Crain’s New York Business: After years as a political lightning rod, Scaffold Law reform gains traction

By: Kathryn Brenzel

For years, developers have pushed to reform a law that they say drives up construction costs.

Such efforts to change the so-called Scaffold Law seemed doomed to remain on lobbyists’ wishlists in face of opposition from trial lawyers and construction unions.

“We didn’t even say the S word,” said Travis Wattie, a vice president of government relations at the Association for Independent Insurance Agents, known as the Big I. “It was just a nonstarter.”

But supporters have some reason to hope that the issue will be picked up in the next state legislative session. Hochul administration officials have indicated that they are looking at the law as part of an effort to bring down insurance costs. It builds on recent efforts, including reforms to auto insurance that were included in the state’s fiscal year 2027 budget.

The Scaffold Law holds general contractors and property owners fully liable for gravity-related injuries on construction sites. New York is the only state that applies this “absolute liability” standard. Most states use a comparative liability standard, where legal blame is divided among parties.

Supporters feel emboldened by the shift in opinions around housing construction in New York, along with the state’s recent reforms to auto insurance. Wattie indicated that reform conversations haven’t seen this much momentum in more than 10 years. Back then, hopes of reform were quashed by former Gov. Andrew Cuomo, who told Crain’s at the time that “you can’t change the Scaffold Law.” In recent years, supporters have also turned to a federal proposal that would preempt the state law on certain construction projects.

The Citizens Budget Commission estimates that reforming the law could reduce the cost of building by up to $42,000 per apartment, CEO Andrew Rein said in an interview.

Last month RuthAnne Visnauskas, commissioner of the state’s Division of Homes and Community Renewal, told Capitol Confidential during New York State Association for Affordable Housing’s annual conference that the administration is focused on combatting high insurance costs related to construction and operating multifamily housing.

She noted that the Hochul administration has approved changes previously thought unattainable, including reforming the State Environmental Quality Review Act, and lifting the city’s residential floor area ratio cap.

“It’s been a thing that people have said, ‘You can’t do that. There’s no way’ and that’s what people said about SEQRA. That’s also what people said, in the New York City context, when we removed the FAR cap,” she said. “And we did it. So, I don’t know. We’ll see.”

Hochul is expected to lay out her policy agenda in January but hasn’t yet announced a specific proposal to reform the Scaffold Law.

“The governor is always looking for ways to improve how New York builds, but there is no proposal to announce on Scaffold Law requirements,” Kristin Devoe, a spokeswoman for the governor, said in a statement.

Meanwhile, the Mamdani administration is also beginning talks with stakeholders on the issue. In a draft presentation about potential insurance reforms, prepared by the Department of Housing Preservation and Development and viewed by Crain’s New York, the agency emphasizes the need for Albany to act to “meaningfully impact market conditions.”

The deck outlines a legislative package that would include reforming the Scaffold Law to have comparative liability. The package also proposes requiring disclosures of third parties who fund personal injury cases, capping damages awarded to plaintiffs, and shortening the statute of limitations for personal injury claims from three years to one.

The presentation suggests ramping up transparency requirements for New York insurers and offering premium discounts to property owners who invest in risk mitigation. The deck additionally floats shielding owners from liability related to crimes committed on their properties, if the properties meet certain security standards, and more closely aligning certain construction safety requirements with federal rules.

The deck underscores the need for broader reform “to stabilize existing affordable housing buried under the weight of property and liability insurance.” The legislative package, if adopted, would join the administration’s plans to launch a city-backed insurance program as a way of reducing costs for rent-stabilized owners.

Representatives for HPD said the deck is “in no way indicative of a final decision or recommendation” from the administration. Agency spokesman Andrew Stern said HPD has considered many proposals from stakeholders as “part of an internal, deliberative, agency process” and that no final call on any of the proposals has been made.

“We will be having additional conversations with partners and stakeholders across the city and state, including those who may be opposed to potential changes, in order to ensure we are conducting a comprehensive analysis,” Stern said in a statement.

Legal groups have opposed changes to the law.

“If the Scaffold Law were changed it would erode worker safety across the state in a dangerous and unnecessary way,” said Josh Kelner, an attorney and member of the New York County Trial Lawyers Association.

Construction unions have previously opposed reforming the law, viewing such efforts as a threat to worker safety. In previous years, leaders of the state AFL-CIO referred to reform proposals as “putting dollars over lives.”

Gary LaBarbera, head of the city and state chapters of the Building and Construction Trades Council, a union umbrella organization, has been a vocal opponent of reform at the state and federal level. He declined to comment for this story.

It’s not clear what labor would seek in exchange for backing down on the Scaffold Law, though the issue could get tangled up in negotiations over reforming the property tax exemption 485-x and calls to reform the state’s rent stabilization law.

Elizabeth Crowley, CEO and president of the Building Trades Employer Association, an organization that represents general contractors, said she’s been encouraged by conversations with union contractors about reforming the law. She believes most of the opposition lies with trial lawyers.

She also thinks there’s a broader recognition that the law drives up construction costs, resulting in fewer housing units and few jobs for her members and their subcontractors.

“When you have a climate with insurance costs so high, you are not creating an environment for businesses to thrive,” she said.

BTEA released a report last year that insurance costs were two to five times higher in New York compared to other states, none of which have an absolute liability standard. It also found that insurance accounts for 8% to 10% of total construction costs.

Wattie, whose group represents insurance brokers and agents, noted that some insurance carriers have clauses that prohibit writing policies in New York.

“What my members face is a very challenging marketplace, where it’s hard to find the coverage, and when they do, it is staggering,” he said.