New York Labor Law Sections 240 and 241 and priority of coverage

From the revitalization of downtown Buffalo to new high-rises in the Battery, New York is experiencing a building boom. According to New York City Mayor Bill DiBlasio's website, 88 million square feet of new construction were built in New York City in 2015, a 329% increase since 2009. The site also boasts a 517% increase in new housing units since 2009, with 62,040 new units built last year.

Yet this building boom has a dark side. Accidents, jury verdicts and settlements involving construction workers have also increased. Cases of this nature are especially challenging since New York is the only state in the country which imposes strict liability for practically all accidents occurring at a construction site via New York Labor Law Section 240 and 241.

According to claims data provided by the Port Authority of New York and New Jersey, the liability costs on one joint NY-NJ bridge project are more than double on the NY side. Researchers at the Rockefeller Institute of Government estimate that Labor Law 240 costs New York the tax payers $785 million a year. 

This article provides an overview of these unique laws and a checklist of issues that could relate to construction site coverage.

What do the New York labor laws do?

New York Labor Law Section 240, also known as the "Scaffolding Law," was designed to protect workers from falls and/or injuries from falling objects. Classic suits could include:

  • Workers who fall from an elevated worksite – such as a scaffold or ladder – because they have not been furnished with a safety device or the device malfunctioned
  • Workers injured by debris or tools that have fallen from an elevated worksite

New York Labor Law Section 241, while similar to Section 240, focuses on the safety of a construction site at ground-level. Also known as the "Safe Place to Work Law," this section outlines specific regulations about how the areas of a construction site should be arranged and operated. In doing so, it aims to prevent slip and fall and/or trip and fall accidents, chemical hazards, air contamination, etc.

These two laws impose absolute liability on the construction companies, property owners and/or contractors who are responsible for maintaining a safe work environment. Generally, it does not matter whether or not the injured worker acted negligently, unless their negligent conduct was the sole cause of injury.

An owner or contractor found to be liable under Labor Law 240 is not automatically assumed to be negligent. In some cases, liability can be passed by contract or in limited circumstances by common law to another party. Typically this is the only defense available to an owner or general contractor.

Why is it so hard for defendants to win these cases?

Labor Law 240 does not provide an automatic award every time a worker falls from an elevated height or is hit by a falling object. However, the law is a very powerful tool for the plaintiff's lawyers; it is estimated that injured workers win almost 90% of Labor Law 240 cases.

  • Since the plaintiff’s recovery is not reduced by his/her own negligent conduct, Labor Law cases are very attractive to the plaintiff's bar and typically result in high awards/settlements.
  • The proof required for recovery – injury resulting from a gravity-related accident – is relatively simple while the defenses – "employee is the sole proximate cause for the accident" or "the recalcitrant worker defense" – are very difficult to prove.
  • Under strict liability, there is no discussion of risk mitigation practices enacted to prevent the accident. Instead, the courts just take into account whether the plaintiff was engaged in activity covered by the law, whether the accident occurred as the result of a height differential, and whether the accident was of the type that the statue was passed to prevent.
  • When evaluating this type of case, the court is charged with reading the statute as broadly as possible to provide recovery for the injured worker. As such, all legal questions are typically resolved in the plaintiff's favor.
  • Trial judges in New York are elected. Labor unions and plaintiff lawyers are both powerful beneficiaries of 240 and large contributors to judicial election campaigns.

How extreme can these cases be?

 A few recent examples highlight the challenge of defending construction injury cases.

  • Although 12 inches might not seem like an elevated height, on March 31, 2016, a New York appellate court upheld a trial judge's ruling in favor of a plaintiff who was injured by falling through a opening that was 12 to 18 inches above a plywood form. The case was won pursuant to Labor Law 240 even though experts say no scaffold or safety device could have protected the worker from such a minor fall. Brown v 44 St. Dev., LLC 2016 NY Slip Op 02527 Decided on March 31, 2016 Appellate Division, First Department.
  • On August 3, 2015, a New York county jury ended the longest civil trial in the history of Manhattan by awarding $96 million to the families of two workers who were killed when a tower construction crane collapsed on May 30, 2008. During the ten-month trial, over 60 witnesses testified and more than 600 exhibits were introduced into evidence. Ultimately, the jury concluded that the crane collapsed because of shortcuts that the owner of the crane company, James Lomma, took in repairing a critical crane component. The families of the two workers were awarded $48.3 million in compensatory and $48 million in punitive damages.
  • On December 10, 2014, in what is believed to be the largest personal injury verdict for a single plaintiff in the history of the Queens, a jury awarded $62,060,086.27 to 26-year old Chinese immigrant Zeng Guang Lin. Mr. Lin was working at a construction site in the Bronx, owned by Hutch Realty Partners, LLC., when he fell 20 feet from a roof while installing metal siding. The jury unanimously found that the defendants violated Labor Law 240 by failing to provide Mr. Lin with proper safety devices, and were 100% responsible for the verdict. The defendants unsuccessfully argued that Mr. Lin was provided with appropriate safety devices and that he was solely responsible for his accident. Mr. Lin  sustained a traumatic brain injury, multiple spinal fractures, multiple rib fractures, splenic laceration, renal hematoma, and lung contusion. The jury awarded Mr. Lin $20,000,000 for past pain and suffering, $42,000,000 for future pain and suffering, and $60,086.27 for past medical expenses.  Lin v. Hutch Realty Partners, LLC and Gamut Consulting, Inc., Case No.: 24253-08 (J.S.C. Janice A. Taylor).

What is changing and what are the insurance implications?

There is a serious movement in Albany to change the standard for a 240 case from absolute strict liability to comparative fault. The bill, S111-2013, was introduced three years ago but is still in committee.

Best practices that may limit exposure

Assure worksite safety

  • Ensure ladders, scaffolds, and other means of access to the work site are properly built, in good condition and maintained and used properly
  • Create a process to verify that workers have been adequately trained

Hire contractors with strong safety performance records

  • Review their qualifications
  • Verify their licenses. In New York City, you can call 311
  • If possible, obtain a contractor's worker's compensation experience modification rate. An EMR greater than 1% can indicate a higher than average frequency of claims.
  • Visit OSHA's website search page and check the citation history

Create site-specific safety plans that include: 

  • A site safety manager
  • Documented education and training for workers working on scaffolding
  • Documented education and training for workers using ladders
  • A fall prevention plan specific to the work site
  • A falling object policy to control hazards (i.e. netting, overhead protection, storage of materials away from the edges of buildings, roofs and walls)
  • Document safety meetings with individual sign-in sheets

Consider risk-shifting mechanisms

In the construction industry, it is common practice for contractors to require subcontractors to procure a certain amount of liability insurance for themselves as well as for upstream parties (i.e. the owner and the general contractor) and to defend and indemnify the upstream parties from any liability arising out of the subcontractor's work.

Since New York's General Obligations Law Section 5-3221 voids construction agreements that attempt to transfer a party's liability for its own negligence, indemnification agreements should clearly state that the owner and general contractor are retaining liability for their own negligence. We suggest the following language:

Hold Harmless & Indemnification Agreements

To the fullest extent permitted by law, the party performing the work under this agreement, hereby known as the contractor, shall defend, indemnify and hold harmless the property owner and property manager and their agents for whom the work is performed, for any liability, loss, or other claim for damages for death, bodily injury or property damage arising out of performance of the work by the contractor or any agent, servant, employee, subcontractor or supplier of the contractor, except to the extent of any fault attributed to the property owner and property manager.

Insurance Requirements

The contractor shall obtain insurance covering the property owner and property manager as additional insured's for any liability arising out of the work with limits not less than million. This insurance shall be primary insurance and any other insurance covering the property owner and property manager shall be non-contributory. The coverage must be provided for both ongoing and completed operations. The coverage must be provided through coverage forms using standard ISO wording and must not include language that would limit or exclude the standard ISO coverage for injuries to the contractor's employees or the employees of any agent, servant or subcontractor, or exclude contractual indemnification and/or change the definition of an insured contract to exclude coverage for the very type of contract that would transfer the risk to the subcontractor. The measure of damage for failing to provide the necessary coverage is not limited to the cost of premium.

Waiver of Subrogation/Workers Compensation Immunity

The contractor agrees to waive any and all rights of subrogation against the property owner and property manager. In addition, the contractor agrees the indemnification obligation shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable by or for the contractor under workers compensation acts, disability benefit acts or other employee benefit acts.

Certificate of Insurance Requirement

A certificate of insurance must be provided to the property owner and property manager prior to the commencement of work as evidence the contractor is maintaining its own general liability and workers compensation insurance with sufficient limits to cover a significant loss. The certificate must show the property owner and property manager as additional insureds for ongoing and completed operations on a primary and non-contributory basis.