An accident that involves a worker who injures him or herself while on the job at a building can spell legal and financial trouble for building owners and managing agents under New York's Labor Law. Three important sections from the law to consider are that building owners and managing agents are obligated to provide a safe working environment for workers (section 200); that areas in which work (i.e., construction, demolition) is being performed “shall be so constructed...equipped...operated and conducted as to provide reasonable and adequate protection and safety to the persons employed or frequenting such places” (section 241(6)); and that owners, contractors and managers are liable for gravity-related accidents that happen at the property (section 240 (1)).

Building owners and managing agents could be held liable in cases of workplace injuries, and at stake could be millions of dollars. GNY Insurance Companies, which is headquartered in New York City, tackles the issues of workplace injury and insurance in their report titled New York Labor Law. The topic about the law was discussed at an event sponsored by GNY yesterday at Manhattan's Union League Club of America. In the report, GNY makes the following recommendations in order for building owners and property managers to protect their business and assets under the law. Here is a summary of that report.

When Dealing With a Contractor

• According to GNY, it is important for the building owner and managing agent to make sure the contractor is “properly licensed, insured and experienced in the type of work it is being hired to perform.”
  
• Check if the contractor uses subcontractors. And if so, find out what the contractor's screening process is and whether the subcontractor is also properly insured.
  
• Make sure agreements between the building owner and general contractors (and subcontractor) are in writing with the “proper indemnification and insurance procurement clauses.”
  
• Confirm before entering an agreement that the “contracts make the contractors responsible for workplace safety.”
  
• Check to see if your contractors and subcontractors have a history with OSHA (Occupational Safety and Health Administration).
  

Shift the Risk of Liability and Damages to Your Contractors

• Before the actual work begins, there should be a clause in the contract that requires the contractor and subcontractor to "indemnify" and hold harmless the building owners and the managing agents from liability and damages because of contractors' negligence, says GNY.
  
• Contractors and subcontractors should include building owners and managing agents as additional insureds to their insurance policies for liabilities. GNY says the policies' limits should be at least $1 million for a primary commercial general liability (CGL) policy, and $5 million for an umbrella policy.
  
• It's best to have the contractors furnish a copy of the primary liability and umbrella policies for an insurance professional to look over.
  

What Does This Mean for Co-ops?

When it comes to cooperatives, GNY suggests that the risk-transfer approach that was just described should also apply to a shareholder who has work performed in his or her unit. Thus, an alteration agreement should mandate that the shareholder's contractors indemnify and hold harmless the shareholder, the co-op and the managing agent--and to include them as additional insureds on the CGL policies.

“Insurance companies insuring contractors have come up with broad exclusions and limitations designed to protect them from having to defend and indemnify you as additional insureds under their policies," says GNY in the report. “This is very unfair to the co-op.”

David Chiu is an associate editor at The Cooperator.