As all New York property owners and general contractors know, Section 240 of New York State Labor Law, the official name of the state’s Scaffold Law, presents a wide range of legal, insurance and risk management challenges. While originally passed to protect construction workers from serious falls, falling objects and other elevation-related accidents, the Scaffold Law has evolved into a major area of risk that can lead to multi-million-dollar lawsuits.
The Scaffold Law imposes strict liability on property owners and general contractors in the event of an elevation-related accident on a job site. Because of this, injured workers who would normally receive workers’ compensation from their employer also have the ability to 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 damages.
Famously high payouts have occurred as a result of these lawsuits, causing considerable financial damage for the defendants. For example, a New York county jury previously 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.
These lawsuits negatively impact property owners and general contractors in a number of ways. Aside from leading to increases in defense costs and multi-million-dollar claims, the Scaffold Law has led to increased insurance costs that drive up overall construction costs in New York. These additional expenses elevate the total construction costs of a given project by as much as 10% on average, according to a recent report from the General Contractors Association of New York.
As insurance brokers for many general contractors and property owners in New York, we understand the importance of mitigating risk, maintaining worker safety and keeping insurance costs down. In our decades of experience working with New York contractors and property owners, we’ve identified three ways these organizations can limit their exposure to the Scaffold Law. Here’s how:
In general, and particularly considering the Scaffold Law, taking a proactive approach to worksite safety is critical. Property owners and contractors should start by ensuring scaffolds, ladders and other access points to the worksite are properly designed, constructed, and well maintained. Similarly, all construction and safety equipment must be inspected regularly to confirm they are 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 on general safety, but also on jobsite specific hazards that may be encountered on a project. Contractors and property owners should also properly document and maintain records of all education and training for workers, as well as safety meeting attendance.
Hiring subcontractors with strong track records of safety performance is also important. Starting this due diligence process by reviewing their qualifications, verifying their licenses and searching their citation history on OSHA’s website are good places to start. Additionally, contractors and property owners should consider hiring a site safety manager to oversee any worksite where elevation-related accidents could take place.
One of the most critical steps property owners and general contractors can take to limit their exposure to lawsuits is to contractually transfer 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 these 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 / Excess liability insurance policies to ensure these subcontractor organizations have the financial means to honor their indemnity agreements.
Another way to mitigate risk is by taking an ultra-responsive and thorough approach to 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. By getting ahead of the claim, policyholders can control it from the onset. 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 comprehensive incident reports with photos of the accident scene, and any equipment involved in the incident. 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.
Don’t go at it alone
Issues around the New York Scaffold Law can present general contractors and property owners with serious legal headaches that can lead to inflated claim values. It is critical these parties not go at it alone. Working with an insurance broker who is familiar with the exposures and claims surrounding the complexity of the Scaffold Law can ensure these 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
Senior Partner, National Accounts, New York Region Practice Leader
Led the firm’s International Practice Group and the Property & Casualty Training Committee
Partner, National Claim Advocacy & Consulting Leader
Partner, Senior Business Development Executive & Surety Manager
Juanita Gadsden
Claim Consultant
