Since 1885, New York has had a law on the books that puts the financial burden of many fall-related construction-site injuries on property owners and contractors. Referred to as the “Scaffold Law,” the legislation emerged before the age of skyscrapers, when the potential injuries a worker could incur from falling were significantly less substantial than they are today.
While many other states once had similar laws, most phased them out in favor of modern Workers’ Compensation laws as buildings got taller and the potential injuries contractors and construction workers could suffer became more serious.
In New York, though, the 1885 law still stands. The problem? For contractors, construction workers, and property owners, the law substantially increases the cost of General Liability Insurance they must carry. Far from only affecting a small segment of the economy, this cost ultimately impacts every New York resident: for state-funded construction projects (including renovations of schools, bridges, and roads), taxpayers end up footing the bill for the extra liability insurance.
One estimate suggests that, if the Scaffold Law were taken off the books, the state of New York would save enough money to build two new schools every year.
Workers’ Compensation for Contractors in New York and Around the Country
So how is NY’s liability law different from other states’? Here’s a breakdown:
- In most states, workplace injuries incurred on construction sites are like any other workplace injuries: hurt workers can collect benefits from their employers’ Workers’ Compensation Insurance funds. Often, specific injuries are awarded standard compensation amounts, which speeds up the process of compensation and facilitates treatment and rehabilitation. In exchange for relatively speedy payouts, workers give up the right to sue their employers over many workplace injuries.
- In New York, injured construction workers can sue their employers, contractors, and property owners for construction-related injuries. When those injuries are significant (as they can be when falls from tall buildings are involved), settlements and judgments can be tremendous.
- In order to fund multi-million-dollar settlements, the General Liability Insurance that contractors, construction company owners, and property owners must buy comes with high coverage limits, which means high premiums. The cost of those premiums gets passed on to anyone who hires a contractor or works with a property owner on an improvement project (including, often, the taxpayers of New York).
Changes to General Liability Law Still in Negotiations
The issue of too-high insurance costs for New York taxpayers, contractors, and property owners has been around for some time, and negotiations over the law have been active just as long. While the most recent negotiations haven’t led to any actual updates, insiders apparently reported more willingness on all sides to adjust the existing system during the most recent negotiations.
What might that mean for New York construction professionals? For one thing, it could mean savings on General Liability Insurance. Perhaps more importantly, though, a change to the law could free up money that would allow more construction projects to happen, meaning that more construction workers could find work.
Ultimately, it may be the promise of more jobs that moves an update of the Scaffold Law out of the debate phase and into a meaningful revision. At a time when job creation is a buzzword for pretty much every politician and New York’s job creation rate trails the national average, any legislation holding that creation back could find itself under the unforgiving knife of reform. (For more on insurance for construction professionals, read "Philadelphia Building Collapse: Salvation Army Named in Liability Suit.")