Why is reform of LABOR LAW 240 more urgent than ever now?
On March 31, New York became the 15th state in the nation to legalize cannabis. For the construction industry, the timing couldn’t be worse.
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For years, construction industry associations and other supporters and sympathizers have railed to reform New York Labor Law 240(1), commonly known as the Scaffold Law.
The primary goal is to switch the onerous “absolute liability” clause to “comparative liability.” In its present, antiquated form, employers and building owners are 100% liable for any gravity-related injury incurred by a worker at a site – if the worker falls or is struck by a falling object, regardless of the worker’s conduct or gross negligence. Comparative liability would distribute fault among all involved parties.
NB: The only stipulation under which an employer or owner might not be liable is “sole proximate cause” which applies if it can be proven that the worker’s conduct was the SOLE cause of the accident. Such an argument is difficult to prove and often fails.
“Was the worker intoxicated at the time of the accident, following a legal, but hazardous ‘liquid lunch?’” No change in “absolute liability”.
“Was the worker high?” The employer or owner remains absolutely liable.
It is hardly surprising that the chorus of voices championing reform has risen several decibels in the months preceding and following the legalization.
The Scaffold Law dates back to 1885, the year the Dow Jones index debuted, and the first modern skyscraper was erected – not in Gotham, in Chicago. The law was enacted at a time before Workers Compensation, site safety training, personal protective equipment (PPEs) and other measures to protect workers’ safety and
New York State remains the only state in the union to retain the law. As a result, soaring insurance rates make it more expensive to build statewide than anywhere in the nation. Furthermore, a liability suit could force a contractor, especially a smaller firm, out of business.
In a recent interview with the White Plains CitizeNetReporter, Santino Thomas, the spokesperson for the Associated Builders & Contractors of the Empire State, said, “It’s just a matter of time. It’s not ‘if’ but ‘when’ the situation will arise where you will have a worker under the influence be hurt on the job.” Thomas noted that his association represents hundreds of contractors throughout New York State who in turn employ thousands upon thousands of workers.
“Our contractors are going to be on the hook for this …should they go under because of a suit where they are, in our opinion, wrongfully held 100% responsible, that’s not only a contractor losing their livelihood but every person that contractor employs losing their livelihood, their family’s ability to put food on the table.” Thomas noted that the Governor, the State Senate and the Assembly have been informed of the issue yet “these concerns were just largely ignored.”
“NY pot law creates safety, liability issues for contractors,” an article in Construction Dive, quoted Mike Elmendorf, CEO of the Associated General Contractors of New York State who said, “Impairment isn't a defense under the Scaffold Law… We have real, significant concerns, not just about safety, but also because this just adds more liability into a universe for construction in New York where you already have absolute liability. It's a real black hole at this point."
Rise in usage may lead to a rise in insurance premiums
It is extremely likely that the legalization of marijuana will lead to increased usage. Consequently, the perception of an increase in construction accidents is apt to cause a rise, possibly a spike, in already inflated insurance premiums.
“It’s only going to get worse. We will have more [workers] stoned. [We need to] be more proactive with the legalization of pot,” said Mario Castellitto, an attorney partner with Traub Lieberman, at a recent webinar sponsored by the Subcontractors Trade Association (STA), “The Ugly Truth About New York’s Scaffold Law.” Castellitto noted too that marijuana is available in many forms such as edible gummies that are odorless and undetectable without investigation.
On March 17, a coalition of associations wrote to the Governor and representatives urging reform prior to the pending legalization.
The letter was signed by the Associated General Contractors of New York State, the New York State Builders Association, the Capital Region Chamber, the New York Federation for Independent Business and many other organizations. It read, in part, “Adult use cannabis poses an unmanageable insurance risk for contractors, property owners, and governmental entities because of New York’s ‘Scaffold Law’… The tremendous costs and limited availability of the commercial general liability insurance have an impact across New York because construction costs go up, fewer workers are hired, consumers pay higher prices for goods and services, and the economy suffers.”
The letter summed up the issue saying: “Absolute liability means that the contributing fault of an injured worker, such as consuming cannabis at the workplace will be virtually irrelevant in court.”
The Board of Directors of the Home Builders & Remodelers of Central New York posted an OpEd in syracuse.com that read, in part: “For large infrastructure projects, like schools and bridges, the Scaffold Law adds over a half a billion dollars in annual costs to the state construction budget.” The group had argued that the Scaffold Law must be fixed before cannabis legalization passes.
The impact on MBEs and MWBEs
All construction companies – large, medium, small – are impacted by the scaffold law including the most vulnerable firms – MBES and MWBES. The result is in direct opposition to the intent of the legalization.
The legalization of cannabis intends, in part, to correct a systemic injustice: the disproportionate effect of criminalization on Black and brown persons and communities. As the press release from the Governor’s office that announced the pending legislation stated: “The legislation …creates a social and economic equity program to assist individuals disproportionately impacted by cannabis enforcement that want to participate in the industry.”
The Scaffold Law impacts all industry stakeholders. MBEs (minority-owned business enterprises) and MWBEs (minority and women-owned business enterprises) are at a distinct disadvantage. Many are small, possibly newly-formed, and struggling to survive throughout the pandemic. Spiking insurance rates may be the proverbial nail in the coffin, forcing businesses to shutter. Would-be entrepreneurs wishing to launch a new construction firm will surely be discouraged if not prohibited from starting.
A crisis in insurance availability
Last December, Harlem World Magazine posted a letter signed by Nayan Parikh, president of the NY Tri-State National Association of Minority Contractors.
The letter said that “New York State is facing a crisis in construction insurance availability. These circumstances, which disproportionately harm MWBE contractors, could be alleviated by fixing the legal anomaly that is the Scaffold Law’s absolute liability standard.”
Parikh also noted that due to its costly consequences, retaining the Scaffold Law contradicts the purpose of the State’s MBE and MWBE participation programs: “For MWBEs, this is more than just a cost issue – this is an insurance availability issue that threatens the existence of most MWBE construction firms…. The goal of New York’s MWBE program is to create a balanced playing field. The Scaffold Law’s strict liability is the antithesis of that laudable goal.”
The recovery needs to succeed
New York State and City, along with the nation, are transitioning to recovery as the pandemic improves due to mass vaccinations. It’s a time when the industry needs incentives to help it reinvigorate, not blockades that could hurt businesses and employment, hurdles that could depress efforts to restore and rebuild.
Congressman Chris Jacobs introduced an Infrastructure Expansion Act last September which would impose a comparative negligence liability standard, pre-empting the Scaffold Law on all projects receiving federal funding.
Those lobbying for exempting federally funded projects from the Scaffold Law are clear in their message: The built environment cannot afford any more barriers along the road to recovery.
After all - If we can’t make it here – what then?
“Reforming the "Scaffold Law” in New York State would unleash our state’s economy, attract new investment, and drive down construction costs. New York is the only state in the union to still impose an absolute liability standard on employers for gravity related injuries. This results in inflated construction costs, in some cases by hundreds of millions of dollars, while having no positive impact on safety. These costs are then handed down to the citizens of New York, resulting in a high cost of living in New York that is stagnating our economy and driving people to lower cost and lower tax states. Reforming our insurance laws to reflect comparative liability will maintain workplace safety, instill accountability, and increase the competitiveness of New York.”
Congressman Chris Jacobs (NY-27)
“Inevitably, legalization [of cannabis] will lead to increased use of cannabis in general…
Much like the legal consumption of alcohol, the use of cannabis impairs core human cognitive and biomechanical human functionality. As such, workers using either will naturally be at a higher probability of accident…
With absolute, or strict, liability, if a contractor is determined to be even 1 percent at fault, then any contributing factors into an injury would not be considered. There are hundreds of examples of construction site accidents where alcohol as a contributing or mitigating factor was not considered - identical fact patterns will emerge with cannabis. The reform agenda is not over-reaching – it is simply to make the liability standard comparative, meaning, if a worker is intoxicated and gets injured, the intoxication is measured as a contributing factor. It is not taking away a worker’s rights to sue and it is not lessening any safety standards.
The arguments and reasoning driving scaffold law reform with the legalization of cannabis are so obvious, so common sense, that I trust New York legislators are looking at quick reform… Otherwise, expect the most overpriced, inefficient, and litigious construction/infrastructure environment in the country to keep getting worse. It’ll be hard to keep New York City as the financial epicenter of the world when our roads and buildings are crumbling – but hey, the courts will be busy!”
Rygo E. Foss, General Counsel, Andromeda Advantage Inc.
“New York courts have long held that an employee’s intoxication is not a defense to a Scaffold Law claim. It is actually in the state’s jury instructions for Scaffold Law cases.
This is precisely why the Scaffold Law actually makes workplaces less safe. Since there are no legal consequences for someone who is high on the job, we will have more people high on the job. That makes everyone less safe.
We expect this will have a significant impact on premiums, increasing costs for builders at the worst possible time. New York already has the highest insurance costs and the lowest insurance availability thanks to the Scaffold Law. This will only exacerbate the state’s construction insurance crisis.
The coalition to fix the Scaffold Law is incredibly broad and includes the Conference of Mayors, the New York School Boards Association, the Citizens Budget Commission and Habitat for Humanity.”
Tom Stebbins, executive director, Lawsuit Reform Alliance of New York
"Scaffold Law will not require the employee to have any responsibility for being impaired just as cases with alcohol, thus putting more of a burden on the contractor to properly police the job site for any substance impaired employees.
NYC, NYS and USA safety regulations do not identify the use of cannabis in any inspections which can result in a stop work order for dangerous conditions. They may be involved after an incident which may have been the cause of any accident.
It is very important for a contractor to have their field supervisors trained in identifying potentially impaired employees and provide guidance for dealing with employees suspected to be under the influence. At this time this type of training is optional, but could very well become mandatory like most safety training. The various trade associations should be educating their members and encouraging them to adhere to this standard. Once this training becomes an industry standard, it will preclude many of the workers from participating in dangerous substance abuse on the job, with the threat of losing their job and potentially a career. Depending on the number of cannabis-related accidents, it will most likely be at that time that the regulators will make the training mandatory & part of the licensing process.
Effect on insurance availability and affordability: Safe work means fewer accidents and in turn a lower cost of Insurance."
James A. Fenniman, ARM, area executive vice president, senior director – Construction Practice, A.J. Gallagher
To learn more AND TO SUPPORT THE SCAFFOLD LAW REFORM, VISIT www.billiondollarFix.nyc
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