For decades, a heated battle has been raging over New York’s Labor Law 240, also known as the scaffold law. The law holds contractors and developers 100 percent liable for the costs of any gravity-related accidents that they’re at least partially at fault for.
Opponents of the law, including construction firms, real estate developers, and local governments, claim that the absolute liability standard is outdated and unnecessarily drives up construction costs in New York. Supporters claim that placing absolute liability onto contractors and property owners is essential for workplace safety.
And with awards ranging from $3 million to $15 million in 2012, the stakes continue to be astronomical.
Now a new study by SUNY’s Nelson A. Rockefeller Institute of Government has added fuel to the fire, claiming that the law actually makes construction sites less safe while costing the public millions of dollars. According to the study, New York incurs an additional 677 workplace accidents every year because of the law, and diverts at least $785 million of public money annually from schools and local governments toward lawsuits, legal fees, and insurance costs. The study also estimates that the scaffold law costs the private sector over $1 billion per year, taking into account legal costs, workers’ comp payments, medical costs, and other expenses.
The study also found:
- Additional injuries associated with the scaffold law cost New York State between $34 million and $84.7 million in worker’s compensation costs, and between $26 million and $65.1 million in direct, indirect, and quality-of-life costs annually.
- Redirecting the money spent on lawsuits and insurance to the construction industry would add an additional $480 million in labor income.
- Shifting dollars from lawyers and insurers to contractors would be a net gain of 12,000 jobs.
Supporters up in arms
Labor unions and other supporters of the law have loudly criticized the report. The labor-backed Center for Popular Democracy and the New York Committee for Occupational Safety & Health labeled the findings “far-fetched” and released their own scathing rebuttal, Fatally Flawed: Why the Rockefeller Institute’s Scaffold Law Report Doesn’t Add Up.
They especially criticized the study’s conclusion that compared to New York, the average number of non-fatal injuries in Illinois dropped after the state repealed its version of the scaffold law in 1995. They also pointed out that the study was paid for by the New York Civil Justice Institute, the research arm of the Lawsuit Reform Alliance of New York, a business-supported group that wants the scaffold law amended.
Governor throws in the towel – for now
The battle lines continue to be drawn, and opponents of Labor Law 240 shouldn’t expect reforms anytime soon. Although Governor Cuomo’s budget division explored ways to reform the law last year, they didn’t have any luck. And now the governor, running for reelection on a pro-business platform, is once again conceding the fight, at least for now. "You can't change it," he said in an interview. "The trial lawyers are the single most powerful political force in Albany."
Unfortunately, New York’s construction industry will have to continue operating under the law as it stands for now. And that means doing everything possible to get the most bang for your buck when it comes to your New York construction insurance.
That’s where BNC Insurance and Risk Advisors can help. With over 150 years of experience in the New York construction market, we have the expertise to help you navigate the maze of laws and insurance requirements, get the most from your safety program, and get the best rates on insurance.
Contact us for a complimentary construction insurance quote or download our construction case study collection.