Claims against design professionals often pose unique challenges when such claims are dually rooted in both tort and contract theories, and therefore subject to competing time limitations. To reconcile these differences, Massachusetts courts have historically looked to the “gist” of a given claim, rather than the label, to assess the appropriate limitations. A determination that the “gist” of a claim lies in tort will subject that claim to a shorter statute of limitations, as well as the statute of repose, which bars tort claims arising out of construction projects brought more than six years after the project is either completed or open for use.

The Massachusetts Supreme Judicial Court (SJC) recently addressed the statute of repose in this context in Trustees of Boston University v. Clough Harbour & Associates LLP. Docket No. SJC-13685 (Mass. Apr. 16, 2025). There, the SJC held that the six-year time limitation set forth in the tort statute of repose, Mass. Gen. Laws c. 260, § 2B, did not apply to bar a contractual indemnification claim for damages allegedly caused by an architect’s negligence. The decision arose out of a dispute concerning alleged defects in the design and construction of a brand-new synthetic turf athletic field on Boston University’s campus. In 2012, the university entered into a contract with the architect for design and construction administration services, which included an indemnification provision, providing that the architect would indemnify the university for any and all expenses caused by the architect’s negligence. The work was completed, and the field opened for use in the summer of 2013.

After experiencing numerous problems with the field after opening, the university demanded indemnification from the architect for costs spent remedying the issues pursuant to the parties’ contract. The architect refused, and well over six years after the field opened, the university sued for contractual indemnification. The architect was ultimately granted summary judgment by the Superior Court, which reasoned that because the indemnification obligation was contingent on the architect’s negligence, the gist of the claim was actually rooted in tort and therefore time barred by the statute of repose. The university appealed, arguing that its indemnification claim was based on distinct, express contractual obligations specifically negotiated and agreed to by the parties, and therefore did not fall under the ambit of the statute of repose.

The SJC agreed with the university. In resolving the question, the SJC noted that a key distinction between actions of contract versus those of tort is that contract actions are based on express promises set by the parties, as opposed to tort standards imposed by law. Thus, notwithstanding the parties’ decision to incorporate the negligence standard into the indemnity provision, the indemnification obligation still represented a distinct contractual promise, the breach of which requires a different showing than for negligence. With its findings, the SJC reversed the lower court and restored the contractual indemnification claim thus underscoring the importance of contractual indemnification clauses in managing project risk.

Although the SJC’s decision is generally consistent with a “gist of the claim” evaluation, it nevertheless suggests a departure from prior applications that may pose far-reaching effects for the construction industry moving forward. Though the Court found that the university’s indemnification claim was not barred by the statute of repose, it also confirmed that, for an owner to prevail on its claim, it must show, amongst other things, the occurrence of an event triggering the duty to indemnify. Assuming that a finding of negligence against the architect is the necessary trigger for purposes of the university’s claim, it seems that a paradoxical procedure has been created, wherein the university, to prove an element of its viable indemnification claim, will first need to prove a time-barred negligence claim. The impact of such a paradox remains to be seen.

Amidst the flurry of tariff threats swirling around the world, the Federal Highway Administration (FHWA) is terminating the waiver known as the Manufactured Products General Waiver from the Buy America requirements found in 23 U.S.C.A § 313. The Buy America regulation requires all federal-aid projects to use only steel, iron, and manufactured products that are produced in the United States. Since 1983, these requirements have been waived for manufactured products that were permanently incorporated into federal-aid projects by not requiring such products to be produced domestically, apart from predominantly iron or steel components of manufactured products. This waiver is being phased out  in 23 C.F.R. 635.410, an amendment to the Buy America regulation which establishes new standards that will apply to manufactured products on federal-aid projects. The final rule was published in the Federal Register on January 14, 2025 (Vol. 90, No. 8, pp. 2932-58).

The new rule, 23 C.F.R. 635.410, defines “manufactured products” as “articles, materials, or supplies that have been processed into a specific form and shape, or combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.” A manufactured product does not include an article, material, or supply if it is “classified as an iron or steel product, an excluded material, or another product category as specified by law or in 2 C.F.R. part 184” or “mixtures of excluded materials delivered to a work site without final form for incorporation into a project.” However, “an article, material, or supply classified as a manufactured product may include components that are iron or steel products, excluded materials, or other product categories as specified by law or in 2 C.F.R. part 184.”

Manufactured products must be manufactured in the United States effective for federal-aid projects obligated on or after October 1, 2025. The Manufactured Products General Waiver will remain in place until then. The additional requirement to have greater than 55% of the manufactured product’s components, by cost, be mined, produced, or manufactured in the United States becomes effective for federal-aid projects obligated on or after October 1, 2026. For all federal-aid projects obligated on or after October 1, 2026, all manufactured products permanently incorporated into the project must both be manufactured in the United States and have the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States be greater than 55% of the total cost of all components of the manufactured product.

Under the new rule, an article, material, or supply is generally only subject to one set of requirements. The classification of an article, material, or supply is made based on its status at the time it is brought to the work site for incorporation into an infrastructure project. The work site is the location of the infrastructure project at which the iron or steel product or manufactured product will be incorporated. The new rule also provides additional clarifications for precast concrete products and enclosures of electronic hardware systems classified as manufactured products, as well as, how to determine whether the cost of components for manufactured products is greater than 55% of the total cost of all components.

In Iberdrola Energy Projects v. Oaktree Capital Management L.P., 231 A.D.3d 33, 216 N.Y.S.3d 124, the Appellate Division for the First Department ruled that a nonrecourse provision in a contract barred a plaintiff’s causes of action for tortious interference with contract, unjust enrichment, and statutory violations of a trade practices statute, but not for fraud.

This case arose from a contract related to the construction of a power plant in Salem, Massachusetts. A choice-of-law provision dictated that the contract was governed by and construed in accordance with New York law. Defendants created a special-purpose entity (SPE) to serve as the company charged with constructing the new plant. Defendants owned, controlled, and managed the SPE and were the SPE’s majority and controlling equity holders. The majority of the SPE’s board of directors and officers were also defendants’ employees. The SPE retained plaintiff to be the project’s engineering, procurement, and construction contractor.

The contract permitted the SPE to terminate the contract for convenience or for a material breach by the contractor. In the event of termination for cause, the owner would incur substantial payment obligations; a termination for convenience would not. The contract required the contractor to post a standby letter of credit in the amount of approximately $140 million as security for the contractor’s performance. The owner was permitted to draw on the letter of credit only “upon any Contractor’s breach or failure to perform, when and as required, any of its material obligations under the Contract.” The contract contained a nonrecourse provision that provided that,

[Owner’s] obligations hereunder are intended to be the obligations of Owner and of the corporation which is the sole general partner of Owner only and no recourse for any obligation of Owner hereunder, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director or Affiliate, as such, past, present or future of such corporate general partner or any other subsidiary or Affiliate of any such direct or indirect parent corporation or any incorporator, shareholder, officer or director, as such, past, present or future, of any such parent or other subsidiary or Affiliate.

The project was plagued with delays and cost overruns. When the project was 98% complete, the SPE terminated for cause. The SPE drew the $140 million afforded by the letter of credit, retained a replacement contractor, and completed the remaining work. The original contractor filed for arbitration against the SPE, claiming that the SPE breached the contract, engaged in tortious conduct, violated the Massachusetts Unfair Trade Practice Act, and sought $700 million in damages. The SPE appeared in the arbitration proceeding and asserted counterclaims.

The arbitration panel determined, among other things, that the SPE lacked cause to terminate the contract and that it terminated the contract as a pretense to draw on the letter of credit and issued a final award in the contractor’s favor for $236,404,377. That award was confirmed in New York, and the SPE filed for bankruptcy. The original contractor filed a civil action in New York, bringing the same claims against the defendants, but all counts except for fraud were dismissed based on the nonrecourse provision.

The New York lower court enforced the plain meaning of the nonrecourse provision, which sophisticated commercial parties negotiated. The nonrecourse provision is a contractual limitation on liability, which, like other exculpatory clauses, is generally enforceable provided it does not violate a statute or run afoul of public policy. The court determined the provision to be “as broad as it is clear: no liability could be imposed upon various individuals and entities for “any claim based on the contract or otherwise in respect thereof.” Plaintiff’s causes of action for tortious interference with contract, unjust enrichment, and violations of Massachusetts’s deceptive trade practices statute were all hinged or predicated on conduct taken under or in contravention of the contract. Since these causes of action were all related to or connected with the contract, they were all barred by the nonrecourse provision. The court showed no sympathy for the plaintiff contractor and its likely inability to recover any part of the judgment it was holding. The plaintiff knew it was entering a very large contract with an SPE and should have known of the breadth of the nonrecourse provision. The takeaway appears to be: Beware of nonrecourse provisions with SPEs.

This post was co-authored by Government Enforcement + White Collar Defense Team lawyer David Carney, Capital Markets + Securities Group lawyer Tiange (Tim) Chen, and Antitrust + Regulation team co-chair Jennifer Driscoll.

Executive Order Directing Deregulation and Termination of Certain Regulatory Enforcement Actions

On February 19, 2025, in an executive order titled Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, President Trump expressed a policy to “deconstruct[] … the overbearing and burdensome administrative state.” Specifically, President Trump directed each agency head (subject to limited exemptions) to classify all regulations subject to the agency’s sole or shared jurisdiction into one of seven categories. These categories include, for example, “unconstitutional regulations and regulations that raise serious constitutional difficulties,” “regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority,” “regulations that impose significant costs upon private parties that are not outweighed by public benefits,” “regulations that harm the national interest,” and “regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.” There is no category for a regulation that the agency head finds lawful and appropriate. Each agency head is to provide the Administrator of the Office of Information and Regulatory Affairs (OIRA) the list of those “unconstitutional regulations and regulations that raise serious constitutional difficulties.” The Administrator of OIRA, then, is tasked with developing an agenda to “rescind or modify these regulations.”

In addition, the executive order directs each agency head to assess whether ongoing enforcement of any regulation identified in the above classification process complies with law and the policies of the Trump administration. On a case-by-case basis and consistent with applicable law, the agency head is to “terminat[e] … all such enforcement proceedings that do not comply” with the executive order’s directive. (D. Carney)

Executive Order Affecting Independent Agency Power

On February 18, 2025, in an executive order titled Ensuring Accountability for All Agencies, President Trump amended Executive Order (EO) 12866 to require administrative rulemaking by independent regulatory agencies (such as the Securities and Exchange Commission, the Federal Trade Commission, the National Labor Relations Board, and the banking regulatory agencies (Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency)), which are previously exempted by EO 12866, to go through the regulatory review process promulgated by EO 12866, including submission of any proposed or final rules to the White House’s Office of Management and Budget (OMB) for review before publication.

The executive order further:

  • Directs the OMB Director to:
    • Adopt performance standards and management objectives for heads of independent agencies;
    • Conduct performance reviews over independent agency heads and report to the President; and
    • Review financial obligations and consult agency heads to adjust budget allocations.
  • Requires heads of independent agencies to
    • Consult the OMB and other White House offices on policies and priorities;
    • Establish a White House liaison position in each agency; and
    • Submit agency strategic plans to OMB for preclearance before publication.
  • Prohibits government agencies to advance interpretation of laws in rulemaking or litigations inconsistent with the positions taken by the Attorney General. (T. Chen)

Executive Order Reducing the Size and Composition of the Federal Government

On February 19, 2025, in an executive order titled Commencing the Reduction of the Federal Bureaucracy, President Trump directed several actions to reduce the size of the federal government. First, the executive order eliminates, to the maximum extent of the law, the non-statutory components and functions of (i) the Presidio Trust, (ii) the Inter-American Foundation, (iii) the United States African Development Foundation, and (iv) the United States Institute of Peace. The head of each of these entities must submit a report to the OMB Director that (i) states the extent to which it and its components and functions are statutorily mandated and (ii) affirms compliance with the executive order. The OMB Director will terminate or reject funding requests for components or functions that are not statutorily mandated. Second, the Director of the Office of Personnel Management will take steps to eliminate the four Federal Executive Boards and the Presidential Management Fellows Program. Third, the heads of the departments and agencies identified below have been instructed to terminate the following committees and councils:

  • The Advisory Committee on Voluntary Foreign Aid (U.S. Agency for International Development),
  • The Academic Research Council and the Credit Union Advisory Council (Consumer Financial Protection Bureau),
  • The Community Bank Advisory Council (Federal Deposit Insurance Corporation),
  • The Secretary’s Advisory Committee on Long COVID (Department of Health and Human Services), and
  • The Health Equity Advisory Committee (Centers for Medicare and Medicaid Services).

Fourth, within 30 days, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and the Assistant to the President for Domestic Policy are to recommend additional entities and Federal Advisory Committees to be terminated. (J. Driscoll)

Presidential Memorandum on Disclosure of Terminated Programs, Contracts, and Grants

On February 18, 2025, in a memorandum titled Radical Transparency about Wasteful Spending, President Trump directed the heads of executive departments and agencies to take all appropriate actions to the maximum extent permitted by law to make public the “complete details of terminated programs, cancelled contracts, terminated grants, and any other discontinued obligation of Federal funds.” (J. Driscoll)

Many out-of-state professional engineering companies practice engineering in Connecticut and may not be aware of all the requirements to do so. Connecticut has certain requirements for corporations and limited liability companies (LLCs) engaging in the practice of engineering. The applicable law, General Statutes §§ 20-306a and 20-306b, requires that (1) the personnel who act as engineers on behalf of the company must be either licensed in Connecticut or exempt from Connecticut’s license requirements, and (2) the company must have been issued a certificate of registration by the State Board of Examiners for Professional Engineers and Land Surveyors (State Board). Professional engineering firms must be registered with the Secretary of State as a domestic or foreign firm prior to applying for registration from the State Board. In addition, no less than two-thirds of the individual members of an LLC or owners of a professional corporation must be individually licensed as professional engineers in Connecticut. The Connecticut Department of Consumer Protection maintains a list of all professional engineers licensed in Connecticut and all State Board registrations.

Caselaw interpreting these requirements is sparse. Strict compliance with the State Board registration requirement is not always required. In Rowley Engineering & Associates, P.C. v. Cuomo, 1991 WL 27286 (Conn. Super. Jan. 2, 1991), the defendant alleged that the plaintiff professional corporation was not entitled to its design fees because it had not been issued a certificate of registration and thus did not comply with Conn. Gen. Stat. § 20-306a. The Rowley Court rejected this argument, reasoning that the statute was established for administrative purposes to allow professional engineers to practice in a corporate form and not safeguarding life, health, or property. The Court found substantial compliance with the statute, reasoning that all of the design professionals in Rowley were, in fact, licensed to practice in Connecticut. Thus, the purpose of licensure—to protect the public—was essentially satisfied. However, strict compliance with Connecticut’s professional engineer license requirement is required. In Anmahian Winton Architects v. J. Elliot Smith Holdings, LLC, 2010 WL 1544418 (Conn. Super. Mar. 16, 2010), the Court confirmed that a professional engineer or architect license in Connecticut is required to practice in Connecticut and it does not matter that such professional is licensed in any other state. The failure to be licensed in Connecticut precludes professional engineers from enforcing their right to payment for work performed.

Professional engineering companies practicing in Connecticut should be familiar with all state requirements. The failure to do so could result in being terminated from a project and not getting paid for work otherwise properly performed. Even if the company substantially complies with the State Board registration requirement, it could be difficult to explain this to an inquiring owner.

This post was authored by International team lawyer Kathleen Porter.

Executive Order Adjusting Imports of Aluminum into The United States

On February 11, 2025, in an executive order titled Adjusting Imports of Aluminum into the United States, President Trump increased, from 10% to 25%, the ad valorem tariff rate on imports of aluminum and aluminum-derivative articles from most countries. The tariff rate on imports of aluminum from Russia will be 200%. President Trump cited national security grounds as the reason for the tariff increases.

The executive order also ended previous exemptions on these imports for allies such as Argentina, Australia, Mexico, Canada, the EU, and the UK.

The tariffs begin on March 12, 2025.

The President stated that these actions aim “to protect America’s steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity.”

Executive Order Adjusting Imports of Steel into The United States

On February 10, 2025, in an executive order titled Adjusting Imports of Steel into the United States, President Trump increased, from 10% to 25%, the ad valorem tariff rate on imports of steel and steel-derivative articles from most countries. President Trump cited national security grounds as the reason for the tariff increases.  

The executive order also ended previous exemptions on these imports from Argentina, Australia, Brazil, Canada, the EU, Japan, Mexico, South Korea, and Ukraine.

The tariffs begin on March 12, 2025.

The President stated that these actions aim “to protect America’s steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity.”

In Admiral Insurance Co. v. Tocci Building Corp., 120 F.4th 933 (1st Cir. 2024), the federal Court of Appeals ruled that, under current Massachusetts law, a general contractor’s Commercial General Liability (CGL) policy does not cover damage to non-defective work resulting from defective work by subcontractors.

The defendant contractor was retained as a construction manager for an entire residential construction project. After several work quality issues and delays on the project, the contractor was terminated before the project’s completion. The owner of the project filed suit against the contractor for breach of contract and related claims but did not allege negligence by the contractor. The complaint included allegations of defective work by the contractor’s subcontractors leading to various instances of damage to non-defective work on the project including: (1) damage to sheetrock resulting from faulty roof work; (2) mold formation resulting from inadequate sheathing and water getting into the building; and (3) damage to a concrete slab, wood framing, and underground pipes resulting from soil settlement due to improper backfill and soil compaction. The contractor’s request for defense and indemnification coverage under its CGL policy was denied by its insurer. The insurer filed suit seeking a declaratory judgment confirming it had no obligation to defend or indemnify the contractor. The district court granted summary judgment in favor of the insurer and the contractor appealed.

The Court examined the “Damage to Property” exclusion outlined in subsection (I)(2)(j) of the CGL policy, which provides that there is no coverage for “property damage” to “(6) [t]hat particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it.” The CGL policy defines “your work,” in relevant part, as “work or operations performed by you or on your behalf.” Since the complaint alleged damage resulting from the contractor’s “incorrectly performed” work on the entire project, the Court interpreted the (j)(6) exclusion as applying to the entirety of the project where the contractor was the construction manager charged with supervising and managing the whole project, the Court enforced the exclusion against coverage for the contractor.

The Court also examined the exception to the exclusion in (j)(6), which provides that the exclusion does not apply to “‘property damage’ included in the ‘products-completed operations hazard.’” The “products-completed operations hazard,” in turn, “includes all ‘bodily injury’ and ‘property damage’ occurring away from premises you own or rent and arising out of ‘your product’ or ‘your work’ except … (2) work that has not yet been completed or abandoned.” Since the contractor was terminated and did not complete or abandon the project prior to damage, the court of appeals concluded that the coverage exclusion in (j)(6) still applied.

In closing, the court of appeals left the door open for potential coverage for damage to non-defective, work arising from a subcontractor’s defective work even with the (j)(6) exclusion. Since the Massachusetts Supreme Judicial Court has yet to rule on the issue, it could interpret “property damage” caused by an “occurrence” to encompass this type of damage, which could allow a general contractor to potentially receive coverage if the work is completed or abandoned, as the exception to the exclusion would then apply.

Below is an excerpt of an article published in the Q4 2024 edition of the National Organization of Minority Architects Connecticut Chapter (NOMAct) newsletter, which offers insights from Robinson+Cole’s Construction Industry Roundtable.

The construction industry, long viewed as a traditional and labor-intensive sector, is poised to experience a transformational shift with the integration of artificial intelligence (AI). From streamlining architectural design to enhancing safety protocols and project management, AI is reshaping how construction professionals operate. However, the journey to widespread adoption has its hurdles, particularly in areas like cybersecurity and workforce adaptation.

A Construction Industry Roundtable event hosted by Robinson+Cole on September 29, 2024, brought together industry leaders from local and national organizations to explore AI’s opportunities and challenges in construction. These organizations included the National Organization of Minority Architects, Associated General Contractors, Associated Builders and Contractors, Design-Build Institute of America, Connecticut Construction Industries Association, Connecticut Building Congress, Construction Institute and American Arbitration Association. Read the full article.

This post was co-authored by Labor + Employment Group lawyers Natale DiNatale, Abby Warren and Christopher A. Costain.

As most employers in the construction industry know, the Connecticut Legislature passed significant amendments to the Connecticut Paid Sick Leave (PSL) law which are set to go into effect on January 1, 2025, for employers with twenty-five or more employees. The amended PSL law includes a few important exceptions for unionized construction companies. Additionally, just in time, the Connecticut Department of Labor (DOL) has published important guidance (Guidance) regarding these wide-ranging changes that employers in the construction industry may find helpful as they revise policies and procedures to ensure compliance with these significant amendments. Highlighted below are some of the most important parts of the amended PSL law and the DOL’s guidance that may impact employers in the construction industry.

  1. The Construction-Related Union Exceptions

The amended PSL law covers all employees working in the state of Connecticut with the exception of certain unionized construction workers. Specifically, the exception applies to individuals who are members of organized construction worker unions to the extent that the union is a party to a contract with a multiemployer health plan in which more than one employer contributes to such a plan so long as the plan is maintained pursuant to one or more collective bargaining agreements between the union and the employers.

Similarly, an exception appears in the amended law’s definition of “employer,” which excludes employers that participate in multiemployer health plans in which more than one employer is required to contribute to such plan, and the plan is maintained pursuant to one or more collective bargaining agreements between a construction related union and the employer.

2. Existing and Pre-2012 Collective Bargaining Agreements

The amended PSL law does not diminish any rights provided to employees under an existing collective bargaining agreement, and it does not preempt or override the terms of a collective bargaining agreement entered into prior to January 1, 2012. Therefore, as the Guidance has clarified, any collective bargaining agreement entered into or renegotiated after January 1, 2012 must comply with the terms of the amended PSL law, including by not requiring documentation in support of a paid sick leave-related absence or prior notice of a qualifying absence, among the other key requirements of the amended PSL law discussed in our prior Legal Update.

3. Two Different “120-Day” Rules in the Amended Law

The amended PSL law provides that covered employees are entitled to use accrued paid sick leave on or after one hundred twenty calendar days of employment, meaning they have been “on payroll” for three months. The Guidance clarifies that the 120 calendar days begins on the employee’s hire date, and that employees who meet the 120 day threshold as of January 1, 2025, do not need to wait to use accrued paid sick leave. Similarly, employees who began their employment prior to January 1, 2025, but have not yet worked 120 days must wait until their 120th day of employment before using accrued paid sick leave.

Also under the amended law, “seasonal employees” (defined as employees who work 120 or fewer days in a year) are not covered by the new law. The important distinction between the new hire waiting period and the seasonal employee workday threshold is that new hires must wait 120 calendar days before using accrued paid sick leave, whereas seasonal employees are not eligible for paid sick leave until they have worked 121 or more days in a year.

The Guidance clarifies that if a seasonal employee remains employed and works 121 or more days in a year, they will become eligible for the use of accrued paid sick leave. Importantly, in such an instance, a former “seasonal” employee would be entitled to use accrued paid sick leave beginning on workday 121 and thereafter, based on the hours worked in their first 120 days.

4. Documentation and Notice Prohibited

Under the amended PSL law, employers are not permitted to require documentation of paid sick leave use from employees.  Instead, employers are permitted to ask employees only if they are taking time off pursuant to the PSL law, but cannot gather specific details or documentation to support the request. The Guidance states that if an employee refuses to provide enough information for an employer to determine that the absence is covered under the PSL law, the employer should not apply the employee’s accrued paid leave to the absence.

The Guidance also clarifies that if an employee uses paid sick leave concurrently with a law that permits return-to-work or fitness-for-duty certifications, such as the federal or state Family and Medical Leave Act or the Americans with Disabilities Act, an employer may request such documentation. However, if such documentation is requested, it may not be used to deny an employee’s use of paid sick leave.

The Guidance also clarifies that as it relates to notice that employees must provide in advance of use of paid sick leave, employers may require employees to provide notice “as soon as practicable” of the need to use paid sick leave, so long as employees are not disciplined for failing to follow the employer’s requirements regarding the timing of the notice.

5. Ensuring Compliance with Existing PTO Policies

With regard to employers in the construction industry that are not exempted from the amended PSL law and who have a paid time off (PTO) policy, the Guidance clarifies that employees who use all of their accrued PTO by taking a family vacation will be deemed to have exhausted their 40 hours of paid sick leave. For future absences in the same year that would have otherwise qualified as a paid sick leave-related absence, the employer would be permitted to require advance notice and documentation, and the other requirements of the PSL law would not need to be satisfied.

However, the DOL cautions that an employee’s absences related to paid sick leave should not be treated as an “occurrence” under the employer’s attendance policy. That being said, employers may have a policy with regard to use of sick time used above and beyond the 40 hours required by law (and presumably, could discipline for various reasons when time is used above the 40 hour threshold).

6. Carrying Over or Paying Out

The amended PSL law provides that employees may carry over up to forty (40) hours of unused accrued paid sick leave per year unless the employer frontloads the time, in which case carry over is not required. The Guidance further clarifies that an employer may also offer to pay out an employee’s unused accrued paid sick leave in lieu of carrying over to the following year, but only if an employer and employee agree. Employers that do not frontload paid sick leave may want to consider offering employees a payout option in order to better manage workforce and staffing levels at the beginning of the following year, before paid sick leave accruals grow.

There is likely to be additional forthcoming guidance from the DOL as the amended PSL law goes into effect beginning in January. In addition to carefully reviewing the amended PSL law and the DOL’s guidance, employers should consult competent employment counsel.

New York law generally enforces a contractual suit limitation that specifies a “reasonable” period of time (usually shorter than the applicable statute of limitations) within which an action must be commenced. The contractual suit limitation needs to be fair and reasonable, given the circumstances of each particular case. The New York Court of Appeals recently examined this precedent in the context of an insurance policy enforcing an insurance contract’s two-year suit limitation period in Farage v. Associated Insurance Management Corp., 2024 N.Y. Slip Op. 05875 (Nov. 26, 2024).

In Farage, a Staten Island multi-unit apartment building was damaged in a fire. The plaintiff owner filed its full repair claim for damages with its insurer six years after the fire and four years after the expiration of the contractual limitation period. The insurer denied the claim. The plaintiff filed suit for breach of contract and breach of the covenant of good faith fair dealing. The insurer moved to dismiss the action based on the two-year limitation provision in the insurance contract.

The insurance policy provided that an insured “may not bring a legal action” under the policy unless: “(a) There has been full compliance with all of the terms of this insurance; and (b) The action is brought within 2 years after the date on which the direct physical loss or damage occurred.” The policy further provided that the “[Insurer] will not pay on a replacement cost basis for any loss or damage: (i) Until the lost or damaged property is actually repaired or replaced; and (ii) Unless the repairs or replacement are made as soon as reasonably possible after the loss or damage.”

The lower court granted the insurer’s motion to dismiss the complaint in its entirety, and the Court of Appeals affirmed. While the owner relied on an earlier New York precedent, Executive Plaza, LLC v. Peerless Ins. Co., 22 N.Y.3d 511 (2014), which allowed the nullification of a suit limitation provision if a plaintiff demonstrates the damaged property could not be replaced within the limitation period, that authority was distinguished because the owner ultimately failed to allege that it reasonably attempted to repair the property within the two-year limitations period but was unable to do so. Without allegations of specific remedial actions to restore the property within the limitation period showing that such provision was unreasonable under the circumstances, a suit limitation provision will be enforced.

Typically, at least one party to a construction contract will benefit from a suit limitation provision. The statute of limitations for contract actions in New York is six years. Reducing this statutory period down to two years by agreement, which should be fair and reasonable for most construction contracts (other than design contracts), limits uncertainty and potential stale claims long after a project is completed. Such a provision should be relatively easy to enforce in court as well.