Scaffold Law report: Insurance costs skyrocket up to 500% in NYS because of controversial law

A controversial 140-year-old, only-in-New York law that holds property owners and contractors responsible for all falls on construction sites, even in instances of worker negligence, has caused insurance costs to skyrocket up to 500% higher than in other states, a report released Wednesday shows.

The study, released by the Building Trade Employers’ Association, found that insurance premiums now consume 8% to 10% of development budgets, in large part because of the Scaffold Law’s standard of "absolute liability," in which property owners and employers are held financially liable for injuries caused by "gravity," regardless of who is at fault.

Billions 'wasted'

Newsday has investigated the impact of the Scaffold Law for nearly a year, with a particular focus on allegations that the measure has prompted a wave of staged accidents and frivolous lawsuits perpetrated by an interconnected network of law firms and medical professionals, including many based on Long Island.

Elizabeth Crowley, president of the Building Trade Employers’ Association, described the report as a critical opportunity for Mayor-elect Zohran Mamdani to deliver on his promise to increase affordable housing in the city.

"For decades, New York’s insurance law has pushed construction budgets to the brink, forcing developers — and public authorities like the MTA — to waste billions on premiums that don’t make construction work any safer and are a driving force behind the affordability crisis that is crushing our state’s economy," Crowley said in a statement.

But supporters of the Scaffold Law, including some labor unions and the state Trial Lawyers Association, argue the "absolute liability" standard protects low-wage workers on some of the most dangerous job sites in the nation by holding employers and property owners liable for unsafe conditions.

"It is well established that construction work is inherently dangerous and maintaining the safety of the tradesmen and tradeswomen on our job sites should always be an utmost priority," said Gary LaBarbera, president of the New York State Building and Construction Trades. " ... Perpetuating this behavior and opening the door for more accidents will only hurt workers, hinder key projects, and discourage critical job development. 'Cutting costs' should not come at the expense of the well-being of hardworking New Yorkers who are simply trying to support their families and pursue the middle class."

Critics dispute that the Scaffold Law, which generally exempts projects involving one- or two-family homes, has made workers safer. 

In 2023, New York City’s construction fatality rate was 11.6 per 100,000 workers, while the statewide rate was 10.4 per 100,000 workers, BTEA said. Both figures exceeded the national average of 9.6 per 100,000 workers.

The report, produced by HR&A Advisors, quantifies, for the first time in granular detail, the impact of the law — which traces back to 1885 when there were few federal and state regulations to protect scaffold workers, who increasingly were getting injured on the job.

At the time, many states nationwide had similar measures. But laws in every state except New York were repealed or amended in the 20th century.

Insurance premiums skyrocket

The analysis, which relies on data from several of the state's largest builders, insurers and public sector institutions — including the Metropolitan Transportation Authority and the New York City School Construction Authority — found that insurance premiums in New York are 200% to 500% higher than in states of similar sizes and populations and consume 8% to 10% of total development costs.

Comparatively, insurance premiums compose 2% to 4% of development overhead in states such as New Jersey, Massachusetts and Illinois, the report found.

The report also models what the projected savings would be on some of the state's largest active construction projects if the law were repealed.

For example, the analysis found that at least $560 million could be saved on the redevelopment of Penn Station while another $550 million in savings could be generated on a project to extend the Second Avenue Subway to East Harlem.

"This thoughtful analysis confirms what we have known for years: New York’s outdated scaffold law siphons off vital resources from construction and infrastructure projects, inflating costs and harming both taxpayers and workers," said Mike Florio, chief executive of the Long Island Builders Institute. 

Earlier this year, four Island-based groups, including the Builders Institute, joined with nearly 50 organizations statewide to call for changes to the Scaffold Law and to lobby for passage of the Infrastructure Expansion Act, sponsored by Rep. Nick Langworthy, an upstate Republican. The bill would exempt federally funded or permitted projects in New York from the law.

Another bill, introduced in Albany by Assemb. Ari Brown (R-Cedarhurst), would exempt projects built in Nassau and Suffolk counties, but not the rest of the state.

"New York is the most expensive city in America, and the sky-high cost of construction insurance is a major contributor," said Kathryn Wylde, the outgoing president and chief executive of the Partnership for New York City, a nonprofit representing more than 300 corporate, investment and entrepreneurial firms. "This report lays bare the economic reality: We are wasting billions that should be going into housing and infrastructure."

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.