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New York Construction Law

New York Mandatory Pay Notices: What Employers Need to Know

Posted in Labor & Employment in Construction

While employers generally provide detailed information to new hires about their pay, New York law now requires employers to provide written notice to employees when they are hired.  A failure to provide the required written documentation may result in civil money penalties up to $5,000 per employee. what employers need to know

Pursuant to the New York Wage Theft Prevention Act (WTPA), written pay notices must include:

  • Employee’s rate of pay, including overtime rate (if applicable);
  • How the employee is paid – by the hour, shift, day, or week;
  • Employee’s regular payday; and
  • Official name of the employer and principal business location.

Wage notices must be provided in English or the employee’s primary language and must be kept for six (6) years following termination of employment.  While no specific form is required, sample notices are available at the New York State Department of Labor’s website.

Finally, employers may notify employees of pay rate increases or changes to the regular payday or primary business location on employee paystubs; however, employers must provide employees with separate written notice one week prior to any reductions in pay.


Are Employers Required to Make Contributions to Union Pension Fund for “Bonus” Payments?

Posted in Labor & Employment in Construction

Hammering Nails Construction has a CBA (collective bargaining agreement) with Local 1 of the United Brotherhood of Widgetmakers (“Union”). After a pension fund audit, Hammering Nails received a letter claiming it owed approximately $50,000 in additional pension contributions based on unreported “bonus” payments. Does the Company have a problem?Pension Contributions

Under the CBA, Hammering Nails must pay pension and welfare contributions based on the “hours worked” by member employees. Hammering Nails pays the hourly rate established in the CBA for all hours worked and pays pension and welfare contributions based on those hours.  In addition, however, to keep workers happy, Hammering Nails pays “bonuses” to employees following a particularly busy week or month.  Hammering Nails did not make contributions based on the bonus payments.

However, under the CBA, employer contributions to the Union pension fund are based on the “hours worked” by employees. Specifically, the CBA requires a pension contribution of $0.63 for every hour worked.  Hammering Nails has made the required contribution for all hours worked (and paid).  The pension fund audit calculated owed pension contributions by converting bonus payments to so-called hours worked.  The CBA, however, does not require additional contributions based on bonuses.  Rather, the CBA specifically states that contributions must be paid for the hours worked.  Not only were the bonuses not guaranteed compensation, but, in addition, the bonuses were not based on employees’ work hours.  Employees never had a contractual right to receive a bonus – the decision was always within the Company’s discretion.  As a result, these bonuses were not “wages” paid based on hours worked, and the Company should not owe additional pension contributions based on the bonus compensation.

The Risky Business of Warranties

Posted in Architects & Engineers, Construction Contracts

Owners and contractors beware! The warranty you get may not be what you bargained for.

Many construction contracts, including widely used industry form contracts, contain two distinct warranties, a general warranty and a call-back warranty.  For example, the general warranty contained in the American Institute of Architects, AIA Document A201 – 2007, General Conditions of the Contract of Construction, provides that:

materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit. Work, materials, or equipment not conforming to these requirements may be considered defective.

Notably, the standard AIA general warranty is not limited in time.Warranties Blog

The call-back warranty, on the other hand, traditionally requires the contractor to promptly correct work found not to be in accordance with the requirements of the contract for a period of one year.  In other words, if the work is defective and the owner timely notifies the contractor of the defect, the contractor must return to the job and fix the work.  If the contractor does not correct the work in a reasonable time, the owner can repair the defective work and seek the cost of the repairs from the contractor.

The call-back warranty is often misinterpreted as a limit on the general warranty. However, the call-back warranty is generally interpreted as an additional warranty, not a one-year time limit on the general warranty.  As a result, the contractor is still liable for defective work covered under the general warranty beyond the one-year call-back period.

Identifying the relationship between a general warranty, a call-back warranty and any other warranties is essential to effectively negotiating a construction contract. To avoid unanticipated consequences, owners and contractors should take care to clearly understand warranty provisions before signing!

Travel Time: To Pay or Not to Pay

Posted in Labor & Employment in Construction

Do I have to pay my workers for travel time when I provide transportation to a job site?

Slate Rock and Gravel, Inc. has a reputation for completing jobs on time and under budget. For their convenience, employees often report to the yard at 5:15 a.m. and then travel to the construction site in company trucks loaded with tools.  They always arrive before the construction site opens at 7:00 am, and leave together when the whistle blows at 3:30 pm.  Most days, the truck returns to the yard just before 5:00 pm.  Some employees choose to meet the Slate Rock and Gravel foreman at the site.  Recently, Fred, a longtime employee, started complaining that Slate Rock and Gravel had cheated him out of overtime.  Fred claims the company owes him (and all the other employees) for time spent traveling from the yard to the jobsite and the jobsite back to the yard.  Does Slate Rock and Gravel have a problem?Time clock

Probably not.   Time spent travelling from home to work before the regular workday is generally not considered compensable work time.  Even an employee who travels in an employer-provided vehicle, transporting work equipment is engaged in ordinary home to work travel.  29 C.F.R. §785.35.  Fred and his coworkers are meeting at the yard for their own convenience and benefit, not because they are directed to do so by their employer.  On the other hand, if Fred and his co-workers were required to report to the yard to receive instructions or perform other work there, travel time to the job site would likely be viewed as part of their principal activities, i.e., “travel that is all in a day’s work.”  29 C.F.R. §785.38.  The same is true of travel time back to Slate Rock and Gravel’s yard at the end of the day.

Practice Tip: Make sure you inform employees, in writing, that they are not required to report to the yard or travel to and from job sites in the company vehicle.

Did the Union Cross the (Picket) Line?

Posted in Labor & Employment in Construction

When I arrived home last night, there were picketers in my front yard carrying signs saying “Shame on Johnny!  He doesn’t pay union wages!”  This morning, the picketers have set up shop on the sidewalk outside our construction yard.  Now, they have signs telling my employees and customers that I am “Cheating the American Worker.”  Can I make them stop picketing?

Picket SignSeeing men and women carrying placards in your front yard or outside of your business is never a comfortable feeling. Unions use picketing to organize workers; in other words, to convince workers that they should join a union or to pressure employers to pay higher wages.  However, a union’s right to picket is not without limits.

Generally, unions and workers are permitted to picket outside an employer’s primary place of business to convince employees that they should join the union.  This type of activity is often called “recognitional” or “organizational” picketing.  When employees already have a union, employees and unions may use picketing to pressure an employer to increase wages and benefits or to improve working conditions.  In these circumstances, the picketing activity is lawful IF the activity: (1) takes place at the employer’s place of business or job site; (2) does not physically prevent workers (or others) from entering the employer’s premises or job site where the employer is performing work; and (3) does not involve threats of violence, acts or force, or destruction of property.

But, not all picketing is allowed. For example, unions are not permitted to engage in organizational picketing in the twelve months following a union election or recognition of a union.  Similarly, while unions are allowed to picket for the purpose of “informing the public” that an employer pays wages that are below “area standards,” they are not permitted to use “area standards” picketing as a ruse to organize workers.  In addition, picketing outside the homes of business owners, supervisors, and customers is often prohibited.

If picketers are disrupting your business, you may be able to limit their activity. We encourage you to consult with an attorney to determine what measures can be taken to address the situation.

Public Private Partnerships: Securing Payment for Labor and Materials

Posted in Construction Contracts

What happens to contractors and subcontractors who are without lien rights when a private developer who is building on public land with private money defaults on the project? A recent court decision clarified the parties’ rights and obligations for those projects that are privately funded on publicly owned land, i.e., Public Private Partnerships (“PPP”).Public Private Partnerships

Under New York’s Mechanics’ Lien Law, when the project is a PPP, the public owner must require that the private developer post a bond or other form of undertaking guaranteeing prompt payment of moneys due to the contractor or subcontractor.  While not exactly a lien, such an arrangement is designed to ensure that contractors and subcontractors get paid for labor and materials on the project.  While most in the industry are familiar with how a bond works, the phrase “other form of undertaking” is subject to interpretation.

In a case of first impression, a three-judge panel in Skanska USA Bldg. v. Atlantic Yards B2 Owner, LLC, analyzed what would satisfy the obligation to post “a bond or other form of undertaking.”  In that case, the contractor argued that a “guarantee” provided by an affiliate of the developer was not equivalent to a bond or “other form of undertaking” under the statute.  The Court disagreed.  The Court ruled that a formal “guarantee” that an affiliate would “fully and punctually pay and discharge any and all costs, expenses and liabilities incurred for or in connection with the Guaranteed Work,” the Court found, was sufficient to satisfy the statutory obligation.  Although the Court acknowledged there are better guarantees available, such as a letter of credit, the judges found the statute did not require the “best” form of guarantee; and the formal promise to pay met the statutory threshold.

What does this mean for the industry? If this decision is upheld, it may result in cost savings to PPP developers who may no longer incur bonding or related costs; however, it may also result in increased risk for contractors, subcontractors and suppliers who, in the absence of a bond, may have less security in the event of a project default.

2017 Minimum Wage Hike: What You Need To Know

Posted in Labor & Employment in Construction

Effective December 31, 2016, New York no longer has a state wide minimum wage. In 2017, the minimum wage is based on where employees work. Also, in New York City rates depend on the number of people you employ.

New York City (11 or more employees) $11.00
New York City (1-10 employees) $10.50
Nassau, Suffolk, and Westchester Counties $10.00
All other New York State Counties $9.70

Other Significant Changes:Minimum Wage

  • Businesses with workers in multiple regions can either: (1) pay the highest applicable minimum wage rate to all employees, or (2) pay the applicable minimum wage for that geographic region.
  • When counting employees in New York City, all employees, including part-time and seasonal employees, as well as workers employed by more than one entity count.
  • Minimum wage rates in New York also will increase on December 31st of 2017, 2018, 2019, and 2020.

Consult with employment counsel if you have any questions about the applicable minimum wage rate or other wage issues.


Effective January 22, 2017: NEW I-9 Forms

Posted in Labor & Employment in Construction

Employers are required to prepare and retain I-9 Forms for employees. The purpose – to verify an employee’s identity and authorization to work in the United States.  The New I-9 Forms should make them easier to complete and minimize mistakes that often result in significant monetary penalties.I-9 Forms

The biggest change – the new forms can be completed electronically. Embedded question mark icons in the information fields provide specific instructions.  Most importantly, the “Click to Finish” button does not allow the form to be finalized until each required section is complete.

Other significant changes:

  • Drop-down menus and calendars make completing the forms easier.
  • Instructions are linked and no longer clutter the Form.
  • Employers can have multiple preparers – making it easier to complete the forms within the three-day window after an employee commences employment.

Although a new form, remember:

  • The Form must still be printed and physically signed and dated by the employee and employer; and
  • Incomplete or inaccurate forms will result in substantial fines – up to $2,156 per incomplete or incorrect I-9.
  • I-9 Forms must be kept for as long as the individual works for the company. Once employment ends, the I-9 must be retained for three years after the date of hire, or one year after the date employment ends, whichever is longer.

Employers must start using the New I-9 Forms effective January 22, 2017.

Subcontractor Required to Strictly Comply with General Contractor’s Contractual Claim Provisions

Posted in Construction Contracts

In construction, incorporating a “prime contract” by reference into a subcontract is commonplace. Recently the Courts have broadly construed such “incorporation” provisions, often to the detriment of subcontractors. General Contractor

In Schindler Elevator Corp. v. Tully Const. Co, Inc., 139 A.D.3d 930 (1st Dept. 2016) the Plaintiff Schindler Elevator Corp. (“Schindler”) entered into a subcontract with the Defendant Tully Construction Co., Inc. (“Tully”) to provide five elevators for the City of New York Department of Sanitation (“DOS”). The subcontract incorporated by reference the “Prime Contract” between Tully and DOS. The Prime Contract had a condition precedent-type notice provision which required “a contractor claiming to be sustaining delay damages to submit, ‘within forty-five (45) Days from the time such damages are first incurred, and every thirty (30) days thereafter for as long as such damages are incurred, verified statements of the details and amounts of such damages, together with documentary evidence of such damages.’” The Prime Contract went on to state that a failure “to strictly comply with the requirements … shall be deemed a conclusive waiver by the Contractor of any and all claims for damages for delay arising from such condition.”

While after trial, the trial Court found in favor of Schindler relying upon the letters and emails of “actual notice” of the delays and the claim, on appeal, the First Department reversed the trial Court’s decision and found that “actual knowledge of the delay and the claims did not relieve the plaintiff of its obligation to serve a proper notice of claim.” The First Department rejected Schindler’s letters and emails as sufficient “since they did not contain verified statements of the amount of delay damages allegedly sustained by the plaintiff and were unsupported by documentary evidence.” Essentially, “substantial performance” is not enough when a condition precedent-type notice provision is incorporated by reference in a subcontract.

Parties to construction contracts should not only be cognizant of the claim provisions in its subcontract, but should also review and understand any other document that is incorporated by reference to that subcontract.