The enactment of the New York State Construction Industry Fair Play Act on October 26, 2010 makes it difficult to qualify a construction worker as an Independent Contractor or subcontractor. By misclassifying employees as Independent Contractors, employers avoid paying unemployment insurance taxes, no overtime rates, and other such benefits normally provided for employees which are not provided for Independent Contractors.
In the past, it was often understood that if someone maintained a workers’ compensation policy, they could qualify as an independent contractor and this new law makes it clear that this isn’t the case.
Under the act (S.5847-F), construction workers are assumed to be employees, rather than Independent Contractors. Construction workers can still be classified as Independent Contractors if they qualify as having their own separate business entity in addition to meeting qualifications that show an obvious separation from the general contractor on the job.
If businesses misclassify construction workers as Independent Contractors rather than employees, the new law offers a greater chance of the situation being discovered and then penalized.
Independent Contractor Qualifications
According to the New York State Department of Labor (DOL), you are an employee, and must be labeled and treated as such, unless you meet the following three conditions:
- Receive no direction or control from another person (like a “boss”) at your job
- Perform work and jobs that are not part of the usual work the business hired you to do
- Have a business entity set up independently of the business that hired you
Enforcement of New York State Construction Industry Fair Play Act
It is unlawful for employees to call their employees Independent Contractors when they are not; or to pay employees “off the books”. Penalties and fines imposed by this law extend to individuals who are corporate officers or shareholders of the business incorrectly classifying employees. There is new mandatory information sharing between the Workers’ Compensation Board, the NY Department of Taxation and Finance and the Labor Department – which should make it easier to discover businesses incorrectly classifying their employees.
Think your employer has misclassified you as an Independent Contractor? Contact us and we’ll take a look at your situation and help you decide what to do about it.