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New York State's controversial Scaffold Law is costing contractors hundreds of millions of dollars annually and forcing some to close their doors. According to a new report from the Building Trades Employers' Association (BTEA), insurance costs driven by the state's strict liability standard account for 8-10% of total development fees in New York City—two to five times higher than comparable markets.
Enacted in 1895, New York's Scaffold Law holds property owners and contractors fully liable for gravity-related worker injuries regardless of worker fault—a standard unique in America. All other states use a comparative negligence model where liability is shared based on degree of fault.
The law was designed to protect workers from unsafe conditions. However, the BTEA report found that while New York has seen declining construction incidents, the number of liability claims has actually increased, suggesting potential fraud and abuse due to the law's absolute liability standard.
Insurance costs are devastating to contractors in high-risk trades:
"We've had companies that have had to close shop because the cost of insurance is so high," said Elizabeth Crowley, BTEA president and CEO.
The survey included 54 respondents statewide, including owners, general contractors, construction managers, subcontractors, and insurance companies. The findings reveal how the law impacts major projects across New York.
On flagship New York projects, reform could save hundreds of millions:
"The cost of construction is so expensive it is preventing us from building big and building abundantly," Crowley noted.
The findings support pending federal legislation to preempt the Scaffold Law on federally funded projects in New York. According to BTEA, that bill may be necessary for multibillion-dollar federally funded projects to move forward.
One insurance company has been fighting claims under the Scaffold Law with countersuits, resulting in hundreds of claims being dropped. The strategy highlights the challenges the law creates even for liability management.
The Scaffold Law's impact extends far beyond individual contractors. The combined weight of high insurance costs, potential fraud exposure, and competitive disadvantages compared to other states creates systemic challenges for New York construction.
"The law's absolute liability standard has contributed to higher insurance premiums without corresponding improvements in worker safety," the report found, "placing added strain on contractors, particularly small and mid-sized firms."
With major projects like Penn Station, the Second Avenue Subway, and thousands of new housing units in the pipeline, the construction industry argues that reform is critical to project timelines and affordability.
Industry Insight: Westside Construction Group understands the regulatory landscape facing New York contractors. With 30+ years of experience managing complex projects across Upstate New York, WCG navigates cost pressures while maintaining project excellence. For consultation on your project's regulatory requirements and cost management: (585) 440-0304 or www.buildwcg.com
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