By Joseph Schuler, Sheats & Bailey, PLLC

Public works contracting in NYS is subject to various statutes, rules, and regulations under Article 8 of the NY Labor Law.  The state is on the brink of adding another onerous registration requirement to the list. The requirement would apply to all contractors on public works projects in NY and is on the way to the Governor’s desk after passing the State Senate and Assembly.

The bill is a self-described attempt “to better enforce existing labor laws and regulations in the public works industry.” In reality it is a way for NYS to raise revenue and add another unnecessary layer of bureaucratic review for contractors to navigate.  The bill requires contractors to register with the DOL’s Bureau of Public Works. The registration must be renewed every two years and prior to bidding on any public work. Unregistered contractors may not bid on public contracts. Additionally, registered contractors may not use the bids of unregistered subcontractors. Proof of application is not accepted as proof of registration. All bidders must provide proof of their own registration and that of any underlying subcontractors their bid relies on when submitting their bid.

Noncompliance with any of the registration or proof of registration requirements may, after notice and a hearing, result in a fine of up to one thousand dollars.  It may be prudent for contractors to revise their current form subcontracts to include indemnification clauses specifically covering potential fines under this new law.  Also, it may be wise to add language permitting claims for lost profits if an unregistered subcontractor causes the prime contract to be terminated.  Including subcontract language that subcontractors must maintain and renew their certification at their own cost could mitigate a contractor’s risk. Furthermore, requiring proof of registration in advance of bid submission by subcontractors and developing an in-house database of registered subcontractors may reduce the chance of using a bid from a sub that is not registered.  The proof of registration terms could be included in RFPs sent to subcontractors.

Registration, in its simplest form, is completed in three parts. First, there is a registration fee of $200, which the Commissioner has the discretion to lower for M/WBEs. Second, the registrant must fill out a fairly extensive disclosure form. Finally, the company must show proof of workers’ compensation insurance coverage for all employees.

The form is statutorily required to include the following criteria: (1) company name and address, (2) business entity type, (3) contact information for any individuals with company interest, (4) company tax ID number, unemployment insurance registration number, and workers compensation board employee number, (5) outstanding wage assessments in NY, (6) debarments in the last ten years in NY, (7) debarments in the last ten years outside NY, (8) past violations of NY labor or employment tax law, (9) past OSHA violations, (10) associations with apprenticeship programs, and (11) status as a M/WBE or not.

After paying the fee, filling out the form, and showing proof of workers’ compensation insurance, the Commissioner of the Bureau of public works has the broad discretionary power to determine a contractor’s fitness. The unelected Commissioner is required to “promulgate regulations to determine under what circumstances a contractor would be unfit to be registered.” A bright spot for some, past debarment is not permitted to be the sole determining factor of fitness, unless the debarment is currently still in effect under section 220-b(3) of the Labor Law (five-year debarment for two prevailing wage violations in six years) or 141-b of the Worker Compensation Law (one-year debarment for workers compensation payment violations).

If the Bureau of Public Works Commissioner finds a company unfit the company will have the opportunity to dispute the finding at a hearing. Then the Commissioner will make a final determination. Companies found to be fit at the outset or after a hearing will be issued their certificate of registration. The Bureau is required to establish an online interface for contractors to access their certificates.  

The attorneys at Sheats & Bailey, PLLC are experienced with compliance in the public works bidding process. For more information or assistance with navigating the Public Works Construction landscape contact Sheats & Bailey, PLLC.

The information provided in this article is not intended to serve as specific legal advice for any particular situation. Competent legal and experienced counsel should be consulted.