New York Construction Industry Facing Hurdles to Post-Pandemic Recovery

Posted by John Cofini on Wed, May 12, 2021 @ 03:42 PM

New York construction industryAfter a tough year, the U.S. economy is continuing to show signs of recovery. Coronavirus cases are falling, vaccination numbers are still rising, unemployment claims are down, business investment is up, and confidence among corporate leaders is high. Economists surveyed by the Federal Reserve Bank of Philadelphia predicted U.S. output will increase 4.5 percent this year, which would make it the best year since 1999.

But many industries still face big challenges when it comes to making those recovery predictions come true. Here in New York, the construction industry is facing two major issues that are threatening to place burdensome regulations on business owners and significantly drive up costs on major projects. That could put a serious damper on recovery in the state.

Let’s take a look at these two issues…

  • The NY HERO ACT (Senate Bill S1034A). On March 1, 2021, the New York State Senate passed Senate Bill S1034A, otherwise known as the NY HERO ACT. If enacted into law, the Act would require businesses to implement enforceable safety standards to prevent further spread of COVID-19 and other airborne infectious diseases. The Act would also require minimum workplace safety standards businesses must adhere to including testing protocols, personal protective equipment (PPE), social distancing, personal hygiene, disinfection, and other measures. Strict penalties will be imposed on businesses that don’t comply. Finally, the Act would require the State to create a model airborne infectious disease exposure prevention standard for employers that establishes minimum requirements to help prevent workplace exposure to airborne infectious diseases.

    Opponents of the Act have a couple specific complaints. First, the bill would expose employers to more lawsuits under a “private right of action” provision that allows workers to sue for noncompliance with COVID-19 safety protocols. Second, the bill would require any business with 10 or more employees to form a joint labor-management workplace safety committee. Members would be able to raise health and safety concerns the employer must respond to, and be permitted to attend training without loss of pay. In essence, it would establish a form of collective bargaining between employers and workers, even if the business has no union representation.

  • The Scaffold Law (Labor Law 240). With new construction on the rise, industry groups are once again pushing back against the decades-old law. Three New York-based contractor groups – the Minority & Women Contractors & Developers Association, the Associated General Contractors of New York State, and the General Contractors Association of New York, along with the New York State Conference of Mayors and Municipal Officials – have asked Transportation Secretary Pete Buttigieg to use the regulatory clout of the Department of Transportation (DOT) to bypass the Scaffold Law for contractors working on the $11.6 billion Hudson River Tunnel construction project. New York Governor Cuomo received a similar request last year by a group called the Scaffold Law Reform Coalition.

    These groups claim the Scaffold Law, with its “absolute liability” standard, will increase the cost of the Hudson River Tunnel project by anywhere from $180 million to $300 million. They also claim the huge financial settlements paid out in Scaffold Law related lawsuits continue to drive up liability insurance rates and push many insurers out of the market altogether.

Both of these issues will cost employers and likely put a damper on economic recovery in the state. For New York construction employers, the message is clear …

Now more than ever, your safety and risk management initiatives are paramount.

At BNC Agency, we’ve been insuring the New York construction industry for more than 20 years. That means we’re experienced partners you can count on to help you navigate this evolving industry. Call us today.

Tags: new york construction industry