Article by: John Dreste

In recent years the New York Legislature has annually imposed ever-increasing burdens on the construction industry, some for laudable underlying purposes (“Carlos” law, Wage Theft Act), but others with questionable motives (expanded application of prevailing rate to certain private jobs, extended certified payrolls, mandatory public contractor registration). In each case the burden of compliance, and risk of downstream non-compliance by subcontractors or others, falls on contractors. As a result, even new laws with good intent unduly pressure contractors under pain of financial penalties, and sometimes even criminal exposure, for violations not of their doing.

In late 2025 the Legislature created, and the Governor signed, a new §220(3)(f) in the New York Labor Law. It was subsequently amended (A2747-A/S5236A) but still mandates that companies supplying “custom fabricated” products to New York public works projects-such as precast concrete, structural steel, curtain wall systems, electrical duct systems, rebar cages, and mechanical insulation, not only register per other recent laws, but also pay the prevailing rate of wages for the county in which the project is located. The supplier/manufacturer must also provide certified payrolls to confirm compliance, with failures ultimately penalizing the contractor. This mandate applies regardless of where the supplier/manufacturer is located, whether in-state, out of state, or even out of the country. In other words, a supplier/manufacturer in North Carolina, during the time an item for a New York job is being manufactured, must pay its workers the prevailing rate for the New York county where the project sits. Anecdotal feedback thus far has been that key out of state suppliers/manufacturers will simply no longer quote New York public projects. Design professionals and owners must take this into account if their intent is to specify custom systems or other items that will no longer be shipped to New York. Loss of supply chain aside, from a practical standpoint, manufacturers concurrently work on items earmarked for multiple jobs and now have to track and pay higher a rate for the time dedicated to a New York project. This is an unrealistic expectation, but as with other new laws, the New York contractor will be held ultimately liable for any shortfall in paperwork and payments. 

One change in the law’s text via the amendment process altered the listed covered “custom” items from “including but not limited to” to merely “including.” Some commentators have latched onto that change to suggest that means the list is exhaustive, but New York law treats those two terms almost identically, meaning the listed items are not exclusive. Had a limitation been intended, the change would have said “limited to” or any other clear similar statement.

An absence of clarity overall creates uncertainty. What is truly “custom” is not defined. Also, the law extends to any “covered projects” pursuant to another recent law that extended prevailing rate to private projects that meet certain tests for public funding or similar support. The geographic scope of the new law extends to manufacturing “off-site, or in another jurisdiction” which on its face extends to foreign-made items. Apart from all the other unworkable elements to the law, it is almost laughable to suggest that fabricators in Europe, Asia, Mexico, Canada or elsewhere will even consider compliance. 

But there is some hope. A consortium of trade organizations and contractors, spearheaded by the Associated General Contractors of New York, filed suit to challenge the legality of the new law, in large part because New York cannot dictate wages paid by employers in other states or countries. The impact and limitation on competition is also self-apparent. The Federal Court sitting in Albany has issued a temporary stay preventing enforcement of the law pending arguments. The case should be fully briefed in September and everyone in the construction industry should hope for a finding that the law is impermissible. Failing that, we will be one step closer to imposing so much non-construction burden on the industry that contractors may ultimately also leave the state. If that occurs, please, will the last to leave turn off the lights?