Vol 18, No. 11 (518) 869-9800 May 2000
Inside this edition: NYS DOL Provides Prevailing Rate Guidance * Benefit Plans Position Paper Approved * President's Message * Owner Not Responsible for Safety of Contractor's Tools * Status of DOL Policy on Employee Benefit Plans * New Members * Prevailing Rate Signs Available * Did You Know
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LABOR DEPARTMENT PROVIDES PREVAILING RATE GUIDANCE (Go Top)
The NYS Department of Labor has published a document intended to provide contractors and subcontractors with guidance regarding compliance with the prevailing wage law. The April release of the document, entitled "New York State Prevailing Rate Guidance Outline", comes approximately one year after Executive Deputy Commissioner of Labor James Dillon committed to its publication. This commitment was made in response to a request by NESCA for such a document. While the 18-page Guidance Outline is lacking in depth to some extent, it should be useful as a reference document for basic prevailing wage law questions subcontractors may have. The Guidance Outline covers such questions as: When is a project considered "public work?" Is maintenance or warranty work subject to prevailing wages? What is the locality to which specific wage rates apply? Are prime contractors required to provide subcontractors with prevailing wage schedules? How does DOL determine whether the building rate or the heavy/ highway rate applies? What are the overtime provisions of the law? Are foremen or supervisors required to be paid prevailing wages? Are owners covered by the law? Are off-site operations subject to the prevailing wage law? Any member who would like a copy of the New York State Prevailing Rate Guidance Outline should contact the NESCA office. Members may also find the document at the Department of Labor's website at www.labor.state.ny.us.
NESCA'S BOARD APPROVES BENEFIT PLANS POSITION PAPER (Go Top)
At its April 6, 2000 meeting, NESCA's Board of Directors approved a position paper which is highly critical of the NYS Department of Labor's recent policy shift concerning New York State Public Work Benefit Plans. The Board approved the 6-page document after directing NESCA staff to prepare such a position paper on this issue at the March 2, 2000 Board of Directors meeting. The position paper (1) provides a brief background on Section 220 of the Labor Law (prevailing wage law) and some historical perspective on the payment of supplements prior to and after 1990, (2) discusses the Labor Department's April 1999 "Notice" which effectively reversed DOL's previously stated policy, (3) addresses the CPI lawsuit and the recent federal court decision in favor of DOL, and (4) reviews the financial impact this decision will have on construction businesses and their employees throughout New York State. The position paper is particularly critical of DOL's decision to enforce its policy, which prohibits "pooling" of benefits and requires the "annualization" of benefits, on a retroactive basis. Such retroactive enforcement will cost affected contractors and subcontractors hundreds of thousands of dollars, could put many out of business, and will result in the loss of pension and health benefits for thousands of construction workers across the State. A copy of NESCA's position paper is enclosed with this Newsletter.
NESCA members were recently mailed a solicitation to contribute to the association's newly established "Legal Defense Fund". Our Board of Directors authorized the adoption of such a fund for the purpose of pursuing in the courts the common rights and business goals of northeastern New York subcontractors and suppliers. I urge all members to consider making a contribution to the Legal Defense Fund. There are many, many issues which we can collectively have addressed by the courts on a unified basis -- issues which impact on all of our businesses. Ever wonder why public agencies pay no interest on retainage, yet allow prime contractors to substitute securities for retainage and collect interest on the securities? Since this option is not available to subcontractors, maybe it's time we challenge the concept of who "owns" retainage in court and see if we can get interest paid on the retainage held on our subcontracts. This is merely one of numerous subcontractor issues which could be addressed by the courts. Competitive bidding issues, contract language issues, 240/241 strict liability, and general regulatory overreach by state agencies (such as DOL's policy on prevailing wage employee benefit plans) are all things which NESCA's Legal Defense Fund could be used to address. All construction industry subs and suppliers face similar business problems and concerns every day. NESCA was formed 30 years ago to address these problems and concerns on a unified basis. And for these past 30 years, we have enjoyed significant success in the NYS Legislature, having 30 laws enacted which assist and benefit our membership. However, there are certain issues which can be more appropriately addressed in the courts, and that is why we have established the Legal Defense Fund. So far, the response has been good, and contributions to the Legal Defense Fund are beginning to roll in. I thank those members who have already made a contribution, and encourage the rest of you to strongly consider a contribution of your own. All members were recently mailed Membership Directory update forms for the 2000-2001 NESCA Membership Directory. Please make your changes and corrections and mail or fax your completed forms back to the NESCA office as soon as possible. The Directory is a valuable service provided to members of NESCA, and copies are mailed to local general contractors, architects, engineers and local and state contracting agencies for their use and reference. Remember, May 31st is the deadline for submitting your information for the Directory reprint. We expect to have the new Directory printed by late summer.
Brian B Carmer President
OWNER NOT RESPONSIBLE FOR SAFETY OF CONTRACTOR'S TOOLS (Go Top)
The New York State Supreme Court, Appellate Division, First Department recently held that an owner's statutory duty to provide a safe workplace was not breached when a construction worker was injured on-site while using a defective saw supplied by his employer. Cruz v.Toscano, 702 N.Y.S.2d 289(1st Dept., 2000). In this case, the Court reversed the lower court's decision which found that factual issues existed as to whether the defendant, Philip Toscano, exercised such "supervision and control" over the construction being performed on his home as would justify his being held liable for personal injuries allegedly sustained by the plaintiff under Labor Law Section 200, the provision regarding the general duty of an owner to protect the health and safety of construction employees. Plaintiff Cruz allegedly injured his hand while using a saw in renovations at defendant Toscano's home. Cruz sued Toscano under Labor Law Section 200 for damages sustained due to the injury. The court noted that Cruz had complained to his employer about a missing guard on the saw, a defective condition, but continued to use the saw nonetheless. There was no indication that Toscano, the homeowner, had any knowledge that the saw being used by Cruz was defective. In denying the plaintiff's relief against the homeowner, the court cited New York case law holding, "Section 200 of the Labor Law is a codification of the common law duty imposed upon an owner or general contractor to provide construction site workers with a safe place to work. An implicit precondition to this duty is that the party charged with the responsibility has the authority to control the activity bringing about the injury." The court went on to hold that "where the alleged defect or dangerous condition arises from the contractor's methods and the owner exercises no supervisory control over the operation, no liability attaches to the owner under the common law or under Labor Law Section 200. In the case at hand, the homeowner had no authority to dictate which of the employer's tools the workers would be using at his home, and he was unaware that any of the tools may be defective. Finding no evidence that defendant had any indication that there was a defect in the saw, the court held for Toscano and dismissed all of Cruz's claims.
Terence J. Burke NESCA Legal Counsel
NESCA MEMBERS ALERTED TO STATUS OF DOL POLICY ON EMPLOYEE BENEFIT PLANS (Go Top)
NESCA has previously reported (March 2000 NESCA Newsletter) on the NYS Department of Labor's policy shift regarding public work benefit plans, and the resulting court challenge to this change in policy. To summarize, DOL issued a "Notice" in April 1999 which basically stated that for purposes of compliance with the prevailing wage law; (1) supplements contributed into a benefit plan may not be "pooled", and; (2) supplements contributed into a benefit plan must be "annualized". Since the publication of the March 2000 NESCA Newsletter, a number of developments have occurred which members should be aware of. On March 8, 2000, the federal Court in the CPI case issued its written decision rejecting CPI's ERISA challenge of DOL's Notice. However, the Court's order also directed DOL to re-issue the Notice extending the "grace period" for contractors and subcontractors to correct their benefit plans from June 15, 1999 to 60 days following the date of the Notice's re-issue. DOL re-issued the Notice on March 17, 2000 which extends the grace period until May 17, 2000. What this means is that after May 17, 2000, in addition to the retroactive financial "reparations" being sought by DOL, any contractor or subcontractor who uses a benefit plan which does not comply with DOL's Notice will also be subject to a willful violation of the Labor Law. Further, on April 7, 2000, Assistant Attorney General Pico Paul Ben-Amotz issued a letter which finally made clear DOL's position on just WHICH benefits must be annualized. In his letter he stated: "We are writing to confirm that the Department of Labor has not changed its position that annualization applies across the board to all supplements other than those that are paid in cash with the regular weekly wages........Such annualized supplements would include pension benefits, vacation pay and apprentice training, among others." Given these recent developments, combined with the fact that CPI is appealing the federal court decision, it appears that subcontractors engaged in public work have two options for handling prevailing wage supplements, at least in the short term. 1. Pay all benefits in cash while on public projects. 2. Pay all supplement amounts into a plan which annualizes contributions for ALL types of benefits.
Chubb & Son, Inc. 700 Route 202-206 North Bridgewater, NJ 08807-6952 (908) 218-5274; FAX (908) 526-2060 Contact: Tim Balzan
Closet Crafters/Albany Shower Door 25 Kraft Avenue Albany, NY 12205 (518) 459-0037; FAX (518) 459-0038 Contact: Tom Barber
Wein Young Fenton & Kelsey, P.C. P.O. Box 309 Guilderland, NY 12084 (518) 456-6767; FAX (518) 869-5142 Contact: George P. Conway, Esq.
PREVAILING RATE SIGNS AVAILABLE (Go Top)
NESCA members should be aware that a new law became effective on March 6, 2000 which established certain specifications with respect to the style and content of prevailing wage signs posted at public works projects (See April 2000 Newsletter). The law also requires the wage schedule to be posted in a prominent and accessible place (same location as the sign) and mandates that every contractor and subcontractor meet these requirements for the benefit of their employees. Through an agreement with the General Building Contractors of NYS, NESCA members may purchase signs ($12 each) from the GBC which meet the lettering and the weatherproofing requirements of the law. Enclosed with this Newsletter is an order form for interested members.
That 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 the 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 negligent or criminal behavior of another, must pursue whatever remedies are available under the law. He may not simply confiscate wages due to his employee without a court order permitting him to do so. An employer is not obligated 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. An employer may also not make a deduction from wages because he judges the employee's work to be deficient.