While total construction spending in New York City still remains below pre-pandemic levels, experts anticipate construction projects to pick up meaningfully over the next several years, especially as nationwide infrastructure spending increases. For some property owners and developers currently in the planning process, the next project may be their first undertaking in years. As these projects ramp up, property owners and general contractors should take note of key strategies to mitigate safety risks and legal claims that can arise on construction job sites, including some unique challenges in one of the country’s most active construction hubs.
Known as the “Scaffold Law,” New York State Labor Law Section 240 presents a wide range of legal, insurance and risk management challenges. Originally passed to protect construction workers from dangers such as serious falls or falling objects, the Scaffold Law imposes strict liability on property owners and general contractors in the event of an elevation-related accident on a job site. As a result, injured workers who would normally receive workers compensation from their employer can also file tort lawsuits against the owner or contractor for additional damages. Even if the worker was partially at fault for the accident, property owners and contractors can find themselves being held liable.
For businesses, the Scaffold Law compounds the risks of on-site accidents as it can lead to multimillion-dollar lawsuits. These lawsuits have become known for some extremely high payouts, for example, a New York County jury awarded $96 million to the families of two workers who were killed during a workplace accident in 2015. The prior year, a jury awarded $62 million to an injured worker who fell from a building roof while on the job.
Aside from leading to increases in defense costs and potential multimillion-dollar claims, the Scaffold Law has led to increased insurance costs that drive up overall construction costs on projects in New York. According to a report from the General Contractors Association of New York, these additional expenses increase the total construction costs of a given project by as much as 10% on average.
For general contractors and property owners in New York, particularly in such a challenging business climate, it is critical to more effectively mitigate risk, maintain worker safety and keep insurance costs down. The following three strategies can help these organizations can improve safety and limit exposure under the Scaffold Law:
1. Take enhanced workplace safety measures
In general, taking a proactive approach to worksite safety is always critical, and the Scaffold Law makes it even more so. Property owners and contractors should start by ensuring scaffolds, ladders and other access points to the worksite are properly designed, well-constructed, and carefully maintained. Similarly, all construction and safety equipment must be inspected regularly to confirm everything is in good working condition.
Worker training is another crucial aspect of mitigating risk and liability. Contractors and property owners should consider creating a system to verify that every worker on-site has been properly trained not only on general safety, but also on job site-specific hazards they may encounter on a project. Firms should ensure they properly document and maintain records of all education and training for workers, as well as attendance at safety meetings. Additionally, contractors and property owners should consider hiring a site safety manager to oversee any worksite where elevation-related accidents could take place.
If hiring subcontractors for the project, it is also important to vet prospective partners for a strong track record of safety performance. Reviewing their qualifications, verifying their licenses and searching their citation history on OSHA’s website are good places to start this due diligence process.
2. Sign risk-transfer agreements
To limit exposure to lawsuits, one of the most critical steps property owners and general contractors can take is contractually transferring their potential Scaffold Law liability to subcontractors. By writing appropriate language into their contracts, including hold-harmless provisions and broad indemnity agreements, property owners and contractors can shield themselves from liability in the event of an accident.
New York law is unique in that it voids construction agreements that attempt to transfer a party’s liability for its own negligence. Therefore, property owners and contractors need to ensure any agreements are written such that negligence is not a factor that triggers these protections. Additionally, property owners and general contractors should require subcontractors to name owners and general contractors as additional insureds on general liability and umbrella or excess liability insurance policies. This can help ensure that subcontractor organizations have the financial means to honor their indemnity agreements.
3. Pursue rigorous workers compensation claims mitigation
Another way to mitigate risk is by taking an ultra-responsive and thorough approach to addressing workers compensation claims, especially those with the potential to turn into Scaffold Law-related claims. Property owners and contractors must promptly report all workers compensation claims and quickly develop a mitigation strategy. Getting ahead of the claim can help policyholders control it from the outset. A field investigator should be assigned to conduct a full on-site investigation immediately after the accident, and legal counsel should be brought in early to mitigate risk and form a defense strategy in case a lawsuit is eventually filed.
It is critically important to preserve all evidence that could be useful in a case, including any equipment involved in the incident and comprehensive incident reports with photos of the accident scene. This investigation process should also include securing witness statements and contract information for the investigator and defense counsel to use during any follow-up. Time is of the essence. The faster these actions can be performed, the better protected property owners and general contractors will be.
Finally, working with an insurance broker who is familiar with the complex exposures and claims issues around the Scaffold Law can help ensure organizations have the support they need in the event of an accident. Experienced insurance brokers can help property owners and contractors prepare for these incidents before they arise by establishing a process for responding to elevation-related accidents. With a plan in place and support from an expert team, property owners and general contractors can best protect themselves from a potentially devastating financial situation.