What's happening
This bill creates a five-year pilot program establishing the New York Small Contractor Safety Group, Inc. to help small contractors access liability insurance, with state financial support and oversight.
Why it matters
Addresses a critical gap for small, minority, and women-owned contractors. By creating a specialized safety group for those who have been denied liability insurance, the bill directly targets a major barrier to market entry and survival for under-resourced businesses, potentially increasing diversity and competition in the construction industry.
State-backed financial support with eventual repayment. The program provides up to $25 million in initial state capital to help the group become viable, which is crucial for launching a self-sustaining insurance pool. However, the structure requires eventual repayment of this capital, balancing public support with fiscal responsibility.
Accountability and safety improvements. The bill mandates participation in safety and job site training programs, linking insurance access to improved workplace practices. This could lead to better safety records, fewer accidents, and a stronger safety culture among small contractors.
Oversight, transparency, and sunset provisions. Extensive oversight by state agencies, annual audits, and financial reporting requirements are built in to prevent misuse and ensure transparency. The five-year sunset and required program evaluation ensure the model is tested and refined before any permanent adoption, reducing the risk of long-term unintended consequences.
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Who cares
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Help for Small Contractors
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to finance
- Referred to finance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Aid for Small Contractors
In Assembly Committee · Labor · Sponsor Kevin Cahill
Full text
7 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6123
2017-2018 Regular Sessions
IN SENATE
May 11, 2017
Introduced by Sen. ALCANTARA -- read twice and ordered printed, and when printed to be committed to the Committee on Finance
AN ACT to amend the labor law and the workers' compensation law, in relation to establishing the New York small contractor safety group, inc. and providing for its functions, powers and duties, and establishing the New York small contractor safety group fund within the New York state insurance fund and making an appropriation therefor
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
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
S. 6123 2
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,
S. 6123 3
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.
S. 6123 4
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
S. 6123 5
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.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the labor law and the workers' compensation law, in relation to establishing the New York small contractor safety group, inc. and providing for its functions, powers and duties, and establishing the New York small contractor safety group fund within the New York state insurance fund and making an appropriation therefor
Purpose
This legislation would create the New York Small Contractor Safety Group, Inc. and the New York Small Contractor Safety Group Fund in order to establish a five year pilot program to provide affordable levels of general and excess liability insurance coverage to small and MWBE contractors who participate in safety training and satisfy the Group's safety compliance rules.
Summary of provisions
Section 1. Names the legislation the "Small Contractors Relief Act of 2015." Section 2. Adds a new article 25-C to the labor law, including:
Read the full memo (1,326 words)
1) § 863 - Definitions
a. Defines "small contractor" as either an MWBE or a contractor with less than $1M in gross revenue that can provide evidence that they have been denied insurance coverage.
In addition, it allows the safety group to insure contractors with greater gross revenue, up to a limit set by the group pursuant to "actuarially prudent principles," provided they can also show an inability to obtain coverage.
2) § 863-A - Establishes the NY Small Contractor Safety Group, Inc. pilot program.
3) § 863-B - Provides for the management of the safety group. Requires the appointment of a Board, with members appointed by the Governor, Assembly and Senate majority and Assembly and Senate minority. Board members must have experience in construction or organized labor and have demonstrated a conscientious effort to promote safety and fair treatment of workers.
4) § 863-C - Plan of Operation
a. Must be submitted to the Commissioner of Labor and Superintendent of Financial Services for approval.
b. Must establish procedures for collecting and managing assets, determining and collecting appropriate assessments and surcharges, auditing members, creating safety program and risk management program, and expelling members who do not comply, including a grace period.
5) § 863-D - Membership
a. Opens the Safety Group to all eligible small contractors.
6) § 863-E - Securing Coverage
a. Requires the Safety Group to purchase coverage for members within 270 days of the Act's effective date.
b. Limitations on coverage and any specific requirements to be set in the plan of operation.
c. A copy of the group policy must be filed with the Commissioner of Labor and Superintendent of Financial Services.
7) § 863-F - Assessments
a. Requires the safety group to determine assessments of members to cover insurance and operating costs. The Safety Group will be required to make known the basis of its calculation of assessments.
b. Includes a two-to-one funding mechanism, whereby the state will provide funding to the Safety Group of fifty percent of the amount of assessments, up to a maximum level of $25,000,000. This will limit State exposure if there is low participation.
c. Allows for additional assessments if the Group runs a deficit.
d. Assessments for Excess liability coverage will only be charged to those Members who wish to purchase that type of coverage for a separate fee.
8) § 863-G - Audit Authority
a. Grants the Safety Group authority to audit the books of its members.
b. Grants the State Comptroller the authority to audit the Safety Group.
9) § 863-H - Financial Oversight
a. Requires the Safety Group to present annual financial statements to the 'Commissioner of Labor and the Superintendent of Department of Finance, and allows both the Commissioner and Superintendent to undertake studies and investigations to ensure the Group complies with the law
10) § 863-I - Exempts the Safety Group from all fees and taxes, other than property taxes.
11) § 863-J - Mandatory Safety Program
a. Requires Group members to participate in safety training and to satisfy the Group's safety compliance rules.
b. The Safety Group is to utilize the expertise of work and safety program experts and large contractors, in establishing their program.
12) § 863-K - Pilot Program
a. Establishes that the Safety Group is a pilot program, expiring after five years.
b. One year prior to expiration, the Safety Group is required to submit detailed information and analysis of the Group's operation and effectiveness so that the program can be revised if necessary.
13) § 863-L - Regulations
a. With notice to DFS, the Commissioner of Labor may promulgate any regulations necessary to implement the bill.
Section 3. Adds a new section 87-J to the Workers Comp Law:
1) § 87-J(1) - Allows the State Insurance Fund (SIF) to issue insurance to the Safety Group. Note that it does not limit the Safety
Group to purchase insurance from the SIF, as they could also buy policies from private carriers.
2) § 87-J(2) - Provides for a Safety Group Fund to be established within the SIF to manage the Safety Group's monies.
3) § 87-J(3) - Requires the Safety Group to set aside a percentage of premiums as the Fund's surplus until they have sufficient surplus to provide for reserves and to return to the state the initial appropriation.
4) § 87-J(4) - The Safety Group's administrative expenses are to be paid out of the Safety Group Fund. The Safety Group Fund is to submit a quarterly statement to the director of budget. Administrative expenses are limited to 25% of premiums.
Section 4. Makes an appropriation of $25M from the state general fund. It provides that no appropriations shall be provided until the Group has entered an agreement for the repayment of funds under § 87-J(3) above.
Justification
Small, independent contractors make up the majority of businesses in the construction industry and play an important role in New York's economy. Over recent years, these contractors have reported difficulties in obtaining affordable liability insurance. This legislation would create a program to provide affordable insurance for independent contractors who are otherwise unable to obtain such coverage and who reduce their insurance risk by promoting safety on construction sites.
Liability insurance costs are driven by the frequency and severity of claims, which is why the most effective way to cut the cost of insurance rates for independent construction contractors is to lower the number of accidents on their worksites, as well as the severity of accidents when they do occur. Unfortunately, because of the cost, effective safety programs that include the use of site safety coordinators, incentive schemes rewarding low accident rates, and stringent safety standards, are typically only available to large developers. Small, independent contractors lack the resources to implement these safety programs, and as a consequence, the greater frequency and severity of accidents at their work sites push the cost of their liability insurance up to unaffordable levels.
This legislation would create a 5-year pilot program to provide small and MWBE contractors with low-cost and accessible liability insurance. It would do so by providing economies of scale through the programs purchasing power and, more importantly, by implementing an effective safety program to reduce the number and severity of accidents on construction sites.
Contractors who join the program will receive safety- training and will be required to comply with strict safety regulations. Random audits will ensure compliance with safety regulations, and those contractors who do not comply would risk losing their insurance coverage. In return, the program would provide contractors with the low cost insurance coverage they need.
Legislative history
2015-2016: A6531 - Referred to Labor
Fiscal implications
The sum of $25,000,000, or so much thereof as may be necessary, shall be appropriated from any monies in the State Treasury in the General Fund to the credit of the State Purposes Account not otherwise appropriated to the State Insurance Fund for the initial capital of the Safety Group Fund in carrying out the provisions of this act.
Effective date
This act shall take effect immediately.
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