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New York State Construction Industry Fair Play Act Effective

  • October 25, 2010

Under the New York State Construction Industry Fair Play Act, effective October 26, construction workers are presumed to be employees, and must be treated as employees, as opposed to independent contractors, unless they meet three criteria.  The new section to the New York Labor Law takes aim at worker misclassification in the construction industry.  After signing the legislation, Governor David Paterson said, “Studies have shown that up to 15 percent of New York’s construction industry is misclassified at any given time. It deprives the government of tax revenue at a time when it is sorely needed and places an unfair burden on law-abiding employers who play by the rules. It often deprives New York’s workers of crucial benefits such as overtime pay, workers’ compensation and unemployment insurance. This new law will be a powerful tool that hopefully will clean up this practice once and for all.”

Under the law, construction industry employers must notify workers of their classification status as employees or independent contractors.  Employers must display a New York State Department of Labor notice about the Act, which explains to workers their rights and protections.

Independent Contractor Status (Three Criteria)

A worker classified as an independent contractor must satisfy the following three criteria:

  • The worker is “free from control and direction in performing the job, both under his or her contract and in fact;”
  • The service “must be performed outside the usual course of business which the service is performed;” and
  • The worker is “customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue.”

Penalties

An employer who violates the Act by paying workers off-the-books or improperly treating employees as independent contractors may be subject to a civil penalty of $2,500 to $5,000 per employee.  In additional, an employer may be subject to a criminal penalty of up to 60 days in jail, up to a $50,000 fine and debarment for up to five years.

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Jackson Lewis attorneys are available to answer inquiries regarding this new law and assist employers in achieving compliance with its requirements.

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