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In a long-awaited turn of events, Bill No. A07636, known as the “New York City Public Works Investment Act,” was delivered and subsequently passed by the New York State Assembly on June 19, 2019.  The Bill is now before the New York State Senate awaiting a final vote.[1]  The reception the current design-build legislation has received in the New York State Legislature is its most positive yet.  It has been on the Assembly/Senate floor two times previously, in both the 2015-16 and 2017-18 Legislative sessions, both times being stalled and subsequently not passed.  The current Bill, unlike its predecessors, has received overwhelming support in both the Cities Committee and Rules Committee (14-1 in favor and 25-0 in favor, respectively).  While the proposed legislation has not been officially passed by the Senate and approved by the Governor, it is highly encouraging to see it moved through the New York State Legislature with such swiftness and support.

If enacted, the new law will allow certain New York City agencies[2] to use the design-build procurement model for their infrastructure projects.  Design-build is a method of project delivery in which the owner retains a single contractor to provide turnkey design and construction services for the project. The design-build model has been used successfully in the private sector and more recently at the State agency level to complete projects on time and on budget. Having a single point of contact saves both time and money and permits the design and construction teams to work more efficiently.

Part of the reason why the implementation of the design-build system on New York State and City public works projects has been so vexing is the “Wicks Law,” which requires the award of separate prime contracts for mechanical, electrical and plumbing work on municipal projects over certain dollar thresholds.  By requiring the municipal agencies to directly retain four separate contractors for each of the primary subdivisions of work, the Wicks Law precluded the single contractor design-build delivery system on projects of any significant dollar amount.  Further, the agencies have interpreted the NYS Education Law as preventing non-licensed contractors from offering professional design services. Even though the design services would continue to be signed and sealed by appropriately licensed design professionals as subcontractors to the design-builder, the restrictive interpretation of the Education Law handcuffed the agencies from reaping the benefits of the design-build delivery system. 

The impasse was finally broken through the passage of the New York State Infrastructure Investment Act, which permitted a select few state agencies to engage in design-build contracts in recent years notwithstanding the prohibitions of the Wicks Law and Education Law. The results were immediate and overwhelming. Specifically, the design-build delivery system enabled the NYS Thruway Authority to complete the Tappan Zee Bridge replacement project in August 2017 – more than a year ahead of schedule and approximately $1 billion less than what the State projected.  The success of the Tappan Zee Bridge Project has opened the door to more than 30 other public works projects where the design-build project delivery method is being utilized, such as the Kosciuszko Bridge Replacement Project, the Rehabilitation of Atlantic Avenue Viaduct Project, and the reconstruction of the BQE. 

While the State agencies have been reaping the benefits of design-build projects, the City agencies have not. The hope is that is about to change. The NYC Public Works Investment Bill that is making its way through the NYS Legislature mimics the NYS Infrastructure Investment Act and will allow NYC agencies to utilize the design-build delivery system on the City’s infrastructure projects.  Under the applicable provisions of the pending legislation, the “design-build contractor” may be a team comprised of separate entities, thus eliminating the separate prime contractors required by the Wicks Law. The Bill also proposes that the design-build project must be subject to a Project Labor Agreement.

Further, the Bill resolves the NYS Education Law impediment by enabling the design-builder to provide the professional services regulated by Articles 145, 147 and 148 of the Education Law through the appropriately licensed design firms that are retained by the design-build contractor. 

In effect, the NYC Public Works Investment Act would codify the New York Court of Appeals’ decision in Charlebois v. J.M. Weller Associates, Inc., 72 N.Y.2d 587 (1988), which elicits the principle that a contract, which includes an express requirement for a separately retained licensed professional to perform the design function of a project, does not violate the licensing protections of the Education Law when the professional services are provided through a subcontractor.  As the Court of Appeals held over 30 years ago, when the design-builder places in writing its duty to find the appropriate individual/entity that possesses the proper professional licenses to engage in the specified “design” services aspect of a project, the design-builder does not run afoul of the Education Law. 

The Bill, having passed the New York State Assembly, now only waits to be passed in the NYS Senate.  If the Bill passes the Senate and is signed into law, it would take effect immediately.  The Bill also has a sunset provision, through which the law will expire and be deemed repealed three years after enactment, unless extended by the State. 

CMM will continue to monitor the status of this Bill and keep our clients informed.

Thank you to Brendan Mahon for his research and drafting assistance with this article.

[1] While the Bill is not guaranteed to pass, it appears more likely than prior attempts. In 2015, similar legislation was stalled in the Cities Committee and Rules Committee of the Assembly and Senate.

[2] The authorized NYC agencies are: Department of Design and Construction, Department of Environmental Protection, Department of Transportation, Parks and Recreation, Health and Hospitals Corporation, School Construction Authority, and NYC Housing Authority.

Do you know any good lawyer jokes?  Yes?  Ok, ok I get it.  You don’t need to keep going.  I get the joke.

Me, I wasn’t truly aware of the public’s negative perception of lawyers until I started law school.  When informed of this apparent fact at orientation, I nodded along with the crowd, but I never really understood it.  I always thought that lawyers were there to help people, prevent problems, fix problems, and do good.  That day I was given the most important piece of advice that I received in all three years of law school: that the only people who could change the public perception of lawyers, are lawyers themselves.

Perhaps no lawyer is the butt of more jokes than the personal injury plaintiff’s lawyer.  The plaintiff is the person or entity bringing a lawsuit.  The plaintiff’s lawyer, especially in personal injury or negligence cases, is only paid if the client gets paid and, therefore, usually fronts all legal costs. This is called a contingency fee and is intended to allow for legal representation for those who can’t afford to pay upfront. Still, these lawyers (let’s call them plaintiff’s lawyers) make for the best lawyer jokes, and are the cream of the crop of lawyers that people love to hate.

Critics of these lawyers argue that their lawsuits increase the cost of products and services, insurance rates, and taxes, and that they invite false lawsuits and malingering clients. Such claims feed into the prevailing image of all lawyers as untrustworthy and unscrupulous. As you might guess, I disagree. I got my start as a plaintiff’s personal injury lawyer before I transitioned to a broader litigation practice, and that has given me a unique perspective which benefits all of my clients. 

Despite the perception and jokes, plaintiff’s lawyers are often on the foreground of positive change in the legal community, and the public as a whole. Idealistic or not, their livelihood depends on it. To be successful, plaintiff’s lawyers must often maintain a difficult balance of being forceful and polite, dynamic and dignified, knowing when and where to push. Plaintiff’s lawyers seek to fix problems, make changes, and can’t take no for an answer. Many plaintiff’s lawyers work with each other, and with other lawyers, to pass legislation that improves the litigation process for everyone.

Recently, as part of the usual sudden bustle of activity which concluded the end of the Legislative Session, the New York State Senate and Assembly passed several bills relevant to civil litigation – one of which, if signed by the Governor, will permit a plaintiff to recover directly from a third-party defendant found to be liable to the direct defendant through contribution or indemnity.

The intent is to close a loophole that had previously allowed certain defendants held liable by judge or jury to evade payment on a judgment. It is expected to promote settlement of cases, thereby reducing judicial waste and unnecessary post-judgment proceeding, allowing the courts to focus on matters not otherwise resolved.

Fortunately, I truly believe that most of us lawyers want to better the public perception that we live with. This bill presents one example of a group of lawyers who saw a problem and took action to better the system, better the legal profession as a whole, and thus, better the public perception of lawyers.

By Christine Malafi

Many companies employ independent contractors to supplement their workforce. By using independent contractors, businesses can minimize expenses from health insurance to payroll taxes to pension plans. These savings can provide much needed relief when the budget is balanced at the end of the year. Yet the distinction between independent contractors and employees can be vague and misleading, and a misclassification of workers could prove to be a costly mistake for employers.

The determination of whether a worker is an employee or an independent contractor is both a federal and state issue. Per the Federal Fair Labor Standards Act, an employment relationship must be differentiated from a strictly contractual one and, additionally, a U.S. Department of Labor (DOL) audit could uncover mistakes made in classification. Persons hired as independent contractors can dispute such classification and file for unemployment insurance if terminated or file for worker’s compensation if injured, triggering an audit. The DOL views misclassification as denying access to critical benefits and protections to employees, to which they are entitled by law. Employee misclassification also reduces taxes paid to federal and state governments, and lowers contributions to state unemployment insurance and workers’ compensation funds.

If a business is discovered to have improperly treated an employee as an independent contractor, the business will be held accountable for employment taxes for that worker, as well as unemployment insurance and workers’ compensation contributions, with associated fines and penalties.

In general, an independent contractor is an individual engaged in a business of his or her own, while an employee is dependent on the business he or she serves. The DOL’s Wage and Hour Division applies a six-factor balancing test, based on Supreme Court precedent, to determine a worker’s classification. These include: (1) the nature and degree of the potential employer’s control; (2) the permanency of the worker’s relationship with the potential employer; (3) the amount of the worker’s investment in facilities, equipment, or helpers; (4) the amount of skill, initiative, judgment, or foresight required for the worker’s services; (5) the worker’s opportunities for profit or loss; and (6) the extent of integration of the worker’s services into the potential employer’s business.

According to the New York State Department of Labor, independent contractors must be free from supervision, direction, and control in the performance of their duties. Furthermore, New York State is more stringent in determining whether an employer-employee relationship exists. An employer-employee relationship may exist (rather than an independent contractor relationship), if the employer: (1) chooses when, where, and how workers perform services; (2) provides facilities, equipment, tools, and supplies; (3) directly supervises the services; (4) sets the hours of work; (5) requires exclusive services; (6) sets the rate of pay; (7) requires attendance at meetings and/or training sessions; (8) asks for oral or written reports; (9) reserves the right to review and approve the work product; (10) evaluates job performance; (11) requires prior permission for absences; and (12) has the right to hire and fire.

All of these guidelines should be taken into consideration when businesses based in, or hiring from, New York State consider how to classify their workers.

The debate between contractors vs. employees has become extremely relevant in our modern economy where, in a study conducted by Intuit, more than 40% of American workers are predicted to be independent contractors by 2020. In a letter dated April 29, 2019, the DOL discussed this growing trend and concluded that workers who provide services through a specific company’s virtual marketplace platform should be classified as independent contractors. The DOL explained that the company in question only provided a platform through which to connect service providers with customers, and that they reject any employment relationship with the service providers. The DOL noted that service providers were obligated to provide their own certification of experience and qualifications before being allowed to use the platform, that the company did not provide any training, or even a required onboarding process, and allowed service providers immediate access to the platform. Thus, the DOL assessed that the service providers in this instance fell under the category of independent contractors, not employees.

Businesses that use independent contractors should conduct an internal audit every year or so, depending on the size of their business and how many independent contractors they claim, to make sure that all workers are properly classified. Please contact our office to discuss your specific business situation.