Business Community Making Strong Move to Repeal NY's "Ladder Law" this Legislative Session
January 24, 2006
by Dylan Skriloff
As the New York Legislature opens its winter session, the NY construction industry and business community again hope to press lawmakers for badly needed reform of New York's infamous labor law 240-241, a.k.a. "ladder law" or "scaffold law," which is to blame for a large portion of New York's high liability insurance costs.
Liability insurance costs for construction work have skyrocketed 300-600% in New York State since 2000. The ladder law states that contractors assume total liability for employee injuries regardless of fault or work conditions. New York is the only State in the union which still has such a law on the books; most others have a "comparative negligence" statute, which partitions lawsuits according to blame.
"This law is a legendary blight on New York's economy and common sense," RBA CEO and President Al Samuels said. "The RBA will be joining in the statewide effort to pass reform on this issue, this legislative session."
The ladder/scaffold moniker refers to the fact that were a worker to get drunk and fall off of a ladder or scaffold, the contractor still would be legally liable. In fact, if an employee injures themselves on the job, they can sue the homeowner who in turn then sues the contractor. They're eligible then for the reward on top of what they receive in worker's compensation benefits.
The strong influence of the AFL/CIO and the New York State Trial Lawyer Association, especially with Assembly Speaker Sheldon Silver (D), has thus far obstructed reform efforts. The Business Council of New York State and the New York State Builders Association continue to push for reform, however.
Nick Dubray of BCNYS said the Council believes the insurance problem is reaching critical mass and action is needed immediately. Most insurance carriers will not even offer coverage for the 240-241 law and it is estimated to be costing the State hundreds of millions of dollars every year. Still the Trial Lawyers Association remains adamant in their stance against reform.
"They make a lot of money on 240-241, is what I think it comes down to," he said.
Rockland Assemblywoman Nancy Calhoun (R) said reforming the law has been a priority issue for her Republican colleagues and many Democrats as well, like Rochester Assemblyman Joseph Morelle (D), who is the sponsor of a reform bill.
"We are only asking for a comparative negligence statute similar to those in other states," Calhoun said. "It is upsetting because it is a problem when it really shouldn't be a problem."
She compared the ladder law to the vicarious liability statute that hurt the car leasing industry and consumers at the benefit of the trial lawyers for years. That law, also only in effect in New York, was overturned by the United States Congress when the State Legislature could not move on the issue.
"Are we going to have to wait for Congress to overturn another senseless New York statute," she asked.
Dubray said that following the loss of the vicarious liability statute, the Trial Lawyers have promised to fight even harder against those calling for the reform or repeal of 240-241.
Calhoun and Dubray said the best thing that RBA members can do is get in touch with their local lawmakers, especially Democrats, and implore them to action on the reform bills currently being discussed in the Legislature.
"We are trying to get a unified voice for reform right now. There are a few grassroots email campaigns going on," Dubray said.
The Costs of 240-241 and the Counter-Argument
The New York State Builders Association estimates that the ladder law could add between $6,000 and $10,000 to the price of a new home prorated after mortgage. They consider reform of the law their top priority and have even started their own independent insurance company to help members survive in the meantime.
Dubray estimated that for every $60 million invested in construction of new schools, $405,000 was spent on insurance to cover 240-241. New York's recently passed five year, $36.6 billion construction and transportation bill would cost taxpayers over $242 million in 240-241 coverage.
Trade unions and trial lawyers argue that the law is crucial for promoting safety in the workplace; even though New York is the only state with such a law. Premiums are going up all over the country, they point out, primarily because insurance companies lost money in the stock market.
New York insurance rates also saw a large hike following 9/11. They argue that builders could control their insurance costs through better risk-management and other strategies.
Effects on Local Businesses
RBA Member Lou Silver, of Silver Roofing, Inc. in Garnerville, said his costs have increased over 300% or $100,000 in the past four years alone. It's caused many smaller companies he was familiar with to fold or leave the State, he said.
Steve Caccavo, Chief Operating Officer of Hayden Building Maintenance Corp. in West Nyack said he's also seen many people abandon their independent businesses because they could not afford the costs of insurance.
"People used to do subcontracting work for us, but no longer could afford to do it and now are on board as employees," he said.
Caccavo and Silver both say they are pessimistic about reform after past efforts to reform the law have failed. Another major concern associated with the law and rising insurance costs is the birth of an unregulated, underground construction economy.
More Comments from Lawmakers
State Senator Thomas P. Morahan (R) said he is currently reviewing legislation to establish a comparative negligence standard. Rockland County Assemblyman Kenneth Zebrowski (D) said he will consider reasonable reform to any law, but noted there were several factors responsible for the high costs of insurance in New York.
Joseph Morelle (D), a speaker at several RBA events, had forced debate on the ladder law issue on the floor of the house in 2004, despite the objections of many in his party. In a newspaper interview at the time, Morelle said he was forcing debate by his colleagues "because that's what you get elected to do."
"If it's something you feel passionate about, you want to make sure there's an opportunity for people who agree with you to be heard," he said. "I think it's important enough. In the Rochester area in particular, literally hundreds of jobs are at risk," he said.
