The NY Scaffold Law: Has the Time Come for Reform?

February 25, 2014

The New York Scaffolding Law provides “absolute liability” against contractors and property owners for “elevation-related” injuries on most construction projects. This results in employees being free of their own negligence for accidents. The aftereffect has led to excessive insurance premiums to contractors and owners, which is detrimental to business and real estate development in New York. Certain advocacy groups encourage people to travel to Albany to urge elected officials to reform the statute that was enacted in 1885. Numerous articles on the subject have recently appeared in the New York Times, Newsday and the Subcontractors Trade Association Journal in support of the initiative for reform.

The first scaffold law, a precursor of Labor Law §240 (1) was enacted 129 years ago in response to the advent of the “skyscraper”, an engineering innovation that was quickly changing the landscape of New York City. At the time, the legislature was concerned with the increase in injuries on scaffolds due to unsafe conditions for employees who were working at high elevations. Interestingly, the words “strict” or “absolute liability” do not appear in Labor Law §240(1) or any of its predecessors. It was the Court, not the Legislature that began to use this terminology in 1923, holding that employers have an “absolute liability” to furnish safe scaffolding and are liable if injury results when they fail to do so.

Today, New York is the only State with such a law on its books. Pending reform legislation in the NYS Senate would replace “absolute liability” with a “comparative fault” standard for claims under Labor Law §§240 and 241, in cases where the worker was, for example, violating safety standards, was intoxicated or was committing a criminal act at the time of the injury. Under a “comparative fault standard”, the liability of the defendants would be factored into the analysis and a number of damages would be reduced for cases in which the worker’s negligence or failure to follow safety procedures contributed to the accident. This reform would alleviate skyrocketing insurance premiums, that not only plague contractors and property owners but also impact the cost of public projects such as bridges and local schools, all of which translates to higher taxes.

In a recent press conference, Michael Elmendorf, President of the Associated General Contractors of NYS said, “The Scaffold Law adds 5% to the cost of a project which goes towards insurance.” He further stated, “In the next year Governor Cuomo’s New York Works Task Force is slated to spend $20 million on capital spending. That 5% is $1 million that is going to insurance costs because of this law and not to repair roads and bridges, or build schools and hospitals.”

State lawmakers and labor unions are in disagreement on this reform. The opponents argue that the Scaffold Law is necessary because it keeps workers safe by holding contractors and owners accountable for dangerous work conditions that can develop due to improper training and/or defective safety equipment for their employees. However, a study by the Albany Law School Government Law Center concluded that Occupational Safety and Health Act of 1970 (“OSHA”), not the Scaffold law, is the motivating force today behind construction safety on work sites. The OSHA Act imposes strict safety standards and severe penalties for employers who do not follow the rules to ensure a safe workplace. Penalties can include imprisonment and/or criminal charges for serious violations. OSHA is responsible for enforcing its standards by sending Compliance Safety and Health Officers to work sites to carry out inspection and assess fines for regulatory violations. In addition to OSHA regulations, state and federal safety codes provide more than adequate protections for employees working at elevation-related construction sites.

At this juncture, the battle lines are drawn between the unions on one side and the contractors and owners on the other. The unions do not want reform because they claim that the current law protects their members against catastrophic injuries. Some lawmakers appear hesitant to embrace reform because they feel the current law reinforces project safety and because they claim there are no actual statistics that prove the law is driving up insurance premiums. The owners want safe projects, but at the same time are fighting to control the escalating cost of construction. Most contractors are faced with a risk/reward situation on every bid they submit, knowing that having proper insurance could result in the loss of project bids against other contractors due to the high cost of the insurance premiums while their competitors have substandard (and cheaper) insurance, giving them an unfair competitive advantage. On the other hand, having less costly (and risky) insurance could result in a claim that could wipe out a longstanding company.

The question that must be answered is whether the costs associated with the Scaffold Law are hampering development – and if so, by how much? The bottom line is this – it is not 1929 in New York. Is it finally the time to reform the Scaffold Law?