Navigating Risk: Focused on AI Trends, Strict State Statutes

As artificial intelligence rapidly reshapes jobsite operations and New York State continues to implement stringent labor mandates, Adams Leclair LLP provided critical legal strategies to invited guests at its 4th Annual Construction Law Update on October 7, 2026, at the Country Club of Rochester. 

The annual symposium brought together project managers and general contractors to address three primary pillars of current construction risk: artificial intelligence integration, liquidated damages clause enforceability, and project closeout. Guest speaker, Joe Hogan of Associated General Contractors of New York State, shared information on state legislative initiatives including warnings about so-called “piggybacking” schemes, plus the audience learned about 2026 state employment mandates.

The Dual Edges of Jobsite Technology

The opening presentation addressed the legal and insurance risks of adopting Artificial Intelligence in construction estimating, submittal tracking, and safety monitoring without proper guardrails.

Partner Paul L. Leclair warned that commercial general liability (CGL) coverage can be jeopardized by generative AI in project planning, as insurance carriers introduce policy endorsements to deny coverage for claims “arising out of” AI use. Partner Kelly A. Geary noted that while AI aids BIM clash detection and jobsite correspondence, human verification is vital.

“AI can help with synthesis, but it cannot be the last word on safety or contract design,” said Geary.  Contractors should implement protocols and training to avoid AI errors, like improper summarization and identification of contract clauses, hallucinated references, and incomplete notice provisions. 

To mitigate AI risk, speakers recommended:

• Company-wide AI protocols and guardrails to identify which platforms are acceptable to use on projects, and which should be restricted;
• Identify whether contracts require AI disclosures, or whether the contract should require disclosures.
• Data Privacy & Human Control: Maintain strict privacy controls on uploaded plans and assign legal accountability to human project leads rather than algorithmic tools.
• Insurance Audits: Review CGL policy endorsements specifically for generative AI exclusions.

Managing Delay Risk Through Liquidated Damages

Partner Dan Adams addressed contractual risk allocation and the enforceability of liquidated damages (LDs) in commercial and public works construction contracts. Under New York law, daily liquidated damages clauses are enforceable only if the set per diem rate represents a reasonable pre-estimate of probable delay losses and actual damages are difficult to calculate.

To avoid unenforceable penalty rulings, Adams advised reviewing key delay terms:

• Proportionate Limits: Per diem rates lacking a reasonable relationship to actual anticipated losses (like financing costs or lost lease income) are struck down as penalties.
• Consequential Damages Waivers: Pairing LD provisions with a mutual waiver of consequential damages eliminates speculative lost-profit claims.
• Concurrent Delay: Liquidated damages cannot be assessed when the owner contributes to delays, unless clear contract extension mechanisms were ignored.

Navigating Project Closeout: Punch Lists & Substantial Completion

Partner Anthony J. “Tony” Adams addressed project completion challenges, highlighting the critical distinction between Substantial Completion and punch list execution. Poorly defined punch lists often delay final payment, trigger retainage disputes, and expose construction contractors to default claims late in project lifecycles.

Adams emphasized that punch lists must strictly cover minor corrective items that do not impair building occupancy or intended use. To manage punch list risk and avoid extended overhead, he recommended:

• Clear Contract Definitions: Define strict parameters for Substantial Completion so punch lists cannot be expanded into scope changes or used as a moving target to withhold certificates of occupancy.
• Timely Inspection Procedures: Contractually mandate strict deadlines for design professionals to deliver consolidated punch lists rather than piecemeal demands.
• Proportionate Retainage Withholding: Cap retainage withholding at Substantial Completion to a reasonable multiple (e.g., 150%) of estimated uncompleted punch list work rather than withholding total contract retainage.

Staying Compliant: New Laws Affecting New York State Employers

In addition to the presentations, detailed compliance guidance was provided by Employment Law Partner, Stacey Trien, which outlined sweeping legislative updates impacting construction employers throughout New York State. 

Key statutes and compliance deadlines detailed for attendees include:

• Electronic Certified Payroll (Dec. 31, 2025): Contractors on prevailing wage projects must submit certified payroll electronically through the New York State Department of Labor (NYSDOL) portal or face daily fines of $100.
• Consumer Credit Ban (April 18, 2026): Employers are generally barred from using consumer credit history in hiring, promotion, or compensation decisions.
• Personnel Records Access (Nov. 8, 2026): Current and former employees must be granted access to their complete personnel files within five business days of a written request.
• Construction Reporting Pay Act (Dec. 8, 2026): Establishes mandatory minimum reporting pay—requiring at least four hours of pay if an employee reports to work and a minimum of two hours of pay if a shift is canceled with less than 12 hours’ notice.
• Jobsite Narcan Requirements (Dec. 13, 2026): Employers subject to OSHA first-aid requirements must equip jobsite kits with naloxone (Narcan) and ensure at least one trained worker is on site during operating hours.
• Trapped at Work Act (Dec. 19, 2026): Restricts traditional “stay-or-pay” employment agreements and promissory notes requiring workers to pay back costs upon resignation.
• Multi-Employer Paid Family Leave (Jan. 1, 2027): Allows union construction workers under collective bargaining agreements to aggregate service time across multiple signatory employers to qualify for Paid Family Leave.

With wage schedules updated for 2026–2027 and state enforcement ramping up, attorneys urged construction management teams to review contract forms, personnel procedures, and subcontractor agreements immediately to ensure compliance prior to statutory deadlines.

Industry Advocacy & Legislative Reform

Joe Hogan, Vice President Building Services for Associated General Contractors of New York State (AGC NYS), discussed legislative advocacy for building and heavy highway contractors across the state. Hogan highlighted a recent win curbing procurement “piggybacking” schemes to protect fair, competitive bidding for local contractors, while outlining updates to New York prevailing wage schedules and joint efforts addressing complex statutory changes.

To address ambiguities surrounding the upcoming Construction Reporting Pay Act—set to take effect on Dec. 8, 2026—AGC NYS has formed dedicated industry task forces in direct collaboration with Adams Leclair LLP attorneys:

• Show-Up Pay Clarity: Partner Kelly Geary is working alongside AGC to help construction firms gain clearer agency definitions and operational guidelines for show-up pay requirements.
• Report-to-Work Standards: Partner Ted Baum is assisting the task force in addressing practical challenges associated with report-to-work pay regulations, ensuring contractors can adapt scheduling and weather-delay policies before penalties take effect.

This article provides a general summary of selected topics discussed at Adams Leclair’s 4th Annual Construction Law Update and is for informational purposes only. It is not legal advice. Please contact the firm at www.adamsleclair.law if you have questions and we will direct you to the appropriate attorney.