Bill Text: NY S03445 | 2009-2010 | General Assembly | Amended
Bill Title: Relates to the prompt payment of employees and contractors engaged in private construction projects.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2010-01-06 - REFERRED TO LABOR [S03445 Detail]
Download: New_York-2009-S03445-Amended.html
S T A T E O F N E W Y O R K
________________________________________________________________________
3445--C
Cal. No. 143
2009-2010 Regular Sessions
I N S E N A T E
March 19, 2009
___________
Introduced by Sen. SAVINO -- read twice and ordered printed, and when
printed to be committed to the Committee on Labor -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee -- reported favorably from said committee, ordered
to first and second report, ordered to a third reading, amended and
ordered reprinted, retaining its place in the order of third reading
-- again amended and ordered reprinted, retaining its place in the
order of third reading
AN ACT to amend the labor law and the general business law, in relation
to the prompt payment of employees and contractors engaged in private
construction projects
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 196-a of the labor law, as added by chapter 605 of
2 the laws of 1997, is amended to read as follows:
3 S 196-a. Complaints by employees to commissioner. (A) Any employee,
4 or the recognized and certified collective bargaining agent acting on
5 the employee's behalf, may file with the commissioner a complaint
6 regarding a violation of THIS article [six], article nineteen, or arti-
7 cle nineteen-A of this chapter for an investigation of such complaint
8 and statement setting the appropriate remedy, if any. Failure of an
9 employer to keep adequate records, in addition to exposing such employer
10 to penalties authorized under subdivision one of section two hundred
11 eighteen of this chapter, shall not operate as a bar to filing of a
12 complaint by an employee. In such a case the employer in violation shall
13 bear the burden of proving that the complaining employee was paid wages,
14 benefits and wage supplements.
15 (B) ANY EMPLOYEE, OR THE RECOGNIZED AND CERTIFIED COLLECTIVE BARGAIN-
16 ING AGENT ACTING ON THE EMPLOYEE'S BEHALF, CONTRACTOR, OR THE RECOGNIZED
17 AND CERTIFIED LABOR ORGANIZATION WITH WHICH THE CONTRACTOR HAS EXECUTED
18 A COLLECTIVE BARGAINING AGREEMENT COVERING WAGES, BENEFITS AND SUPPLE-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10170-11-9
S. 3445--C 2
1 MENTS, MAY FILE WITH THE COMMISSIONER A COMPLAINT REGARDING A VIOLATION
2 OF OR THE POTENTIAL FOR THE IMMINENT VIOLATION OF THIS ARTICLE OR ARTI-
3 CLE NINETEEN OF THIS CHAPTER OCCASIONED BY ANOTHER PERSON, CORPORATION,
4 EMPLOYER OR ENTITIES IN VIOLATION OF ARTICLE THIRTY-FIVE-E OF THE GENER-
5 AL BUSINESS LAW FOR AN INVESTIGATION OF SUCH COMPLAINT AND STATEMENT
6 SETTING THE APPROPRIATE REMEDY, IF ANY.
7 S 2. Subdivision 1 of section 756 of the general business law, as
8 added by chapter 127 of the laws of 2002, is amended to read as follows:
9 1. "Construction contract" means a written or oral agreement for the
10 construction, reconstruction, alteration, maintenance, moving or demoli-
11 tion of any building, structure or improvement, or relating to the exca-
12 vation of or other development or improvement to land, and where the
13 aggregate cost of the construction project including all labor,
14 services, materials and equipment to be furnished, equals or exceeds
15 [two hundred fifty thousand dollars] ONE HUNDRED FIFTY THOUSAND DOLLARS.
16 For the purposes of this article a construction contract shall not
17 include any such contract made and awarded by the state, any public
18 department, any public benefit corporation, any public corporation or
19 official thereof, or a municipal corporation or official thereof for
20 construction, reconstruction, alteration, repair, maintenance, moving or
21 demolition of any public works project nor any contract with a contrac-
22 tor or subcontractor which is part of such project; or any such contract
23 the purpose of which is the construction, reconstruction, alteration,
24 repair, maintenance, moving or demolition of an individual one, two or
25 three family residential dwelling or a residential tract development of
26 one hundred [fifty] or less one or two family dwellings, or any residen-
27 tial construction project where the aggregate size of such project is
28 [nine thousand] FOUR THOUSAND FIVE HUNDRED square feet or less, or any
29 residential project of fewer than [one hundred fifty] SEVENTY-FIVE units
30 which receives financial assistance from the federal government, the
31 state or a municipal entity designed for households earning an average
32 of one hundred twenty-five percent of the housing and urban development
33 agency area median income.
34 S 3. Section 756-a of the general business law, as added by chapter
35 127 of the laws of 2002, is amended to read as follows:
36 S 756-a. Obligations. IT IS THE POLICY AND PURPOSE OF THIS ARTICLE TO
37 EXPEDITE PAYMENT OF ALL MONIES OWED TO THOSE WHO PERFORM CONTRACTING
38 SERVICES PURSUANT TO CONSTRUCTION CONTRACTS. Except as otherwise
39 provided in this article, the terms and conditions of a construction
40 contract shall supersede the provisions of this article and govern the
41 conduct of the parties thereto.
42 1. Billing cycle. The parties to a construction contract may, by mutu-
43 al agreement, establish a billing cycle for the submission of invoices
44 requesting payment for work performed pursuant to a construction
45 contract. In the absence of an agreement by the parties as to the bill-
46 ing cycle, the billing cycle shall be the calendar month within which
47 the work is performed.
48 2. Invoices. (a) A contractor shall be entitled to invoice the owner
49 for interim payments at the end of the billing cycle. A contractor shall
50 be entitled to submit a final invoice for payment in full upon the
51 performance of all the contractor's obligation under the contract.
52 (i) Upon delivery of an invoice and all contractually required
53 documentation, an owner shall approve or disapprove all or a portion of
54 such invoice within twelve business days. Owner approval of invoices
55 shall not be unreasonably withheld nor shall an owner, in bad faith
56 disapprove all or a portion of an invoice. If an owner declines to
S. 3445--C 3
1 approve an invoice or a portion thereof, it must prepare and issue a
2 written statement describing those items in the invoice that are not
3 approved. An owner may decline to approve an invoice or portion of an
4 invoice for:
5 (1) Unsatisfactory or disputed job progress;
6 (2) Defective construction work or material not remedied;
7 (3) Disputed work materials;
8 (4) Failure to comply with other material provisions of the
9 construction contract;
10 (5) Failure of the contractor to make timely payments for labor
11 including collectively bargained fringe benefit contributions, payroll
12 taxes and insurance, equipment and materials, damage to the owner, or
13 reasonable evidence that the construction contract cannot be completed
14 for the unpaid balance of the construction contract sum; or
15 (6) Failure of the owner's architect to certify payment for any or all
16 of the reasons set forth in this section so long as the reasons are
17 included in the owner's written statement of disapproval.
18 (ii) Upon delivery of an invoice and all contractually required
19 documentation, a contractor or subcontractor shall approve or disapprove
20 all or a portion of such invoice within twelve business days. Contractor
21 and subcontractor approval of invoices shall not be unreasonably with-
22 held nor shall a contractor or subcontractor, in bad faith, disapprove
23 all or a portion of an invoice. Nothing in this section shall prohibit
24 the contractor or subcontractor, at the time of application to the owner
25 or contractor, from withholding such application to the owner or
26 contractor for payment to the subcontractor or material supplier for:
27 (1) Unsatisfactory or disputed job progress;
28 (2) Defective construction work or material not remedied;
29 (3) Disputed work;
30 (4) Failure to comply with other material provisions of the
31 construction contract; or
32 (5) Failure of the subcontractor to make timely payments for labor
33 including collectively bargained fringe benefit contributions; payroll
34 taxes and insurance, equipment and materials, damage to contractor or
35 another subcontractor or material supplier, or reasonable evidence that
36 the subcontract cannot be completed for the unpaid balance of the
37 subcontract sum.
38 (b) Nothing in this subdivision shall authorize the withholding of an
39 application to the owner or contractor for the payment to a subcontrac-
40 tor or material supplier when due to a delay in job progress by the
41 owner, contractor or another subcontractor or material supplier other
42 than the applicant or applicant's subcontractor or material supplier.
43 3. Payment. (a) The owner's payment of a contractor's interim and
44 final invoices shall be made on the basis of a duly approved invoice of
45 work performed and the material supplied during the billing cycle.
46 (i) Unless the provisions of this article provide otherwise, the owner
47 shall pay the contractor strictly in accordance with the terms of the
48 construction contract.
49 (ii) [Unless otherwise agreed to by the parties, payment] PAYMENT of
50 an interim or final invoice shall be due from the owner not later than
51 thirty days after approval of the invoice.
52 (iii) If payment by the owner is contingent upon lender approval,
53 payment of a contractor's interim or final invoice or the amount of loan
54 proceeds disbursed by the lender for payment of the contractor's interim
55 or final invoice shall be due from the owner seven days after receipt by
S. 3445--C 4
1 the owner of good funds except where the provisions of section seven
2 hundred fifty-six-d of this article applies.
3 (iv) An owner may withhold from an interim payment only an amount that
4 is sufficient to pay the costs and expenses the owner reasonably expects
5 to incur in order to cure the defect or correct any items set forth in
6 writing pursuant to subparagraph (i) of paragraph (a) of subdivision two
7 of this section, or in the alternative, to withhold an amount not to
8 exceed the line item amount appearing in the agreed schedule of values
9 together with any change orders, additions and/or deletions, if such
10 schedule has been previously submitted, and/or an amount sufficient to
11 cover liquidated damages as established in an agreed upon schedule in
12 the construction contract.
13 (b) The contractor or subcontractor's payment of subcontractor or
14 material supplier's interim or final invoice shall be made on the basis
15 of a duly approved invoice of the work performed and materials supplied
16 during the billing cycle.
17 (i) Unless the provisions of this article provide otherwise, the
18 contractor or subcontractor shall pay the subcontractor strictly in
19 accordance with the terms of the construction contract. Performance by a
20 subcontractor in accordance with the provisions of its contract shall
21 entitle it to payment from the party with which it contracts. Notwith-
22 standing this article, where a contractor enters into a construction
23 contract with a subcontractor as agent for a disclosed owner, the
24 payment obligation shall flow directly from the disclosed owner as prin-
25 cipal to the subcontractor and through the agent.
26 (ii) When a subcontractor has performed in accordance with the
27 provisions of its construction contract, the contractor shall pay to the
28 subcontractor, and each subcontractor shall in turn pay to its subcon-
29 tractors, the full or proportionate amount of funds received from the
30 owner for each subcontractor's work and materials based on work or
31 services provided under the construction contract, seven days after
32 receipt of good funds for each interim or final payment, provided all
33 contractually required documentation and waivers are received.
34 (iii) A contractor or subcontractor may withhold amounts received from
35 an owner in connection with an interim payment due to a subcontractor or
36 material supplier only such sums that are sufficient to pay the direct
37 expenses as are reasonable to correct deficiencies identified pursuant
38 to subparagraph (ii) of paragraph (a) of subdivision two of this
39 section, or in the alternative, to withhold an amount not to exceed the
40 line item amount appearing in the agreed schedule of values, together
41 with any change order, additions or deletions, if such schedule has been
42 previously submitted[, and/or an amount sufficient to cover liquidated
43 damages as established in an agreed upon schedule in the construction
44 contract].
45 (iv) If a contractor, after submitting an invoice to an owner under a
46 construction contract, but before making a payment to a subcontractor or
47 material supplier for the subcontractor's or material supplier's
48 performance covered by such invoice, discovers that all or a portion of
49 the payment otherwise due to the subcontractor or material supplier is
50 subject to withholding from the subcontractor or material supplier in
51 accordance with the construction contract and the conditions set forth
52 in subparagraph (ii) of paragraph (a) of subdivision two of this
53 section, then the contractor shall:
54 (1) As soon as practicable upon ascertaining the cause giving rise to
55 a withholding, but prior to the due date for a subcontractor or material
56 supplier payment, furnish to the subcontractor or material supplier and
S. 3445--C 5
1 the owner written notice of withholding specifying conditions for with-
2 holding payment and identifying the amount to be withheld;
3 (2) Reduce the subcontractor's or material supplier's interim payment
4 by an amount not to exceed the amount specified in the notice of with-
5 holding; and
6 (3) Pay the subcontractor or material supplier amounts withheld within
7 seven days after correction of the identified subcontractor or material
8 supplier performance deficiency and receipt of all required documenta-
9 tion and waivers, unless the funds [therefore] THEREFOR must be obtained
10 from the owner's next interim payment due to a reduction in the contrac-
11 tor's billing directly resulting from the subcontractor's or material
12 supplier's performance deficiency identified in the notice of withhold-
13 ing.
14 (c) A written notice of any withholding under this subdivision shall
15 be issued to a subcontractor or material supplier specifying:
16 (i) The amount to be withheld;
17 (ii) The specific causes for withholding under the terms of the
18 construction contract and pursuant to this subdivision;
19 (iii) The remedial actions necessary to be taken by the subcontractor
20 or material supplier in order to receive payments of the amounts with-
21 held; and
22 (iv) The documentation and waivers required.
23 4. Notice. A contractor or subcontractor shall disclose to a subcon-
24 tractor, at the time the construction subcontract is entered into, the
25 due date for receipt of payments to the contractor or subcontractor from
26 the owner or the contractor as the case may be. If a contractor or
27 subcontractor fails to accurately disclose the due date to a subcontrac-
28 tor, the contractor or subcontractor shall be obligated to pay the
29 subcontractor as though the due dates established in paragraph (a) of
30 subdivision three of this section were met by the owner. In addition,
31 upon written request of a subcontractor, the owner shall provide notice
32 to such subcontractor within five days of making any interim or final
33 payment to the contractor. The subcontractor's request shall remain in
34 effect for the duration of the subcontractor's work on the project.
35 S 4. Section 756-b of the general business law, as added by chapter
36 127 of the laws of 2002, is amended to read as follows:
37 S 756-b. Remedies. 1. (a) If any interim or final payment to a
38 contractor is delayed beyond the due date established in paragraph (a)
39 of subdivision three of section seven hundred fifty-six-a of this arti-
40 cle, the owner shall pay the contractor interest beginning on the next
41 day at the rate of one percent per month or fraction of a month on the
42 unpaid balance, or at a higher rate consistent with the construction
43 contract.
44 (b) Notwithstanding any contrary agreement, if any interim or final
45 payment to a subcontractor is delayed beyond the due date established in
46 paragraph (b) of subdivision three of section seven hundred fifty-six-a
47 of this article the contractor or subcontractor shall pay its subcon-
48 tractor interest, beginning on the next day, at the rate of one percent
49 a month or fraction of a month on the unpaid balance, or at a higher
50 rate consistent with the construction contract.
51 2. (a) (i) If an owner fails to approve or disapprove an invoice with-
52 in the time limits established in subparagraph (i) of paragraph (a) of
53 subdivision two of section seven hundred fifty-six-a of this article, or
54 to pay the contractor the undisputed invoice amount within the time
55 limits provided by paragraph (a) of subdivision three of section seven
56 hundred fifty-six-a of this article, the contractor may suspend contrac-
S. 3445--C 6
1 tually required performance, only after providing the owner written
2 notice and an opportunity to cure consistent with subparagraph (ii) of
3 this paragraph.
4 (ii) A contractor intending to suspend performance on the construction
5 contract for failure of the owner to make timely payments or approvals
6 within the time limits provided by this article must provide the owner
7 written notice at least ten calendar days before the contractor's
8 intended suspension. Such notice shall:
9 (A) inform the owner that payment for undisputed invoice amounts have
10 not been received; and
11 (B) state the intent of the contractor to suspend performance for
12 non-payment.
13 If after the tenth calendar day following written notice the owner has
14 not cured the deficiency, the contractor may suspend performance.
15 (iii) A contractor shall not be deemed in breach of the construction
16 contract for suspending performance pursuant to this section.
17 (b)(i) A subcontractor may suspend contractually required performance
18 if any or all of the occurrences outlined in clauses (A), (B) and (C) of
19 this subparagraph occur and only after providing written notice and an
20 opportunity to cure consistent with subparagraph (ii) of this paragraph:
21 (A) If an owner fails to make timely payments for undisputed invoices
22 within the time limits established by subdivision three of section seven
23 hundred fifty-six-a of this article for the subcontractor's work and the
24 contractor also fails to pay the subcontractor for the approved work;
25 (B) If an owner pays the contractor within the time limits established
26 by subdivision three of section seven hundred fifty-six-a of this arti-
27 cle for undisputed invoices for work performed by the subcontractor but
28 the contractor fails to make payment to the subcontractor within the
29 time frames established by this article for the subcontractor's work;
30 (C) If an owner fails to approve or disapprove a portion of contrac-
31 tor's invoice for work performed by the subcontractor within the time
32 limits established in paragraph (a) of subdivision two of section seven
33 hundred fifty-six-a of this article;
34 (D) If a contractor or subcontractor fails to approve or disapprove a
35 subcontractor's invoice within the time limits established in paragraph
36 (b) of subdivision three of section seven hundred fifty-six-a of this
37 article; or
38 (E) If an owner fails to approve portions of the contractors' billing
39 for work performed by the subcontractor within the time limits estab-
40 lished by this article and the reasons for such failure are not the
41 fault of or directly related to the subcontractor's work.
42 (ii) A subcontractor intending to suspend performance for failure to
43 receive timely payments within the time limits established pursuant to
44 this article must provide both the owner and the contractor written
45 notice at least ten calendar days before the subcontractor's intended
46 suspension. Such notice shall:
47 (A) inform the owner and the contractor that payment for undisputed
48 billing amounts have not been received; and
49 (B) state the intent of the contractor to suspend performance for
50 non-payment.
51 If after the tenth calendar day following written notice either the
52 owner or the contractor has not cured the deficiency, the subcontractor
53 may suspend performance AND/OR ATTEMPT TO RESOLVE IN COMPLIANCE WITH
54 SUBDIVISION THREE OF THIS SECTION.
S. 3445--C 7
1 (iii) A subcontractor shall not be deemed in breach of the
2 construction contract for suspending performance pursuant to this
3 section.
4 (iv) (A) A contractor or subcontractor that suspends performance as
5 provided in this section shall not be required to furnish further labor,
6 materials or services until the contractor or subcontractor is paid the
7 undisputed invoice amount at the time period for completion as provided
8 in the construction contract, OR A FINAL DETERMINATION HAS BEEN MADE IN
9 COMPLIANCE WITH SUBDIVISION THREE OF THIS SECTION AND COMPLIED WITH.
10 All of the time frames established within [the construction contract of
11 a contractor or subcontractor] THIS SECTION shall be extended for the
12 length of time performance was suspended. Payment of documented actual
13 costs incurred for re-mobilization resulting from suspension shall be
14 negotiated between the parties.
15 (B) In the event of suspension of a construction contract, as provided
16 in this article, all materials, equipment, tools, construction equipment
17 and machinery located at the job site shall remain the sole and exclu-
18 sive property of the contractor or subcontractor and shall be removed
19 from the job site, if necessary, within a reasonable period of time.
20 Access to the contractor's or subcontractor's property shall not be
21 unreasonably withheld.
22 3. (A) UPON RECEIPT OF WRITTEN NOTICE OF A COMPLAINT (I) THAT AN
23 OWNER HAS VIOLATED THE PROVISIONS OF THIS ARTICLE; (II) THAT A CONTRAC-
24 TOR HAS VIOLATED THE PROVISIONS OF THIS ARTICLE; (III) WHERE A CONTRAC-
25 TOR ALLEGES A SUBCONTRACTOR HAS VIOLATED THE PROVISIONS OF THIS ARTICLE;
26 (IV) WHERE A SUBCONTRACTOR ALLEGES A CONTRACTOR HAS VIOLATED THE
27 PROVISIONS OF THIS ARTICLE; (V) WHERE A SUBCONTRACTOR ALLEGES THAT
28 ANOTHER SUBCONTRACTOR HAS VIOLATED THE PROVISIONS OF THIS ARTICLE; (VI)
29 WHERE A CONTRACTOR OR SUBCONTRACTOR ALLEGES A MATERIAL SUPPLIER HAS
30 VIOLATED THE PROVISIONS OF THIS ARTICLE; OR (VII) WHERE A MATERIAL
31 SUPPLIER ALLEGES A CONTRACTOR OR SUBCONTRACTOR HAS VIOLATED THE
32 PROVISIONS OF THIS ARTICLE; THE PARTIES SHALL ATTEMPT TO RESOLVE THE
33 MATTER GIVING RISE TO SUCH COMPLAINT.
34 (B) THE WRITTEN NOTICE REQUIRED UNDER THIS SECTION SHALL BE DELIVERED
35 AT OR SENT BY ANY MEANS THAT PROVIDES WRITTEN, THIRD-PARTY VERIFICATION
36 OF DELIVERY TO THE LAST BUSINESS ADDRESS KNOWN TO THE PARTY GIVING
37 NOTICE.
38 (C) IF EFFORTS TO RESOLVE SUCH MATTER TO THE SATISFACTION OF ALL
39 PARTIES ARE UNSUCCESSFUL, THE AGGRIEVED PARTY MAY REFER THE MATTER, NOT
40 LESS THAN FIFTEEN DAYS OF THE RECEIPT OF THIRD PARTY VERIFICATION OF
41 DELIVERY OF THE COMPLAINT, TO THE AMERICAN ARBITRATION ASSOCIATION FOR
42 AN EXPEDITED ARBITRATION PURSUANT TO THE RULES OF THE AMERICAN ARBI-
43 TRATION ASSOCIATION.
44 (D) UPON CONCLUSION OF THE ARBITRATION PROCEEDINGS, THE ARBITRATOR
45 SHALL SUBMIT TO THE PARTIES HIS OR HER OPINION AND AWARD REGARDING THE
46 ALLEGED VIOLATION.
47 (E) THE AWARD OF THE ARBITRATOR SHALL BE FINAL AND MAY ONLY BE VACATED
48 OR MODIFIED AS PROVIDED IN ARTICLE SEVENTY-FIVE OF THE CIVIL PRACTICE
49 LAW AND RULES UPON AN APPLICATION MADE WITHIN THE TIME PROVIDED BY
50 SECTION SEVENTY-FIVE HUNDRED TWO OF THE CIVIL PRACTICE LAW AND RULES.
51 S 5. Section 757 of the general business law is amended by adding two
52 new subdivisions 3 and 4 to read as follows:
53 3. A PROVISION, COVENANT, CLAUSE OR UNDERSTANDING IN, COLLATERAL TO OR
54 AFFECTING A CONSTRUCTION CONTRACT STATING THAT EXPEDITED ARBITRATION AS
55 EXPRESSLY PROVIDED FOR AND IN THE MANNER ESTABLISHED BY SECTION SEVEN
S. 3445--C 8
1 HUNDRED FIFTY-SIX-B OF THIS ARTICLE IS UNAVAILABLE TO ONE OR BOTH
2 PARTIES.
3 4. A PROVISION, COVENANT, CLAUSE OR UNDERSTANDING IN COLLATERAL TO OR
4 AFFECTING A CONSTRUCTION CONTRACT ESTABLISHING PAYMENT PROVISIONS WHICH
5 DIFFER FROM THOSE ESTABLISHED IN SUBDIVISION THREE OF SECTION SEVEN
6 HUNDRED FIFTY-SIX-A AND SECTION SEVEN HUNDRED FIFTY-SIX-B AS APPLICABLE.
7 S 6. This act shall take effect immediately and shall apply to
8 construction contracts entered into after such date, except those
9 contracts entered into as part of a construction project for which a
10 permit or permits have been issued and work has begun on such projects
11 prior to the effective date of this act.
