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Is Your Restrictive Covenant Still Enforceable?

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By: Sarah E. Steinmann

The Federal Trade Commission (“FTC”) made a big splash this spring when it published its Final Non-Compete Clause Rule (“Rule”), which bans most post-employment non-compete agreements between employers and workers.

The FTC issued the Rule under its authority to regulate “unfair restraints on trade and business” and intends for the Rule to open the door for new businesses, innovation, and increased wages for workers.

Until now, non-compete covenants have been governed by state law, with the scope and enforceability of such arrangements varying widely. The Rule—set to go into effect on September 4—will affect businesses nationwide and across industries, including those operating in the healthcare space.

Applicability
Most healthcare entities will be subject to the Rule, which applies to “all persons and private for profit business entities,” regardless of business structure. While non-profits are generally not subject to the Rule, the FTC will scrutinize non-profit corporations to determine “whether either the corporation or its members derive a profit.” If they do, the Rule will apply.

On the other hand, anyone who produces work for a business, including employees, independent contractors, interns, and even unpaid volunteers, is considered a “worker” protected under the Rule.

FTC Defines Non-Compete Clause
A non-compete agreement is a restrictive covenant that prevents a worker from working for or operating a business that is competitive with the employer after the worker ceases to work for the employer.

The Rule implements a broad definition of “non-compete clause” to include restrictions in employment agreements, workplace policies and even oral agreements between parties. Any term or condition of employment that “prohibits a worker from, penalizes a worker for, or functions to prevent a worker from” working for or operating a business after their employment with the employer ends is prohibited under the Rule.

The Rule also extends to other types of restrictive covenants such as non-disclosure and non solicitation agreements—if they have the same effect as a standard non-compete (i.e. if they prevent a worker from, or penalize a worker for, seeking or accepting work after their employment ends). Businesses that offer on-the-job training should be aware that training repayment agreements might be challenged under the Rule.

Exceptions
The Rule does not prohibit restrictions on workers during their employment, so a business can prevent workers from simultaneously working for their competitors. The Rule also allows noncompete restrictions between buyers and sellers of a business in connection with the sale of a business or an individual’s ownership interest.

Existing Covenants
The Rule is retroactive, so non  compete agreements made before September 4 between businesses and their workers will become unenforceable. 

One notable exception will allow businesses to enforce existing noncompetes against their senior executives. A “senior executive” is an employee who earns more than $151,164 per year, who is in a “policy-making position,” and who has “final authority” over decisions controlling a significant aspect of the business. For most physicians, the question of whether they are in a “policy making position” will be the most controversial in determining the enforceability of a restrictive covenant.

State Laws
Physicians and healthcare businesses may be familiar with existing state laws and regulations and shouldn’t assume they no longer apply. While the Rule supersedes existing state laws and regulations that conflict with it, states are free to regulate non, compete covenants outside the Rule’s scope.

Next Steps for Employers 

Employers will need to notify every worker subject to a non compete that it is no longer enforceable, so businesses should start identifying workers affected by the Rule. They should also start preparing the notices, which must be “on paper” and delivered personally or by mail, e mail, or text message. Businesses might also consider why they used noncompetes and how they might achieve their business aims within the bounds of the Rule.

Legal Challenges
Employers rushed to challenge the Rule in court, seeking injunctions to prevent it from going into effect. A federal judge in Texas issued a preliminary injunction temporarily halting implementation of the Rule and is expected to issue a final decision by August 30. In a separate case in Pennsylvania, the court rejected the employer’s request for an injunction. Businesses should keep an eye out for developments as the September 4 effective date approaches. Because of the pending litigation and the plethora of cases we expect to be filed in the coming months, ultimately, this is an issue that will probably reach the Supreme Court for a final determination. 

If you have questions about the enforceability of your restrictive covenants, it is crucial to act now to ensure your agreements are in full compliance with the FTC’s new Rule before the September 4 deadline. For questions, contact Lippes Mathias attorney Sarah E. Steinmann by phone at 315-477- 6232 or by email at ssteinmann@lippes.com.

Significant research for this piece was performed by Jennifer E. Forward, summer associate, Albany Law School (anticipated Class of 2025).

Cardiovascular Disease Research:One Phase Ahead of Alzheimer’s Studies?

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By: Robert C. Cupelo, MD Principal Investigator

For everyone involved in neurological disease research, the last two years have brought about major advances in our understanding of Alzheimer’s disease and related neurodegenerative disorders. Along with the discovery of new avenues for effective therapies, we now have, for the first time, proven disease modifying treatments. And as we acquire more options shown to be effective, we look forward to applying these tools and developing regimens not only to treat this disease, but also to prevent the very onset of its clinical manifestations.

But when it comes to the area of metabolic disorders and their role in causing cardiovascular disease, science is in an historical phase ahead. As someone who started his medical training in the late 1970s, I can attest to the lack of effective, convenient, and tolerable treatments for conditions like diabetes and hyperlipidemia at that time,relegating many patients to a life with relentless symptom progression, cardiac events and frequent essentially palliative surgical procedures. I can even remember a very respected and prominent cardiovascular surgeon who could predict with uncanny but somewhat sad accuracy when his successful bypass patients would be back in the OR requiring another procedure. With limited therapeutic options available, patients often endured a poor quality of life, many experiencing a feeling of helplessness, despite valiant efforts at lifestyle modification.

The release of lovastatin (Mevacor) in 1987 changed all that. The first statin to gain FDA approval, it was the first truly effective treatment for hypercholesterolemia. Actual statistical proof that it reduced cardiovascular events and surgeries would come a little later (it’s now required for approval of these medications), but we all knew from the start that this was a game changer. It could be said that it was, in effect, the first viable disease modifying medication for coronary artery disease. And in the years since, countless pharmaceutical advances have followed, treating not just elevated LDL cholesterol, but numerous other metabolic conditions which increased risk for cardiovascular disease, such as other dyslipidemia, type II diabetes, chronic renal disease, coagulation abnormalities, obesity, and acquired diseases of myocardial function.

We at Velocity Clinical Research Syracuse embrace the study of the prevention and treatment of metabolic and cardiovascular diseases with today’s therapeutic tools and ask, “How do we best help the further development of our current available medications, and how do we promote their best use both in primary (warding off the first event) and secondary (warding off subsequent events) prevention?” The dedicated and competent staff at our research site on Brittonfield Parkway have run and are actively running several studies in multiple, areas of metabolic disorders including two studies for hypertriglyceridemia, an oral PCSK9 inhibitor for patients with hypercholesterolemia at increased cardiovascular risk (currently in maintenance phase), a long-acting basal insulin dosed weekly, an oral GLP- 1 that is more effective and tolerable than currently available options, and several classes of injectable weight loss medications, assessing not only their efficacy with weight loss but also the metabolic consequences of the therapy.

As always, clinical research studies are fluid in nature, often starting and ending enrollment somewhat suddenly and unpredictably. So, if you have any interest in participating in this research, or would just like to know more about it, we encourage you to call us to learn of our latest developments. We can also keep you up to date on our ongoing efforts to study Alzheimer’s disease, another core focus at our site. Indeed, we look to a vision of the future when, just as we now have with metabolic disorders, we will have numerous and varied options available to people at risk of dementia and other neurodegenerative diseases.

At Velocity Syracuse, we encourage our Central New York medical community colleagues to keep us in mind as a dynamic and viable partner in your efforts to provide preventative care and treatment to your patients, including ones at elevated cardiovascular risk. And as always, we especially seek people from diverse backgrounds and those who are traditionally underserved, as they can potentially benefit in many ways from participation in clinical research. A culture of inclusion is especially vital to the accuracy and validity of our results.

Heart disease is still the number one cause of death for Americans, but our health care system has been making progress on this for quite a few years now. Let us at Velocity Clinical Research Syracuse help you and your patients keep that ball rolling.

A&M Graphics: Revolutionizing Visual Spaces in CNY and Beyond

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By Elizabeth Landry

In high school, Matthew Ferguson was deeply invested in art, taking every available class in Auburn, NY. Initially aiming to become an art teacher, his path shifted when he began working at a local sign shop. Ferguson’s experience in the sign shop later combined with a short career in sales and managing wireless company stores like Verizon, where he delved into technology during the dawn of the smartphone era. The result of Ferguson’s varying experience was a fused passion for art and technology, which, along with a knack for problem-solving and customer service, led him to where he is today: Creative Director and President of A&M Graphics, a company he helped found in 2009 and of which he has been the sole owner for the past four years. 

Located in Auburn, A&M Graphics has carved out a niche in what the team has dubbed “Premium Graphic Environments,” offering a full range of products and services from Vinyl Wall Murals and Wall Coverings to Dimensional Letters and Logos, ADA and Wayfinding Signage, Custom Displays and Exhibits, 3M DI-NOC Architectural Films, and 3M FASARA Window Films. On the other end of A&M Graphics’ business, the team has also proved themselves as the premier Vehicle Wrap and Fleet Graphics provider in the area. No matter what kind of service the team at A&M Graphics is providing, the central goal is always the same: to provide the highest quality of design, printing, fabrication, and installation as illustrated in their tagline: “design. create. deploy.”  This tagline, along with the company’s logo, was recently trademarked by Ferguson and is all fueled by passion, creativity, and strong relationships with fantastic clients. According to Ferguson, this has been true since the very beginning of the business, which will be celebrating 15 years this coming fall. 

“Since day one, we’ve forged a reputation for not just providing quality work but also continuing to set the bar for top levels of quality and service in what we do and what we offer. We’ve continued to build relationships based on these values, and that has really gotten us to where we are today,” said Ferguson. 

Crafting Impactful Visual Experiences

Many of the different mixed-media services A&M Graphics provides come together to form premium graphic environments that transform entire spaces, including office spaces and whole campuses, and significantly boost a brand’s visual communication. Ferguson explained how the creativity, expertise, and passion behind the team’s large-scale graphic installations play a large role in how the company sets itself apart from competitors. 

“We are so much more than just a sign shop or wrap shop,” Ferguson said. “We’ve really forged our own niche in the industry based on our passion for what we do with these premium graphic environments – centered around the creativity, time, and dedication poured into each custom project. Keeping the emphasis on creativity as part of our process and not just being a ‘feed the beast’ or ‘churn and burn’ kind of shop has always been our focus. We have definitely kept that credo the nucleus of our business.”  

Ferguson and his team recently completed several large-scale graphic installations for the Pall Corporation, a global leader in filtration solutions, at its Cortland and Long Island locations. The A&M Graphics team worked with the Pall Corporation to achieve a vibrant, high-impact space at both locations, which features a mixed-media timeline of the company’s history and legacy. Designed, printed, fabricated, and installed by Ferguson’s team, the projects took many hours of labor and weeks of creative, high-end graphic design work, ultimately achieving the Pall Corporation’s vision through the use of varying shapes and thicknesses of acrylics and the stand-out effect of the DryTac Polar Chrome material. 

Although the details and vision for custom graphic design projects can vary greatly from one client to the next, each premium graphic environment that A&M Graphics creates is intended to have a strong impact on those who enter the space. This aim remains true whether the space is intended to impress visiting clients or instill a sense of company culture with employees. Mike Durkin, Vice President of Client & Investor Relations for VIP Structures, which has been a client and partner of A&M Graphics in recent years, described how a similarly high-impact design with a very different strategy was achieved for a client in the healthcare industry.

“I toured the new Nappi Wellness Institute at SUNY Upstate Medical University, and in their MRI room, they have this panoramic image of the Adirondack mountains wrapping an entire wall that Matt and his team installed,” said Durkin. “Going to see a doctor and getting an MRI done can be nerve-wracking, but when you walk in the room and see this gorgeous image, I think it can really ease patients’ concerns – it gave me a sense of calm immediately. It’s such a better experience than walking into a room with a stale, blank white wall. A&M Graphics really listens and brings so much creativity into the solution to achieve the impact a client is hoping for. Their creativity, focus on what the client is trying to convey in the space, and delivery of a product that far surpasses expectations are what set Matt and his team apart from the rest.”

Upstate’s Nappi Wellness Institute is one of A&M Graphics’ marquee projects of the last few years. Led by project manager Todd LaFlamme, the team completed hundreds of wall murals, premium sign components, and art pieces throughout the five-story new construction in the heart of Syracuse. “SUNY Upstate and VIP Structures are two important relationships that we feel very fortunate to be able to service,” commented Ferguson. A&M Graphics also completed Wall Murals and Signage for VIP Structures’ new downtown home at “The Post.” 

Nationally Recognized for Excellence

Among A&M Graphics’ clientele are manufacturers, contractors, architects, healthcare organizations, and the higher education sector, and the team is often brought into larger organizations’ projects early during the formation of architectural plans to ensure direct involvement from the start and a smooth result. Having completed numerous projects over several years for Central New York-based organizations such as SUNY Upstate University Hospital and VIP Structures, A&M Graphics has also begun to receive interest from national and even global organizations due to Ferguson’s drive to achieve and maintain important quality standards. 

The company holds two certifications from 3M, which is considered the graphics industry leader and sets the highest bar of quality for graphic application businesses. Ferguson first earned A&M Graphics’ designation as a 3M Certified Graphics Company, which placed the company on 3M’s national registry, signifying that A&M Graphics is not only one of the best in the business but is fully insured and abides by certain business practices and a code of ethics. Later, Ferguson trained, tested, and received 3M’s Endorsed Architectural installer certification, which deems A&M Graphics a certified installer for 3M’s architectural line, including DI-NOC architectural finishes, glass finishes and window films. Both certifications were achieved at 3M’s global headquarters in St. Paul, Minnesota and they put A&M Graphics on the radar of national organizations that only look to 3M’s national registry for companies they can trust to provide top-quality, reliable graphics services. For Ferguson, pursuing these certifications was non-negotiable. 

“We’re nationally connected with industry peers and always keeping our finger on the pulse with the latest and greatest technologies, materials, and techniques. We’re constantly finding the best methods and products to bring back home to our clients, and being 3M Certified is a big part of that, so obtaining the certifications for our business was very important. We pursued and earned these certifications, and they really show that A&M Graphics is committed to being among the best in our industry,” Ferguson explained.

Ferguson has now started taking this a step further, recently participating in industry training demonstrations for different manufacturers in Boston and Chicago.  

People at the Heart of the Vision  

Another way A&M Graphics is naturally expanding beyond Central New York is through Ferguson’s involvement within his industry on a national level. Whether by attending trade shows or simply connecting with his peers around the country, Ferguson expressed a passion for bettering the graphic industry at large. 

“I’m very involved in my industry on a national level – not just for myself and my business, but as a way to advocate for our industry as a whole. I’m trying to help my peers both locally and nationwide by making sure we keep moving the goalposts as the industry expands and helping to grow it even further,” stated Ferguson. 

Building relationships with industry peers in different parts of the country mirrors Ferguson’s value of strong relationships with both clients and members of his team, who he calls the “DREA&M TEA&M.” For Ferguson, it’s those genuine relationships and pride in his team’s excellence that really drive his passion for the work he does every day. 

“At A&M Graphics, we’re all about relationships,” Ferguson emphasized. “Whether that’s our hometown relationships or the accounts we service nationwide. Everything is handled the same way – the right way – and we really enjoy the relationships we’ve forged and that we continue to forge. The relationships I’ve made with my amazing staff, who are more like family to me, are also what I enjoy the most about coming to work each day. They really are a dream team because they’re all professionals who have worked at a high level in the industry before we all came together and who work hard to produce spectacular outcomes that blow our clients’ expectations away.” 

Future Expansion and a New Location 

With great relationships to build on and new ones to be made, the future looks bright for A&M Graphics. The exciting next phase for the business will be bolstered by a brand-new facility being built in partnership with VIP Structures that is planned to be completed in the latter part of 2024. The new space will more than double A&M Graphics’ current square footage, which will allow the company to add additional team members as well as increase the amount of equipment in fabrication and installation areas. The facility will also sit on a plot that allows for future expansion. Ferguson stated that the new location will be an important next chapter for the company. 

“The new space is going to be really impressive, and it will be unlike anything currently in our area. I couldn’t be more excited about where the company is headed and about what the new space will allow us to do,” said Ferguson. 

Certainly, with a leader like Ferguson and a focus on providing high-value premium graphic environments for its clients, A&M Graphics will continue to find success in the future. As Durkin described Ferguson, “He’s a natural-born leader, and it’s clear that his team is all-in on delivering his vision for the company. With Matt and his team, there really is an art form to the design, the production, and the installation they provide. They really do care about the impact of the end product and not just mass-producing for the sake of closing a product order. That’s why I’m really excited to continue to work together and see what we can accomplish.” 

NONCOMPETE AGREEMENTS BANNED NATIONWIDE

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By: Monika Herrera, Sheats & Bailey, PLLC

FTC BAN

On April 23,2024, the Federal Trade Commission (“FTC”) issued its final ruling banning noncompete clauses across the United States. The FTC’s new rule comes into effect September 4, 2024. 

The FTC defines noncompete clauses as follows: a term or requirement in an employee contract that forbids, fines, or prevents a worker from (i) looking for or taking a job in the United States with another individual, where the job would start after the employment that contains the term or condition ends; or (ii) continuing to run a business in the U.S. following the conclusion of the job that contain the term or condition.       

Prior to this act noncompete clauses acted as a barrier to shield businesses from employees who might seek to exploit confidential information gained through their employment to start a competing business.  Noncompetes were common practice across many industries to protect their trade secrets and to keep a competitive advantage. The FTC’s new rule strips businesses of this protection.

The FTC’s ruling bans new noncompetes for all workers including senior executives and invalidates prior noncompetes for all workers, except senior executives. Existing noncompetes for senior executives remain enforced. The FTC defines senior executives as employees that earn at least $151,164 and are in policy making positions. Policy making position refers to a business’ president or chief executive officer or officer equivalent with final authority to make policy decisions over the enterprise such as restructuring, company expansion through mergers or acquisitions, and resource allocation.

In addition, noncompete agreements entered into by a person pursuant to a bona fide sale of a business entity are exempt from the ban by the FTC. According to the FTC, a bona fide sale is one in which the seller has a reasonable opportunity to negotiate the terms of the sale and is made between two independent parties at arm’s length. State law will control the noncompetes permitted by the bona fide sale exception.

IMPACT ON CONSTRUCTION BUSINESS

The construction industry relies on skilled talent and strong relationships. The FTC’s new rule is broad and applies to all employees and independent contractors.  Noncompete clauses have allowed contractors to protect their proprietary information and methods, things like bidding practices/formulas and project management techniques.

Contractors who relied on noncompete clauses to prevent workers from leaving the company and utilizing the information gained while working at the company must now find alternative ways to protect confidential information.

The ban on noncompetes could leave contractors vulnerable to the sharing of their valuable information regarding customers and business development strategies. To stay ahead of the curve companies should look into alternative strategies for protecting proprietary information. Intellectual property protections such as trade secrets are legal tools for protecting valuable information. In order to satisfy trade secret requirements businesses should consult with an attorney to enact the necessary measures.  

Although noncompete clauses are no longer valid there are other restrictive covenants that can be used.  A non-disclosure or non-solicitation agreement can still protect certain aspects of the business.  A non-disclosure agreement keeps workers from revealing confidential information learned through their employment to other companies, but it does not prevent them from quitting to work for a rival company or starting their own business with that knowledge in mind.  A non-solicitation agreement prohibits an employee from leaving the company and taking other employees or clients with them after their departure. Both NDA’s and non-solicitation agreements can lessen the harm caused by the FTC’s new rule.

Businesses that wish to safeguard themselves moving forward should consider adding these kinds of clauses to their employee contracts and handbooks.  Consult an attorney to guarantee compliance with the new rule and prevent such revisions from appearing as a noncompete.  

MOVING FORWARD

In order to be compliant with the ruling, employers must provide clear notice in writing to their employees that they are no longer bound by noncompetes by September 4, 2024, and should remove noncompete clauses from all employment documents. There is a lot of resistance from companies and business groups to the FTC’s authority to remove all active noncompete agreements from millions of employee contracts. There are currently two lawsuits pending, one of which is from the U.S. Chamber of Commerce to contest the enforceability of the new rule.

At this point in time businesses should monitor the progress surrounding the ruling and whether a court will delay its enforcement. In the meantime, employers should understand how this rule affects their businesses and seek protective measures.   

 

For more information or assistance contact Sheats & Bailey, PLLC, Tel: (315) 676-7314, www.TheConstructionLaw.com.

 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.

Prevailing Wage – What Do I Need to Know?

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Lori A. Beirman, Director of Audit Quality, Dannible & McKee, LLP

Micron Technologies is slated to build a semiconductor fabrication facility in Onondaga County. The project may receive, among other things, up to $5.5 billion in tax incentives from Albany’s “Green CHIPS” program. This program requires construction projects to comply with prevailing wage rules.

Prevailing wage laws are designed to level the playing field for local workers. These laws apply to public projects and require contractors to pay most of their workers a set minimum wage of no less than the local “prevailing wage” rate. This rate is often based on wages and benefits paid to union employees. By standardizing compensation rates across union and nonunion worksites, the higher standards and benefits obtained by unions through collective bargaining agreements are extended to a much larger base of workers.

For some background, federal construction projects are covered by the Davis-Bacon Act, which is a federal law that protects construction workers’ wages on government-funded projects. It covers all 50 states. In addition, 32 states have their own prevailing wage laws for state government-owned construction projects. The New York State Department of Labor (NYSDOL) is responsible for calculating the prevailing wage for state and local government projects, except for New York City, where the city comptroller publicizes prevailing wage rates. While the U.S. Labor Department determines prevailing wage by conducting periodic surveys of area employers, New York State does not conduct a wage census. Instead, the NYSDOL copies the terms and conditions of construction union contracts, for each trade and region. This difference is due to the assumption that at least 30% of the workers in every trade in every part of the state belong to a trade union. Because these “prevailing” wages are often based on union contracts, including union fringe benefits, they can equal or even exceed a worker’s hourly cash pay on private work. In other words, in addition to the basic hourly cash pay rate, prevailing wage schedules include supplements (fringe benefits) that vary based on the craft, trade or occupation. Prevailing wage supplements may be provided to workers in the form of a cash payment (wages), or through irrevocable contributions to a fund, plan or program, or any combination of the two. Deciding which method of payment for supplements to use can be complicated and should involve discussions with a financial professional.

To further support local workers and boost the local economy, lawmakers continue to work to broaden the definition of public work and expand the reach of the prevailing wage to more projects across the state. For example, since prevailing wages drive up costs, it may encourage contractors to have more work performed off-site. To counteract this issue, in 2017 and again in 2023, lawmakers worked to pass laws to apply prevailing wage rules to certain off-site fabrication of goods used on a public works job site. In February 2022, New York State passed a law relating to the payment of prevailing wage for work involving the delivery to and hauling of aggregate supply construction materials on a public works job. Additionally, state and federal lawmakers have proposed legislation to broaden the definition of public works projects to include those paid for in whole or in part out of public funds.

Due to these constant changes in the law, it is important for construction contractors in New York to stay up to date with the laws and their responsibilities, not just for their employees but also for the employees of their subcontractors. According to Section 198 (e) of the New York State labor laws, contractors are liable for all claims on unpaid wages, benefits and wage supplements for workers employed by their subcontractors.  Therefore, it is critical for contractors to perform due diligence on their subcontractors. Recordkeeping is critical to ensure compliance with prevailing wage laws in New York. Proper documentation of employee hours worked ensures contractors adhere to the law and assists in any possible investigations or audits conducted by the NYSDOL.

Prevailing wage laws support good wages and benefits, thereby helping to close racial, gender and geographical pay gaps, promote quality work and improve the value received for each taxpayer dollar. However, for employers, prevailing wage laws can be confusing and complex. The repercussions of noncompliance can be devastating to any business. Therefore, it is important for employers to have a clear understanding of prevailing wage laws and to know when to ask for assistance.

Lori A. Beirman is the director of audit quality at Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Auburn, Binghamton and Schenectady, NY, and Tampa, FL. She has over 23 years of experience in audit, reviews and compilations in a variety of industries, such as construction, manufacturing and professional service firms. For more information on this topic, you may contact Lori at (315) 472-9127 or visit online at www.dmcpas.com.

State of the Construction Industry

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Earl R. Hall, Executive Director, Syracuse Builders Exchange

 Considering the multi-year, $2.5 billion Route 81 project, and the highly anticipated start of Micron’s 20-year, $100 billion semi-conductor chip fabrication project in Clay, the media and elected officials have used the word “megaprojects”.   These unusual megaprojects garner great interest and typically lead to questions about the impact of these projects on society.  As a result, people have asked me about how such megaprojects impact the construction industry in central New York.

To begin with, it is important to understand that the construction ecosystem, although resilient, is fragile.  The tripartite balance that exists between project owners, contractors and labor has never experienced projects of this magnitude happening at once, so forecasting the impact on the industry may be difficult.  Making assumptions is what a good actuary does to assist in predicting the future, so I will make assumptions to provide better context.

Assumption #1 – Labor

The lack of labor continues to plague the industry, which in some cases may result in a contractor’s inability to complete a project on time.  Failure to complete projects on time may contractually lead to liquidated damages.  Delivering labor to Micron will certainly be a challenge as the regional industry today does not have such capacity; however, one can assume much of the labor for Micron will be imported from other regions of the United States.  As a result, I do anticipate the project will have the labor force necessary to achieve project delivery requirements, but certainly there will be labor challenges.  Moreover, regional contractors serving traditional clients, such as hospitals, universities, industrial and institutional facilities may not be materially impacted to the extent of not having available labor.

Assumption #2 – Project Schedules

Project owners’ delivery schedules are becoming increasingly aggressive, both in the public and private sectors.  Often the contractor’s ability to achieve the schedule is dependent upon a wide variety of items but having adequate labor and timely delivery of construction material, such as concrete, is essential to achieving schedule goals.  Although much of the labor on the megaprojects may come from out of state, one should assume meeting project owners’ future aggressive schedules may be more challenging due to the potential labor pressures associated with megaprojects.

Assumption #3 – Wage Growth

Anticipating future regional wage growth is paramount for construction contractors and project owners alike.  How will the megaprojects impact future wage growth?  Over the past two years, construction industry employees have enjoyed advantageous conditions leading to above average wage growth.  I expect this environment to continue, with wage adjustments far exceeding inflation.  Additionally, many employers are rewarding their best employees with additional compensation, benefits and other incentives to remain with their employer.

Forecasting future regional wage growth will be difficult as it remains unknown the incentives required to attract labor to Micron’s project.  While Micron’s 20-year project has a Project Labor Agreement which contains the unions’ wages and fringe benefit schedules, I anticipate such wage schedules will be the “minimum wage” requirement for this project.

“What does this all mean?”

The most asked question is, “How will these megaprojects impact other project owners?”  This question is most difficult to answer; however, one can assume:

  • Continued exceptional craftsmanship from labor.
  • Continued exceptional project management, execution and delivery from construction industry employers.
  • Renewed focus on the tripartite relationships.
  • Increased cost of labor and associated increased cost of construction project budgets.
  • Less compressed project delivery schedules.
  • Billions of dollars in new construction spending for new projects surrounding and supporting these megaprojects.
  • Continued labor shortages.
  • Enhanced Career and Technical Education programs in public schools.
  • Increased construction in the housing market.
  • A revitalization of the central New York region.

These two megaprojects, along with additional capital investments from both the public and private sectors, will directly fuel the incredible economic development central New York will experience over the next decade.  It will be essential that the construction industry, and society in general, take advantage of these opportunities and overcome any of the barriers associated with change. 

Steering Through New York’s Construction Safety Landscape

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Wael Khalil, VP & Director of Safety & Health. Lovell Safety Management

In the challenging construction landscapes of New York State, employers face the formidable task of navigating through terrain complicated by the steep costs of insurance. This situation is largely exacerbated by the rigorous absolute liability laws that pertain to falls. For years, these falls have not just been a leading cause of significant injuries within the construction industry but have also escalated the financial implications of such incidents to new heights. Constructing a high-rise building in New York can incur higher expenses compared to other states, largely due to the elevated costs of insurance. Despite legislative initiatives that mandate comprehensive training on proper fall protection measures, these types of accidents continue to pose a persistent threat to the wellbeing of construction workers and the economic stability of their employers.

Drawing on three decades of experience in the health and safety field, I have witnessed firsthand the evolution of job site safety. Today’s construction sites are undoubtedly safer than those of 30 years ago, a testament to the progress achieved through relentless advocacy, improved standards, and technological advancements. However, our quest for “absolute safety” is an ongoing endeavor.

An analysis by The National Institute for Occupational Safety and Health (NIOSH), published in September 2017 and titled “The construction FACE database — Codifying the NIOSH FACE reports,” sheds light on fall-related fatalities. The findings reveal that since 1982, approximately one in five individuals documented in the Construction FACE Database (CFD) succumbed to injuries within their first two months on the job. Notably, 75% and 43% of the reports recommended the implementation of safety training and the installation of protective equipment, respectively.

Yet, a detailed examination of job sites plagued with safety violations uncovers a recurring issue: the failure of employers to enforce established safety protocols. It becomes evident that while education and training are crucial components, they alone do not complete the puzzle. The most significant gap lies in the enforcement of known safety regulations—a duty that falls squarely on the shoulders of employers. As per NYC Department of Building, as of January 2023, falls constituted approximately 70% of all construction-related incidents, yet New York City imposes the most comprehensive employee training regulations in the state and in most cases the country.

The legal framework, particularly embodied by New York State’s Sections 240 and 241 laws, looms large over the construction sector, highlighting the critical necessity for employers to intensify their focus on safety enforcement. This could encompass an array of proactive strategies, such as conducting surprise inspections, initiating unannounced audits, and engaging third-party evaluators for impartial site assessments. Such measures not only ensure adherence to safety standards but also cultivate a culture of diligence and accountability.

The message is unequivocal: Employers must elevate their management of job site safety to mitigate risk exposure. In an industry marked by considerable stakes, the repercussions of complacency can indeed be profound.  As we continue to strive for a safer tomorrow, the commitment to rigorous enforcement of safety protocols remains the beacon guiding our efforts. The path to reducing the financial and human costs of construction accidents is clear, and it begins with a steadfast dedication to safety at every level.

For more information on this issue and other safety related concerns on the job site you may contact Wael Khalil, VP & Director of Safety & Health, Lovell Safety Management at wkhalil@lovellsafety.com or 917-692-9108.   You may also visit online at www.LovellSafety.com.

 

NYS 2024 Workers’ Compensation Updates

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By: Brett Findlay, Sr. VP, Business Risk Specialist

There have been significant changes applicable to New York State workers’ compensation in 2024. However, none have been as impactful as the 2022 change to the experience modification rating formula (or EMR), which all experience-rated policyholders have now seen the effects of. The volatility of loss impacts to policyholder EMR’s has been significant. There may be some help on the way, through rate decreases.

For the ninth consecutive year, an aggregate rate decrease is on the horizon. Furthermore, the New York State Assessment was dropped again in January. Also, the impacts to individual workers’ compensation policies from the changes to the experience rating (EMR) formula have been experienced by all policyholders since our last update.

In a press release dated May 9, 2024 the New York Compensation Insurance Rating Board (NYCIRB) filed its annual loss cost indication with the New York State Department of Financial Services. An approved and published filing for the expected decrease of 9.0% of the overall loss cost level should be confirmed and announced by August 1, 2024. The change in rates is effective on policies renewing on or after October 1, 2024.

The impact of the loss costs, or rates, will vary depending on each individual classification code. For an understanding of the potential impact to your business and individual class codes utilized on your policy, please feel free to reach out to OneGroup using the contact information below.

It is important to note that these rate changes will not go into effect on any individual policy until October 1, 2024. If your effective date is before that date, you will have to wait until your policy renewal before any potential rate changes apply. Regardless of when your effective date is, you should know the exact rate changes to your classifications sooner rather than later. It’s important to not only forecast the future costs of your program, but also to develop a plan for your upcoming renewal.

In January, the New York State Assessment saw another decrease. This year the assessment dropped from 9.8% to 9.2% in 2023, even moreso from 10.2% in 2022, and 11.8% in 2021. Overall, there’s been a nearly 20% decrease in the aggregate cost to policyholders since 2021.

As far as the new formula to determine Experience Modification Ratings, or EMR’s, those changes went into effect on October 1, 2022. The formula is significantly different than it has been in the past and is affecting policyholders who’ve experienced workers’ compensation losses from both a frequency and severity standpoint. OneGroup has been monitoring the impact to policyholders, hosted multiple educational seminars, and developed materials to explain the changes in detail. The formula change has impacted many businesses, both positively and negatively. For more information on how you have been or will be affected, please do not hesitate to contact us directly.

So, what does this mean for New York State contractors? For any individual questions and/or concerns, please do not hesitate to contact Brett Findlay, Sr. Vice President of Business & Construction Risk.

OneGroup has a team of specialists, dedicated to risk management and construction industry specific insurance issues. We’re able to serve as a resource to your organization for all your construction specific questions and concerns. OneGroup takes great pride in being at the forefront of industry trends and assisting others where we can. You can find out more about us here: www.OneGroup.com or about our construction expertise, http://www.OneGroup.com/business-insurance/unique-industry-solutions/construction-industry/.

For more information please contact Brett Findlay, Senior Vice President Business Risk Specialist at (315) 280-6376 or BFindlay@OneGroup.com 

Syracuse Community Health: Evolving and Expanding Under New Leadership

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By Elizabeth Landry

Syracuse Community Health entered a new chapter this year, with Ofrona Reid, MD, MBA, MS taking the helm as Interim President and CEO this past January. Reid was previously the Chief Medical Officer at Oneida Health, having re-located to Oneida from the Bronx, where he grew up. His experiences in his youth have contributed to his sense of passion for leading Syracuse Community Health, a vital health care organization in Central New York that serves those who are uninsured, disadvantaged or who face other obstacles to receiving quality healthcare. In the city of Syracuse, the patient population facing challenges to having its healthcare needs met is large: the city’s 13202 zip code ranks as the poorest in the state and ranks 26th nationally.

“Growing up in the same type of community with similar struggles, barriers and exposures gave me a sense of what’s needed in the greater Syracuse community, as well as the desire to really make a change,” Reid said. “My ultimate passion and vision are to design and deliver a high-quality care model that focuses on providing health equity to patients who unfortunately are vulnerable and under-served in our community.”

Expanding Access to High-Quality Care

Along with his executive team, including Jessica Yoxall, Chief Operating Officer and John Milligan, Chief Financial Officer, Reid has laid plans for several initiatives aimed at increasing access to quality healthcare for the impoverished communities in Central New York. Included in these plans, SCH will be expanding the Quick Care center to increase walk-in access for patients. According to Reid, these walk-in services are critical to the goals of the organization.

“If we have a patient coming into Quick Care for foot pain, for example, we can screen them for other underlying conditions like high blood pressure or diabetes, and then tunnel them to a primary care provider for further care. This process allows us to identify and help close health care disparities in the community,” Reid explained.


Along with the expansion of the Quick Care offerings, SCH will also be adding more dental care for its patients, specifically at the East location. Yoxall explained how these additional dental services are aimed at resolving some of the health care disparities in the area related to location and lack of transportation.

“One of the things we look at when we determine need of new services is the social determinants of health for our patients, such as difficulty obtaining transportation to appointments,” explained Yoxall. “If we have a high volume of patients that live on the East side or perhaps the West side we consider what the specific services are that we can incorporate into those locations to help overcome these barriers. For instance, one of the things we’re working on right now is expanding our dental practice by incorporating access to our dental services at our East location. We’re currently working with the NYS Department of Health to put in three dental operatories for both a dentist and a dental hygienist, where we can offer full-service dental care including panoramic x-rays for our patients. This is just one of the many important ways that we continue to provide high-quality services and promote health equity right here in our community.”

Fostering Connections in the Community

Another strategy the team at SCH continues to explore to provide needed health services to impoverished CNY communities is forging deeper connections with other resources in the area. By identifying ways the health center can partner with other community-based organizations and agencies, the team at SCH is making large strides in advocating for patient needs, especially when patients themselves may not be aware of the resources available to them.

“One of the things Dr. Reid has

 been a huge proponent of over the last two and a half years is connecting the needs of patients in the community with related services that are available. Onondaga County is a very resource-rich community in terms of services, but connecting patients with those services can often be challenging. To bridge this gap, we’ve been working with the

 Onondaga County Health Department, outside agencies and other offices and sharing our story about what we’re doing for patients and what their needs are so we can better connect them with the care that they truly need,” said Yoxall.

SCH’s partnership and collaboration with other community-based organizations is taking shape in several different areas of health care. To help address food insecurity, SCH is working with the CNY Food Bank to distribute 200 boxes of fresh produce each month, available to anyone in the community. A collaboration with Food Access Healthy Neighborhoods Now, or FAHNN, as well as the Mary Nelson Program, will also help SCH alleviate the food desert in Central New York. Additionally, SCH will be partnering with Brady Market to offer a café space in the new building at 930 South Salina Street, offering fresh, healthy food options for patients and staff alike.

The team at SCH also has plans to partner with Catholic Charities, the Rescue Mission and Dr. David Lehmann from Upstate Hospital to help provide quality health care to the sheltered and unsheltered homeless population in Syracuse.

“Dr. Lehmann makes house calls to the homeless and he reached out to me to help identify additional ways the homeless population can receive continued health care,” stated Reid. “We’ve developed a pathway where Dr. Lehmann sees them and can refer them to our Quick Care locations where we can do an initial blood screening, tests and vaccines before they even see a primary care provider. The goal is to get them in to a primary care provider for follow up, which includes dental care and behavioral health. We’re going to work with Catholic Charities and the Rescue Mission to accomplish this goal and provide needed services right on the spot.”

Recruitment, Teamwork and Company Culture

According to Reid, one of the most important requirements for achieving the goals laid out in 2024 and beyond is a strong, supportive leadership team. “Without my staff and clinical teams, there’s no way I’d be able to go after my vision for the organization,” Reid said.

Certainly, this emphasis on teamwork also resonates with the executive leadership team at SCH. “What I enjoy most about working at Syracuse Community Health is our team,” said Yoxall. “Everyone at SCH has a shared vision to provide high-quality care to improve health outcomes for the patients we serve. The employees at SCH are constantly going above and beyond to meet the needs of our patients and organization.”

To continue building on the company culture and attracting top talent from the community, the team at SCH has needed to reach out to local educational institutions to get the word out about all that the health center has to offer. According to Yoxall, many in the community may not understand that students who rotate through SCH will be able to learn about podiatry, eye care, family medicine, pediatrics and more.

“Dr. Reid and I have been doing a lot of outreach in the community and connecting with local community colleges as well as Henninger High School to help explain the type of work that we do. Many people who live in the city of Syracuse may not have even heard of the health center, or they’ve heard of it and thought of it only as a free clinic. As a result, when they see a job posting from SCH they may not understand the scope and the extent of the services we provide here. We’ve been working and partnering with both the nursing program and medical assistant program at Onondaga Community College, sharing our story about everything we’ve accomplished, the services that we provide and the amazing experience we can provide to students,” stated Yoxall.

Continued Focus on Patients’ Needs First

With the team aligned on strategies for making material improvements in healthcare access in the community, the coming years will certainly be full of change and growth at SCH. Alongside new Quick Care locations, planned building expansions include a new clinic on the Onondaga Community College campus and enhancements to the original SCH location at 819 South Salina Street. These developments will further improve patient experience as demonstrated by the brand-new, state-of-the-art location at 930 South Salina Street that recently opened in December of 2023.

As exemplified by the beautiful new building, SCH continues to expand and offer more and more state-of-the-art services for patients in settings that are truly reflective of the high-quality care the organization offers. For Milligan, the new building demonstrates how patients’ needs will always be at the very center of the mission at SCH.

“We are so proud of our new 930 building,” Milligan said. “It was specifically designed to enhance the patient’s experience. The natural lighting, open spaces and easy transitions between care areas really improve the patient flow and experience.”

Whether at the new building, the Quick Care centers, in Syracuse elementary schools or in the streets of the community, the team at SCH will continue to focus on achieving healthcare equity for all.

“I really feel that if we’re going to close the healthcare gap, we can’t sit back and wait,” explained Reid. “We’re going to make the necessary moves to close the gap and bring high-quality healthcare to those who need it the most. We’re going to continue to advocate for our patients and help them overcome barriers to the excellent health care that they deserve.”

Impact of Megaprojects

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Earl R. Hall, Executive Director

Considering the multi-year, $2.5 billion Route 81 project, and the highly anticipated start of Micron’s 20-year, $100 billion semi-conductor chip fabrication project in Clay, the media and elected officials have used the word “megaprojects”.   These unusual megaprojects garner great interest and typically lead to questions about the impact of these projects on society.  As a result, people have asked me about how such megaprojects impact the construction industry in central New York.

To begin with, it is important to understand that the construction ecosystem, although resilient, is fragile.  The tripartite balance that exists between project owners, contractors and labor has never experienced projects of this magnitude happening at once, so forecasting the impact on the industry may be difficult.  Making assumptions is what a good actuary does to assist in predicting the future, so I will make assumptions to provide better context.

Assumption #1 – Labor

The lack of labor continues to plague the industry, which in some cases may result in a contractor’s inability to complete a project on time.  Failure to complete projects on time may contractually lead to liquidated damages.  Delivering labor to Micron will certainly be a challenge as the regional industry today does not have such capacity; however, one can assume much of the labor for Micron will be imported from other regions of the United States.  As a result, I do anticipate the project will have the labor force necessary to achieve project delivery requirements, but certainly there will be labor challenges.  Moreover, regional contractors serving traditional clients, such as hospitals, universities, industrial and institutional facilities may not be materially impacted to the extent of not having available labor.

Assumption #2 – Project Schedules

Project owners’ delivery schedules are becoming increasingly aggressive, both in the public and private sectors.  Often the contractor’s ability to achieve the schedule is dependent upon a wide variety of items but having adequate labor and timely delivery of construction material, such as concrete, is essential to achieving schedule goals.  Although much of the labor on the megaprojects may come from out of state, one should assume meeting project owners’ future aggressive schedules may be more challenging due to the potential labor pressures associated with megaprojects.

Assumption #3 – Wage Growth

Anticipating future regional wage growth is paramount for construction contractors and project owners alike.  How will the megaprojects impact future wage growth?  Over the past two years, construction industry employees have enjoyed advantageous conditions leading to above average wage growth.  I expect this environment to continue, with wage adjustments far exceeding inflation.  Additionally, many employers are rewarding their best employees with additional compensation, benefits and other incentives to remain with their employer.

Forecasting future regional wage growth will be difficult as it remains unknown the incentives required to attract labor to Micron’s project.  While Micron’s 20-year project has a Project Labor Agreement which contains the unions’ wages and fringe benefit schedules, I anticipate such wage schedules will be the “minimum wage” requirement for this project.

“What does this all mean?”

The most asked question is, “How will these megaprojects impact other project owners?”  This question is most difficult to answer; however, one can assume:

  • Continued exceptional craftsmanship from labor.
  • Continued exceptional project management, execution and delivery from construction industry employers.
  • Renewed focus on the tripartite relationships.
  • Increased cost of labor and associated increased cost of construction project budgets.
  • Less compressed project delivery schedules.
  • Billions of dollars in new construction spending for new projects surrounding and supporting these megaprojects.
  • Continued labor shortages.
  • Enhanced Career and Technical Education programs in public schools.
  • Increased construction in the housing market.
  • A revitalization of the central New York region.

These two megaprojects, along with additional capital investments from both the public and private sectors, will directly fuel the incredible economic development central New York will experience over the next decade.  It will be essential that the construction industry, and society in general, take advantage of these opportunities and overcome any of the barriers associated with change.