Recent updates to New York’s already complex construction laws require owners, developers, general contractors and subcontractors to revisit their construction contracts to ensure compliance with current New York law and limit unnecessary risk. Moreover, New York’s unique insurance market and safety and labor laws require that construction contract documents be specifically tailored to New York law. Now, more than ever, boilerplate templates and a one-size-fits-all approach do not work for New York construction industry participants.
For example, starting just this past December 30, 2024, a change in New York’s Labor Law now requires all contractors and subcontractors bidding and working on public projects and certain private projects funded by public subsidies to register with the New York State Department of Labor (DOL). Importantly, contractors are responsible for verifying that their subcontractors are also registered. The DOL can assess fines for failing to comply with the new registration requirements.
Other recent changes include revisions to New York’s prompt payment law, which limits the amount of retainage that can be held from contractors and subcontractors. The prior law gave owners and contractors discretion to retain “reasonable amounts.” The revisions also changed the timing for the submission and payment of final invoices, which, under certain circumstances, may result in earlier final payment and release of retainage and prevent withholding of retainage during a warranty period.
Failure to keep abreast of the requirements of New York construction laws can subject construction industry participants to fines, penalties, high-interest obligations, insufficient insurance coverage or even coverage denials, attorneys fees and potential disqualification from bidding on public contracts. To ensure compliance with these laws and changes and to safeguard your company from potential risks, we strongly advise that all clients regularly take the following actions:
- Review and update your construction agreements,
- Audit your insurance program to ensure you have sufficient and required coverages for the work that you do,
- Develop and revise safety protocols to comply with updated safety standards, and
- Confirm all registration requirements are satisfied.
We recommend that everyone who engages in New York construction retain legal professionals to comprehensively review existing contracts and practices to address potential vulnerabilities. Cohen Seglias’ Construction Contracts & Risk Management Group is available to assist you in understanding New York law and implementing the necessary adjustments in your contract documents. Please reach out to us to schedule a consultation. Taking proactive measures now can help you avoid costly disputes, delays, and penalties in the future.
