NY Subcontractor Rights - Your Rights Against the Owner and General Contractor

More construction jobs these days require the use of subcontractors, many of whom have their own subs contracted out to help them complete their work. These arrangements can get complicated fast. It may be unclear what subcontractor rights exist in reference to the project owner or the general contractor.

Luckily, New York statutes and contract law have many protections in place for subcontractors. Legislators – and those who lobby them – are smart enough to know that without such protections, any project could devolve into a logistical nightmare.

Knowing your subcontractor rights are especially important if there’s an injury or non-payment. Business owners and laborers can use the following information to help them know what rights they have and what actions they can take in either event.

Right to Workers’ Compensation Provided by the Contracting Party

New York workers’ compensation laws (NYCL WKC § 56) provide contractors with a choice: verify that your subs have workers’ comp insurance, or be forced to cover them yourself.

This protection means that all contracting parties must exercise due diligence when offering work to subcontractors. They must verify that the subs have either an insurance policy in place or adequate proof of financial responsibility to cover the costs of any injuries or deaths that occur on the job site.

The Right to Safe Equipment and Conditions Related to Falling Hazards (Scaffold Law)

Generally speaking, contractors and owners are only liable for damages caused directly by their own negligence. If a sub-subcontractor’s injuries were caused because of the negligence of the subcontractor or another third party that’s not the project owner or general contractor, the sub-sub must seek a claim directly against the party responsible.  

Put simply, owners and contractors have an obligation to provide a generally safe working environment to the extent reasonably possible given their level of knowledge and control. If they do everything they can and someone else acts recklessly and causes an injury, it is usually difficult to hold them responsible.

However, this rule does not apply when it comes to falls, falling hazards, or other hazards related directly to gravity.

New York’s “Scaffold Law” (Labor Law § 240) demands that property owners and contractors ensure that all workers on a construction site have safe fall protections and safe structures. 

The law requires that all, “scaffolding, hoists, stays, ladders, slings, hangers, blocks, pulleys, braces, irons, ropes, and other devices,” must be able to, “give proper protection to a person so employed.”

New York courts have broadly interpreted this law to imply a strict liability arrangement between all workers and the general contractor or owner overseeing the project. Any time someone is hurt because of a fall or other gravity-related incident, there’s a good chance that the owner or contractor will be held directly responsible for all damages by the court.

The Right to Timely Payment

Contractors must provide a disclosure stating when they will receive payments for the project to all subcontractors (NYCL GBS § 756-A, 4). Once payment is provided, the contracting party has seven days after receipt to pay their subs in part or in full (NYCL GBS § 756-A, 3, b,ii). 

Furthermore, job progress delays instituted by the owner or the contractor cannot be used as a reason to force the subcontractor to delay a request for payment according to the original terms of the contract (NYCL GBS § 756-A, 2, a, ii, (5), (b)).

And, while contractors and owners retain the right to deny payment in part or in full for reasons like non-performance, NY law states that,

“…Contractor and subcontractor approval of invoices shall not be unreasonably withheld nor shall a contractor or subcontractor, in bad faith, disapprove all or a portion of an invoice.”

In other words, contractors and owners have to provide valid reasons for why payment is being denied, or they are legally obligated to pay the invoiced amount in full.

The Right to Seek a Mechanic’s Lien (Or Other Non-Payment Resolution)

If you face issues with non-payment as a subcontractor, then you may have grounds to place a mechanic’s lien upon an existing lien fund. However, New York court rulings have determined that any subcontractors wishing to place a lien must first establish two things:

1. A “lien fund” is available, AKA funds “due and owing from the owner to the general contractor” DiVeronica Bros. Inc. v. Basset, 213 A.D.2d 936
2. The claimant is able to provide proof that money was owed to the general contractor by the owner at the time the lien was filed 

The New York Appellate Court decision JMP Plumbing and Heating Corp. v. 317 East 34th Street, LLC, 89 A.D.3d 593, 933 N.Y.S.2d 252 (1st Dep’t 2011) established that “a subcontractor’s lien can only be satisfied out of funds due and owing from the owner to the general contractor…..[Subcontractor(s) bear] the initial burden of showing that funds were, in fact, due and owing.”

If these grounds for establishing a lien cannot be met, the subcontractor may have other options, including a:

• Payment bond claim – Many projects involve payment bonds with specific terms and funds available if those terms are satisfied
• Trust fund diversion claim – New York’s lien law (Article 3-A § 72) states that misuse of funds appropriated for subcontractors or their materials qualifies as a breach of trust
• Personal guaranty claim – A cause of action may be available if the contractor or owner was named as a guarantor in specific credit applications or contracts

When You’re Injured, Enforce Your Subcontractor Rights with a New York Construction Accident Attorney

Whether you’re seeking workers’ compensation, a third-party claim, or another cause of action against a contractor or owner, having legal representation after you are hurt in a construction accident is critical. Appointing a New York construction accident attorney means you get the resources, legal knowledge, and experience necessary to navigate New York’s complex laws and get to the bottom of who is liable for your injury costs.

Speak to an experienced construction injury lawyer in New York for free when you call The Weinstein Law Group today at (212) 741-3800 or contact us online to schedule a free, no-obligation case review.