Aid for Small Contractors

Section 1. This act shall be known and may be cited as the "small contractors relief act of 2017."

§ 2. The labor law is amended by adding a new article 25-D to read as follows:

ARTICLE 25-D

NEW YORK SMALL CONTRACTOR SAFETY GROUP, INC. PILOT PROGRAM Section 863. Definitions.

863-a. New York small contractor safety group, inc. pilot

program.

863-b. Management of the safety group; board of directors.

863-c. Plan of operation.

863-d. Membership.

863-e. Securing coverage.

863-f. Assessment of safety group members.

863-g. Audit authority.

863-h. Financial oversight of the safety group.

863-i. Exemption from taxes.

863-j. Mandatory work safety program attendance and partic-

ipation.

863-k. Expiration of pilot program.

863-l. Rules and regulations.

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD01677-01-7

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Section 863. Definitions. For purposes of this article the following terms shall have the following meanings:

1. "Board" means the board of directors of the safety group.

2. "Liability insurance" means personal injury liability insurance, property damage liability insurance and employer's liability insurance, as such terms are defined in paragraphs thirteen, fourteen and fifteen of subsection (a) of section one thousand one hundred thirteen of the insurance law and shall also include any type of insurance deemed by the superintendent of financial services to be substantially similar pursuant to paragraph thirty of subsection (a) of such section.

3. "Small contractor" means any contractor which (i) is a resident in this state, (ii) is independently owned and operated, (iii) is either (A) a certified minority or women owned business as provided for in law or (B) if not such a certified minority or women owned business, both (1) in the fiscal year prior to the year for which application for coverage under this article is requested, had less than one million dollars in gross revenues, and (2) provides adequate proof, as evidenced by a letter of rejection or otherwise appropriate documentation, that after written application for liability insurance coverage from an insurer licensed in this state to provide such insurance, it has been denied coverage for either the prior fiscal year, or the fiscal year for which liability insurance is requested. Additionally, it shall also include contractors with a gross revenue of one million dollars or more, up to a limit to be determined by the safety group following actuarially prudent principles, provided that such contractors can provide adequate proof that they are unable to secure insurance coverage as provided for herein.

4. "Safety group" means the New York small contractor safety group, inc. established in section eight hundred sixty-three-a of this article.

§ 863-a. New York small contractor safety group, inc. pilot program. There is hereby created a pilot program to be conducted by a not-forprofit corporation to be known at the New York small contractor safety group, inc. To the extent that the provisions of the not-for-profit corporation law do not conflict with the provisions of this article, or with the plan of operation established pursuant to this article, the not-for-profit corporation law shall apply to the safety group, which shall be a type c corporation pursuant to such law. If an applicable provision of this article or of the safety group's plan of operation relates to a matter embraced in a provision of the not-for-profit corporation law but is not in conflict therewith, both provisions shall apply. The safety group shall perform its functions in accordance with its plan of operation established and approved pursuant to this article and shall exercise its powers through the board herein established.

§ 863-b. Management of the safety group; board of directors. 1. Within forty-five days after the effective date of this article, there shall be appointed the board of the safety group, which board shall have the authority to manage the business and affairs of the safety group. The board shall consist of nine directors, three of whom shall be selected by the governor, two of whom shall be appointed by the temporary president of the senate, two of whom shall be appointed by the speaker of assembly, one of whom shall be appointed the minority leader of the senate, and one of whom shall be appointed by the minority leader of the assembly. Each member of the board shall be appointed for a term of three years, provided however, that of the initial members appointed, the members selected by the governor shall have a term of three years,

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the members appointed by the temporary president of the senate and the minority leader of the assembly shall be appointed for a term of two years, and the members appointed by the speaker of the assembly and the minority leader of the senate shall be appointed for a term of one year. Members who are appointed shall have experience in one or more of the fields of organized labor, construction, public bidding, work safety or any other construction related fields, and have in their professional capacity demonstrated a willing and conscientious effort to promote work safety and fair and equitable treatment of workers and management.

2. The board shall have the power to remove for cause any director. The authority that appointed a director shall have the power to remove such director for cause or without cause. At the expiration of a director's term, the authority that appointed such director shall re-appoint such director for an additional term or appoint a new director for such subsequent term. A vacancy occurring in a director position shall be filled by the authority that originally made such selection or appointment. A vacancy in any one or more of the director positions shall not prevent the remaining directors from transacting any business, provided a quorum is presented and voting.

3. All of the directors shall have equal voting rights and five or more directors shall constitute a quorum, provided that if the number of directors in office is fewer than five, a quorum shall consist of the number of directors in office. The affirmative vote of five directors shall be necessary for the transaction of any business or the exercise of any power or function of the safety group, provided that if the number of directors in office is fewer than five, the affirmative vote of all directors in office shall be necessary for the transaction of any business or the exercise of any power or function of the safety group. The board may delegate to one or more of its directors, officers, agents or employees such powers and duties as it may deem proper.

4. For their attendance at meetings, the directors of the safety group shall be entitled to compensation, as authorized by the board, in an amount not to exceed two hundred dollars per meeting per director and to reimbursement of their actual out-of-pocket expenses. Directors of the safety group, except as otherwise provided by law, may engage in private or public employment or in a profession or business.

5. The safety group shall indemnify and hold harmless each director and officer of the safety group from all liability, claims, or damages by reason of his or her acts or omissions in connection with the performance of his or her duties as a director or officer of the safety group to the fullest extent permitted by the not-for-profit corporation law, and, in furtherance thereof, the safety group shall obtain director's and officer's liability insurance coverage on terms consistent with section seven hundred twenty-six of the not-for-profit corporation law.

§ 863-c. Plan of operation. 1. Within ninety days after the effective date of this article, the safety group shall file with the commissioner of labor and the superintendent of financial services its plan of operation, which shall be designed to assure the fair, reasonable and equitable administration of the safety group. The plan of operation and any subsequent amendments thereto shall be filed with the commissioner of labor and the superintendent of financial services, who shall have ninety days to approve or reject any proposal contained in such plan which they jointly determine does not conform to the intent of this article. Upon transmission to the safety group of such objections the group shall modify the plan accordingly and the plan shall then become operative.

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2. The plan of operation shall constitute the by-laws of the safety group and shall, in addition to the requirements enumerated elsewhere in this article, (a) establish procedures for collecting and managing the assets of the safety group; (b) establish regular places and times for meetings of the board of directors and the members; (c) establish accounting and record-keeping procedures for all financial transactions of the safety group, its agents and the board of directors; (d) establish a procedure for determining and collecting the appropriate amount of assessments and surcharges under this article; (e) set forth the procedures by which the safety group may exercise the audit rights granted to it under this article; (f) establish procedures for the creation of a safety program, risk management program and such other programs for the safety group's members as the board deems appropriate; (g) establish procedures for expelling members who fail to satisfy the safety group's safety compliance rules which rules shall provide for grace periods of coverage after expulsion as determined fair and equitable by the group; (h) establish rules for the calculation of membership fee assessments; and (i) contain such additional provisions as the board may deem necessary or proper for the execution of the powers and duties of the safety group.

§ 863-d. Membership. Membership in the safety group shall be open to all small contractors initially admitted as members of the group and all small contractors who thereafter apply for insurance coverage and are determined to be eligible for insurance coverage as provided by the group and, as provided in the plan of operation. The safety group shall provide to its members a copy of the plan of operation and any subsequent amendments and shall inform its members of their rights and duties as members of the safety group.

§ 863-e. Securing coverage. 1. Within two hundred seventy days after the effective date of this article, the safety group shall take such actions as are necessary to purchase liability insurance. Limitations on coverage and other specific requirements for any such policy of liability insurance purchased by the group shall be as provided for in the plan of operation. No later than thirty days after the commencement of a new policy year the safety group shall file with the commissioner of labor, and the superintendent of financial services a copy of the group policy it has purchased for that year.

2. The safety group may also purchase a group policy for excess liability insurance coverage on behalf of those of its members desiring such excess liability insurance coverage.

§ 863-f. Assessment of safety group members. 1. In order to meet the obligations and pay (a) the costs of the group general liability insurance policy purchased pursuant to this article and (b) its expenses in carry out its powers, duties and obligations under this article, the safety group shall ascertain by reasonable estimate the total funding necessary to carry on its operations. Based upon such estimation, the safety group shall assess its members a membership fee, to fairly reflect the cost of the liability insurance coverage procured by the safety group and the administration of the safety group. Fees shall be collected annually or more often as determined by the safety group upon written notice that they shall be due within sixty days of the date upon which such notice is received. The safety group shall determine the basis for calculating such fees in accordance with rules set forth in the plan of operation, which rules shall be applied in a fair and equitable manner, and in an open and transparent manner so as to make known the basis upon which such calculations have been made. Upon calculation

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of the fee each member must pay, from within amounts appropriated by law, the state shall make an initial capital contribution to the safety group in an amount equal to fifty percent of the amount of the fee so assessed for the purpose of providing initial capitalization of the safety group which will enable it to conduct business in a financially prudent manner, provided however, that the amount of such initial capitalization provided by the state shall not exceed twenty-five million dollars.

2. Should the safety group determine that the membership fees that have been paid to it are inadequate to meet its obligations under this article, the safety group shall determine the amount required to eliminate such deficiency. Based upon such amount, the safety group shall assess its members a surcharge, calculated on a similar basis as above determined for the original membership fee, in accordance with rules set forth in the plan of operation.

3. To pay the costs of any excess liability insurance coverage purchased pursuant to this article, the safety group shall assess those of its members who wish to obtain such excess liability insurance a separate fee, calculated in accordance with rules set forth in the plan of operation.