Vol 18, No. 12 (518) 869-9800 June 2000
Inside this edition: NESCA Website Unveiled* President's Message * Labor Law Section 241(8) * New Members * General Liability Premiums
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NESCA WEBSITE UNVEILED (Go Top)
The Northeastern Subcontractors Association has unveiled its new website, an initiative intended to provide owners, architects, engineers and general contractors with instant access to qualified subcontractors and suppliers located in northeastern New York State. NESCA's website address is www.nesca.org. The NESCA website will not only provide members with a quick and convenient avenue to retrieve important and useful information, but more importantly, will serve as a marketing vehicle for NESCA members. As more and more subcontractors and suppliers are discovering, general contractors are turning to the Web not only to find good, qualified subcontractors and suppliers, but also to manage their projects via the Internet. Web-enabled project management is gaining momentum and will eventually change how the construction industry does business. The advantages of managing projects on the Internet are numerous, with most pegged to saving time and increasing efficiency. Information can be distributed more rapidly among owners, designers, contractors, subcontractors and suppliers, with turnaround times being drastically decreased. The NESCA website was intentionally constructed to be uncomplicated and easily navigable. In addition to containing general information about NESCA and its services, the site contains: Calendar of Events Board of Directors List Newsletter Archive Bulletin Board Full Membership Roster With Links to Member Sites Resource Links to Important State & Federal Agencies NESCA will soon be sending letters to owners, general contractors and others introducing them to the NESCA Website, and encouraging them to utilize the site when looking for subs and suppliers in northeastern New York. Members who have not yet provided NESCA with your web and email addresses should contact Rachel at the NESCA office with this information.
It is my great pleasure to have served as NESCA's president during our 1999-2000 fiscal year. In this capacity, my appreciation for the tremendous value of membership in our organization has been expanded substantially. All members share a common dedication to free enterprise, innovation and success in the construction industry. However, we also face roadblocks along the path to making our businesses successful, roadblocks that individually would be impossible to remove. And that's where NESCA comes in. By throwing the weight of over 400 companies behind an issue, NESCA can work on solutions to many of the problems we face. This past year has been another successful one for NESCA, as measured by legislative advocacy, government relations accomplishments, educational initiatives taken, additional membership benefits unveiled, and a continued high level of service to our members. NESCA continues to be the only proactive force within the construction industry which works exclusively in the best interests of northeastern New York subcontractors and suppliers. NESCA and our state affiliate, the Empire State Subcontractors Association, continued to advance our legislative program of six bills, all which would significantly benefit our membership. Our bill which would reduce retainage by 50% at 50% of project completion has shown some movement and was recently reported out of the Assembly Local Governments Committee to the Ways & Means Committee. Our lobbyist, Terry Burke, has been working to advance this bill in the Senate as well. NESCA also engaged in efforts this year to provide members with much needed administrative guidance from both the Department of Labor and the Department of Taxation and Finance. After working with the Labor Department for the better part of a year, in April DOL released a publication entitled "New York State Prevailing Rate Guidance Outline". This document will be a handy prevailing wage reference tool for all members who perform public works construction. NESCA also convinced the State Department of Taxation & Finance to begin work on a "Sales Tax Guide for the Construction Industry" to help members navigate through the many confusing sales tax requirements you face every day. As of this writing, the first draft of this publication has been completed and is being reviewed within the Department. I am hopeful this document will be finalized and available to members soon. NESCA also introduced several new initiatives and member services this year, including the new NESCA website found at www.nesca.org. The website will be a great new marketing tool for members. In addition, we unveiled the new group Employment Practices Liability Insurance Program administer by The Allied Group of Companies. This program offers members EPL insurance at up to half the normal cost of such coverage. Finally, NESCA's Board of Directors authorized the establishment of the NESCA Legal Defense Fund for the purpose of pursuing the common rights of subcontractors and suppliers. The Legal Defense Fund will allow the association to compliment its long-standing legislative efforts with new initiatives in the courts. In short, it's been another great year for NESCA! I very much appreciate the hard work and dedication of my fellow officers, the Board of Directors, and the many members who served on NESCA's committees. As the beginning of our new fiscal year approaches, I urge you to keep NESCA's many accomplishments in mind and continue your active support of the association through the prompt payment of your 2000-2001 membership dues. I thank you for the opportunity to serve as president this past year.
Brian B. Carmer President
LABOR LAW SECTION 241(8) DOES NOT CREATE A SEPARATE CAUSE OF ACTION FOR CONSTRUCTION SITE INJURY (Go Top)
The New York State Supreme Court, Appellate Division, Third Department recently held that a violation of safety regulations which predated Labor Law Section 241(8) (authorizing the adoption of safety rules) could not support a cause of action under the Labor Law. LaClair v. Shelly Electric, Inc., 705 N.Y.S.2d 106 (3d Dept.2000). In LaClair v. Shelly Electric, Inc., plaintiff David LaClair ("LaClair") sued his employer, Wastestream Management, Inc. ("WSM") and Shelly Electric, Inc. ("Shelly"), a contractor of WSM, for injuries LaClair sustained at the site. In December 1993, WSM operated a waste management facility and employed LaClair as a truck driver. On WSM's site was an underground access pit holding machinery that ran a truck scale used to weigh trucks hauling waste to the WSM facility. WSM hired Shelly to install electrical service to the pit. In the course of Shelly's work, a steel plate that covered access to the pit was removed and covered by a sheet of insulation. LaClair, while walking across the parking lot, fell into the pit, sustaining injuries for which he sued the defendants. The lower court granted defendant's cross-motion for summary judgment. The Appellate Division affirmed, first noting that because LaClair was not engaged in any "construction, excavation or demolition work" at the time of his injury, he was not engaged in activity protected under Labor Law Section 241(6) and therefore, the owner and contractor could not be held to the strict liability standard of the Labor Law provision. In this case, walking across the parking area did not constitute "involvement" in the construction work at the site. The Court also denied the plaintiff relief under Labor Law Section 241(8), which provides, in pertinent part:
The Commissioner....shall promulgate rules designed for the purpose of providing for the reasonable and adequate protection and safety of persons passing by all areas, buildings or structures in which construction, excavation or demolition work is being performed, and the owners and contractors and their agents for such work.....shall comply therewith......
The Court, questioning whether Labor Law Section 241(8) was even intended to create a cause of action, stated that there are no reported cases interpreting this provision of the Labor Law. Reviewing the statute's legislative history, the Court noted that the addition of subdivision (8) to Section 241 of the Labor Law "was to protect the public by the enactment of safety regulations." LaClair did not establish any violation of any law made pursuant to Labor Law Section 241(8), and therefore, defendants could not be held liable thereunder. LaClair attempted to rely on sections of the Industrial Code to prove liability on the part of the defendants, but the Court held that such provisions predated the enactment of Labor Law Section 241(8), and therefore, they could not have been promulgated under the current Labor Law. In closing, the Court noted that "nonworkers [like LaClair in this case] are not 'entitled to the protection' afforded by the 'flat and unvarying duty' imposed by the Labor Law." In conclusion, an individual injured on a work site should not rely solely on Labor law Section 241(8) for recovery against an owner or contractor for his injuries.
Terence J. Burke NESCA Legal Counsel
Admar Supply 27 Canal Road Albany, NY 12204 (518) 427-5000; FAX (518) 427-3903 Contact: Robert Cox
EMF P.O. Box 173, 950 Broadway Thornwood, NY 10594 (914) 747-1007; FAX (914) 747-1054 Contact: Walter Greenwood
Empire Air Specialties, Inc. 40 Kraft Avenue Albany, NY 12205 (518) 782-7710; FAX (518) 786-3103 Contact: Robert Miner
Recovery Management Systems 194-A Exchange Street Albany, NY 12205 (518) 459-6186; FAX (518) 448-6411 Contact: Michael Bates
J.E. Sawyer & Co., Inc. 776B Watervliet-Shaker Road Latham, NY 12110 (518) 783-5728; FAX (518) 786-1281 Contact: Bill Gleason
GENERAL LIABILITY PREMIUMS ON THE RISE (Go Top)
by Judy Tomlinson, Rose & Kiernan, Inc.
In recent years, general liability insurance premiums have been relatively stable and large limits have been available. Unfortunately for subcontractors, in the third quarter of 1999, this began to change as insurers tightened underwriting standards and sought premium increases. So just what are we seeing in today's market? In a nutshell, the major changes are: Double digit increases in General Liability premiums. Insurers requiring that they write both General Liability and Workers' Compensation. More conservative in pricing and payment terms. An increased emphasis on written contracts which provide primary additional insured status and hold harmless agreements. More restrictions on certain classifications such as carpentry, masonry and the amount of subcontracted work. Higher liability limits are no longer offered, or are offered at a much higher cost. This is happening due to two basic reasons. First, intense competition in the insurance industry over the last several years had resulted in reduced rates and premiums. Insurers have struggled to maintain adequate returns to stockholders, resulting in negative earnings to some major carriers. The second reason involves the New York State Labor Law and recent changes to the workers' compensation law. Prior to September 1996, under NYS law an injured worker could: 1) Collect workers' compensation benefits; 2) Seek additional damages from an owner or general contractor; and, 3) Seek recovery under the Employers Liability section of the employers workers' compensation policy. In 1996 a reform bill was passed with the intention of "clarifying and restoring the 'exclusive remedy' provisions" of workers' compensation. Specifically, amendments would protect employers from other than contract based suits for contribution or indemnity by third parties..." other than for an employee's "grave injury". This effectively limited the employees right to recover under the Employers Liability section of the workers' compensation policy. With that option now limited to grave injuries, more attention was placed on contract based suits. As general liability insurers are now the sole defense of these claims, they are placing more emphasis on properly written contracts, and are taking a conservative approach to both underwriting and pricing. What can subcontractors do to help limit potential increases? 1) Be proactive. Contact your agent. Ask them what changes you can expect, if they will be submitting your account to various insurers for quotations, and what insurers they have available. 2) Negotiate with your insurer early, and be willing to accept a small increase. If they are agreeable to holding the increase in line, get the terms and conditions in writing from the insurance company. 3) Realize that most insurers will need at least 60 days to review the applications, ask for copies of contracts, order an inspection, and prepare a quotation. 4) Keep abreast of the changes going on within the marketplace, particularly with your insurer and the type of work that you do. Stay in touch with your associations. 5) Pay attention to any written information you receive from your insurer. Insurers are required to give you a 60 day notice of any General Liability increase in excess of 10% for any reason other than increased exposures or adverse loss experience. 6) Order loss runs. By law, insurers are required to provide these within 20 days of your written request. Having these in advance will let you know if you may see an increase in liability premium due to adverse loss experience. 7) Insist on signed, properly written contracts with all subcontractors and maintain a copy of them. Make sure all subcontractors are adequately insured and that you secure certificates of insurance naming you as an additional insured. Make sure that your employees know that each job must have a signed contract in place.