcontractors Association submitted an amicus brief with the Court of Appeals in support of the Appellate Division decision.  ESSA argued that if tort liability was imposed under the circumstances of the San Juan case, subcontractors would be liable in perpetuity to a limitless class of potential litigants.  Consequently, liability insurance, already expensive and scarce, would become cost prohibitive and virtually impossible to obtain.

                The Court of Appeals decided that under the contractual framework, San Juan never assumed the Thruway Authority’s common law duty to insure the installation of an adequately safe length of guardrail, nor were inspection responsibilities as to the proper length of guardrail contractually shifted to San Juan. 

                This decision represents a significant victory for subcontractors, who already face a hostile liability climate in New York State, by upholding limitations on a subcontractor’s general duty to the public.

 

WELCOME NEW MEMBERS  (Go Top)

Commercial Builder Arch. Magazine

15 Erie Court

Waterford, NY  12188

(518) 235-5161; Fax (518) 235-0182

Contacts:  Tracy Robinson, Tom Zayac

 

Darmstadt Overhead Doors, Inc.

168 Cornell Street

Kingston, NY 12401

(845) 331-0191; Fax (845) 331-0786

Contacts:  Ken Darmstadt, Jerry Every

 

Tim Duffek Contracting, Inc.

161 Loomis Road

Endicott, NY 13760

(607) 862-3346; Fax (607) 862-3327

Contact:  Tim Duffek

 

Sign Pro

5A Johnson Road

Latham, NY 12110

(518) 783-2048; Fax (518) 783-2052

Contacts:  Tom Boni, David Lucey

 

 

 

CALENDAR OF EVENTS

 

January 2, 2003

NESCA/GBC/ECA Seminar

STP Unit #1Begins – Leadership and Motivation

Building Industry Center, 6:00 pm

 

January 9, 2003

NESCA Membership Meeting

Century House, Latham, 6 pm

 

January 16, 2003
NESCA/GBC/ECA Seminar
Fall Protection & Scaffolds
Building Industry Center, 2 pm
 
January 21, 2003

NESCA/GBC/ECA Seminar

Hot Legal Issues in Construction

Building Industry Center, 6 pm

 

 

.

Get Your Ticket  for NESCA’s 18th Annual

Frank Campito Memorial Car/Cash Giveaway

 

1st Prize Your Choice of:

 

2003 Chrysler LX Convertible

or

Rinker 212 Captiva Bowrider Boat

or

Luxury Vacation for Two at Ireland’s K Club Plus $10,000 Cash

or

$25,000 Cash

 

Tickets Available at the NESCA Office

$200.00 Per Ticket

 

Call (518) 869-9800

 

SOCIAL SECURITY ADMINISTRATION WAGE BASE CHANGES FOR 2003  (Go Top)

 

The Social Security Administration (SSA) has announced cost-of-living adjustments for 2003.

The taxable wage base increases to $87,000, up from the 2002 base of $84,900.  The Social Security and Medicare tax rate will remain at the current 7.65 percent for employers and for employees for a combined rate of 15.3 percent.

 

 

New Prompt Payment Law Becomes Effective January 14th  (Go Top)

                NESCA members are reminded that the new commercial construction prompt payment law becomes effective for contracts (and subcontracts) entered into on or after January 14, 2003.  This new law applies to private commercial construction projects where the total cost exceeds $250,000.  Exempted from the law are all public works projects and most private residential projects. The law provides contractors, subcontractors and suppliers with several new prompt payment protections such as statutory interest penalties and the right to stop work for non-payment.  NESCA members were recently mailed a series of sample letters to use in connection with the new prompt payment law.   Additional copies of these letters may be obtained by calling the NESCA office.

 

Troy Boiler Works was the member pulled in the monthly $100 attendance incentive drawing at the December 12th membership meeting.  Sorry you weren’t there!  Better luck next time!


 

 

WHAT HUMAN RESOURCE RECORDS TO KEEP AND FOR HOW LONG  (Go Top)

Federal and state guidelines for the retention of personnel-related documents are often confusing, and in some cases contradicting.  The following chart includes the more common personnel records retained by businesses in New York State, and may be used as a guide to assist companies trying to decide how long to keep their personnel records.

 

RECORD TO BE KEPT       GOVERNING LAW                                 TIME PERIOD

 

Affirmative Action Documents               Executive Order 11246                                                Not specified, at least                                                                                                                                                   3 years recommended

 

Application for Employment                  Age Discrimination in Employment Act                          1 year

                                                            Civil Rights Act, Americans with Disabilities Act

 

I-9 Forms                                             Immigration Reform and Control Act                             3 years after worker is

                                                                                                                                                hired or 1 year after                                                                                                                                                      termination,

whichever is longer

 

Job Advertisements                              Age Discrimination in Employment Act                          1 year

 

Job Orders to                                       Age Discrimination in Employment Act                          1 year

Employment Agencies

 

On-the-job Injury Records                   Occupational Safety & Health Act                                5 years

 

Payroll Records                                    NYS Labor Law                                                          6 years

 

Records of Employees                          Occupational Safety & Heath Act                                 30 years

Exposure to Toxic Substances

 

Records of Employees                          New York Right-to-Know Law                                    40 years

who Handle Toxic Substances

 

Resumes and Job Inquiries                    Age Discrimination in Employment Act                          1 year

 

Terminated Employee Files                   Fair Labor Standards Act                                             3 years

 

Time Cards / Time Sheets                     Fair Labor Standards Act                                             3 years

 

Tests, employment & aptitude               Age Discrimination in Employment Act                          1 year

 

Physical Exams                                     Age Discrimination in Employment Act                          1 year

                       

Benefit Plan Records                            Employee Retirement Income Security Act                    6 years

 

FMLA leave information                       Family & Medical Leave Act                                        3 years

 

Employer’s Report of Injury (C-2)        NYS Workers’ Compensation Board                           18 years

 

 

- The Business Council of NYS

NLRB RAISES CONCERN OVER “LABOR NEUTRALITY” LAW  (Go Top)

                The National Labor Relations Board (NLRB) has expressed “serious concerns” about a new state law that muzzles employers during union organizing drives. 

                In an October 30, 2002 letter to State Labor Commissioner Linda Angello, NLRB attorney Margery Lieber stated “It appears that the labor neutrality law will effectively regulate conduct that is intended by Congress to be free from governmental interference” and that “this law may be preempted by the National Labor Relations Act.”

                The “Labor Neutrality” bill was signed into law by Governor Pataki on September 30, 2002.  The law is designed to keep taxpayer funds from being used to counter union organizing efforts.  Specifically, the law prohibits the use of state funds and facilities to assist, promote or deter union organizing, and requires employers to keep records of the expenditures of state funds sufficient to show that state funds have not been utilized in this manner.

                The Labor Neutrality law had been opposed by the Business Council of NYS and other business organizations, among other reasons, because it effectively limits employers’ First Amendment rights to free speech and undermines the National Labor Relations Act.

                In the letter, Lieber says the new law would expose employers to burdensome record keeping if they choose to both accept state dollars and offer an opinion during a union drive.  Violations of the law carry a fine of up to $1,000, or three times the amount of money the employer unlawfully used.

                A comparable law in California is being challenged in court by the U.S. Chamber of Commerce.  It is likely the New York law will be similarly contested.

 

OSHA EXCEEDS INSPECTION TARGETS FOR 2002 FISCAL  (Go Top)  

                U.S. Secretary of Labor Elaine L. Chao has announced that the Occupational Safety and Health Administration (OSHA) has exceeded its 2002 fiscal year inspection goals and increased both the number of serious violations and the penalties assessed for them.  According to Secretary Chao, the number of inspections of workplaces are up, and OSHA is more effectively targeting where the hazards exist.

                During fiscal year 2002, which ended on September 30, 2002, the agency inspected 37,493 workplaces in the United States.  That is 1,093 inspections more than the fiscal year target of 36,400 inspections.  In addition, the average penalty for serious violations rose from $930 in FY-2001 to $977 in FY-2002.  Serious violations of the OSHA standards accounted for 70% of all violations found, which indicates that OSHA is directing its efforts to the establishments most in need of enforcement action.

                The top five most frequently cited OSHA standards are also in the most hazardous industries and areas with the most potential for serious illness, injury or death: scaffolding, hazard communications, fall protection, respiratory protection, and lockout/tagout.

 

OGS SOLICITS INTEREST IN EMERGENCY CONTRACTS  (Go Top)

                Last year, the NYS Office of General Services Design and Construction (D&C) Group awarded more than 600 emergency contracts with an average contract value of approximately $90,000.  Emergency contracts may be awarded for as much as $200,000.  Bids for emergency contracts are taken over the phone, require an immediate response and performance of the work.  Emergency contracts are of short duration and are usually awarded on a cost plus basis.

                The Public Buildings Law requires D&C to establish a list of contractors who are interested in bidding on emergency work by trade interest and geographical area.  Bids are solicited from this list on a rotational basis.

                Members of NESCA who would like to be added to the OGS emergency contract bidders list must complete and submit the following:

Ø       Emergency Contract Information Form

Ø       Certificate of Contracting Experience

Ø       New York State Uniform Contracting Questionnaire

Ø       Workers’ Comp and Disability Forms

                These forms (in PDF format) may be downloaded from the OGS website at www.ogs.state.ny.us.  The completed package should be sent to:

NYS Office of General Services

Design and Construction Group

Bureau of Contract Awards

Room 3535, 35th Floor, Corning Tower

Empire State Plaza

Albany, New York 12242

 

TIPS TO AVOID A BAD CHECK  (Go Top)

 

From the NYS Attorney General’s Office

 

·         Be sure the address and phone number appear on the check.

·         Do not accept checks with post office box numbers or other temporary addresses.

·         Be extra careful when accepting checks from out-of-town banks and non/low numbered checks.

·         Do not accept third party checks.

·         Avoid checks with crossed out or rewritten marks.

·         Do not accept checks that are post-dated.

·         Accept only proper and valid identification.

·         Call the bank where the account is held, especially when the check is for a large amount.  The bank can validate the account and the amount of the check.

·         Remember, you do not have to accept a check.

·         Do not give out cash refunds until the check has cleared.

What to do if a check “bounces” back to you….

·         Contact the person who wrote the check and ask them to reimburse you for the insufficient funds.

·         If you still do not receive the money, consult your bank and have them issue a “Certificate of Protest”.

·         Contact your local District Attorney’s Office and they may be able to help you file a complaint.