Enacts the "New York state construction industry fair play act"; defines terms; provides notice to persons receiving remuneration from contractors and subcontractors; describes violations; authorizes enforcement and penalties.
BILL NUMBER: S5847A REVISED 01/29/10
TITLE OF BILL : An act to amend the labor law, in relation to enacting the "New York state construction industry fair play act"; and to amend the workers' compensation law, the tax law and the state finance law, in relation to creating the construction industry classification fund
PURPOSE OR GENERAL IDEA OF BILL : This legislation would amend existing provisions of law related to the payment of workers in order to combat misclassification fraud by employers in the construction industry. The bill would create a presumption of employee status unless an employer met specific criteria for classifying a worker as an independent contractor and would establish penalties for classification violations.
SUMMARY OF SPECIFIC PROVISIONS : Section 1 of the bill creates a new Article 25-A of the Labor Law to be known as the New York State Construction Industry Fair Play Act with the following sections:
* Section 861 contains the short title of the Article. * Section 861-a contains a declaration of legislative findings. * Section 861-b creates definitions. * Section 861-c creates a presumption of employment status in the construction industry. * Section 861-d requires that notice be provided to workers of their employment status. * Section 861-e establishes a violation for improper employment classification and penalties. * Section 861-f creates an advisory committee on employment classification. * Section 861-g establishes retaliation as a violation of the Act.
Section 2 of the bill amends section 511 of the unemployment insurance law to include the presumption of a construction worker as an employee.
Section 3 of the bill amends section 2 of the workers' compensation law to include the presumption of a construction worker as an employee.
Section 4 of the bill amends section 671 of the tax law to clarify that employers of construction employees are subject to withholding tax requirements.
Section 5 of the bill adds a new section 99-t to the state finance law to establish the construction industry classification fund.
Section 6 establishes the effective date of the Act.
EXISTING LAW : There is no statute in New York that establishes a presumption of employment status for work in the construction industry.
JUSTIFICATION : Misclassification is a type of payroll fraud in which an employer improperly classifies a worker as an independent contractor rather than as an employee. Misclassification hurts workers, employers, and taxpayers. Workers are denied basic protections and benefits, including unemployment, workers' compensation and disability benefits, and are forced to pay the employer's share of social Security and Medicaid costs which unfairly enriches the employer and reduces the worker's take home pay. Misclassification also creates an unlevel playing field for law-abiding employers who must compete against businesses that intentionally submit lower bids by misclassifying their workers.
Misclassification additionally impacts taxpayers by reducing the amount of unemployment taxes, personal income taxes and workers' compensation funds collected by the State. Reports by the Joint Enforcement Task Force on Employee Misclassification, the Cornell University School of Industrial and Labor Relations and the Fiscal Policy Institute have all found that misclassification is causing the state to lose millions of dollars in tax revenues each year. Investigations by the Joint Task Force of upstate and downstate construction firms found over $86 million in unreported wages, which resulted in the assessment of over $2.5 million in unpaid unemployment taxes and over $1 million in unemployment insurance fraud penalties. A 2007 Cornell report for the period of 2002-2005 found $4 billion in unreported wages and $175 million in lost unemployment taxes affecting more than 45,000 construction workers. The Fiscal Policy Institute has reported that for the construction industry in 2005 for New York city alone, the loss of unemployment, personal income and other payroll taxes totaled $342 million, plus an additional $148 million in health care costs shifted onto workers, taxpayers and other employers that provide health insurance. This total was expected to reach at least $557 million in 2008. The failure to pursue employers who misclassify their workers has the effect of condoning tax evasion, increasing the number of misclassified workers, and supporting the underground economy instead of the State treasury.
New York State's construction industry is experiencing dangerous levels of employee misclassification fraud. Recent studies of New York city's construction industry found that nearly one in four construction workers are either misclassified as independent contractors or are employed by construction contractors completely off the books. Throughout the State, unscrupulous employers are intentionally reporting employees as independent contractors to state and federal authorities or workers' compensation carriers in record numbers. Several other states use the presumption established under the bill to determine employment status in the construction industry. This legislation will strengthen the enforcement of labor and tax violations against employers who cheat the government and deny construction workers the prevailing wages benefits and other labor protections they are entitled to receive under state and federal law.
PRIOR LEGISLATIVE HISTORY : New bill.
FISCAL IMPLICATIONS : Estimated $270.7 million savings for the State and $66.7 million savings for New York City from the tax collection of unemployment, income, payroll and workers' compensation assessments.
EFFECTIVE DATE : This act shall take effect on the sixtieth day after it shall have become law.
STATE OF NEW YORK ________________________________________________________________________ 5847--A 2009-2010 Regular Sessions IN SENATE June 11, 2009 ___________Introduced by Sens. ONORATO, FOLEY, BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- recommitted to the Committee on Labor in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the labor law, in relation to enacting the "New York state construction industry fair play act"; and to amend the workers' compensation law, the tax law and the state finance law, in relation to creating the construction industry classification fund THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The labor law is amended by adding a new article 25-B to read as follows: ARTICLE 25-B THE NEW YORK STATE CONSTRUCTION INDUSTRY FAIR PLAY ACT SECTION 861. SHORT TITLE. 861-A. LEGISLATIVE FINDINGS AND INTENT. 861-B. DEFINITIONS. 861-C. PRESUMPTION OF EMPLOYMENT IN THE CONSTRUCTION INDUSTRY. 861-D. NOTICE TO PERSONS RECEIVING REMUNERATION FROM CONTRACTORS AND SUBCONTRACTORS. 861-E. VIOLATIONS AND PENALTIES. 861-F. ADVISORY COMMITTEE ON EMPLOYMENT CLASSIFICATION. 861-G. RETALIATION. S 861. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS THE "NEW YORK STATE CONSTRUCTION INDUSTRY FAIR PLAY ACT". S 861-A. LEGISLATIVE FINDINGS AND INTENT. THE LEGISLATURE HEREBY FINDS AND DECLARES THAT NEW YORK STATE'S CONSTRUCTION INDUSTRY IS EXPERIENCING DANGEROUS LEVELS OF EMPLOYEE MISCLASSIFICATION FRAUD. UNSCRUPULOUS EMPLOYERS ARE INTENTIONALLY REPORTING EMPLOYEES AS INDEPENDENT CONTRAC- TORS TO STATE AND FEDERAL AUTHORITIES OR WORKERS' COMPENSATION CARRIERSEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11756-09-0 S. 5847--A 2
IN RECORD NUMBERS. IN ADDITION, THERE HAS BEEN AN EXPLOSION OF EMPLOYERS WHO OPERATE IN THE UNDERGROUND ECONOMY AND FAIL TO REPORT ALL OR A SIZA- BLE PORTION OF THEIR WORKERS. THE LEGISLATURE HEREBY FINDS AND DECLARES THAT RECENT STUDIES OF NEW YORK CITY'S CONSTRUCTION INDUSTRY ALONE SUGGESTS THAT AS MANY AS FIFTY THOUSAND NEW YORK CITY CONSTRUCTION WORKERS -- NEARLY ONE IN FOUR -- ARE EITHER MISCLASSIFIED AS INDEPENDENT CONTRACTORS OR ARE EMPLOYED BY CONSTRUCTION CONTRACTORS COMPLETELY OFF THE BOOKS. CONSTRUCTION INDUSTRY FRAUD REDUCES GOVERNMENT REVENUE, SHIFTS TAX AND WORKERS' COMPENSATION INSURANCE COSTS TO LAW-ABIDING EMPLOYEES, LOWERS WORKING CONDITIONS AND STEALS JOBS FROM LEGITIMATE EMPLOYERS AND THEIR EMPLOYEES. IN TWO THOUSAND FIVE ALONE, IT WAS ESTIMATED THAT THE LOST PAYROLL TAXES AND SOCIAL INSURANCE PREMIUM PAYMENTS IN NEW YORK CITY DUE TO CLASSIFICATION FRAUD EXCEEDED TWO HUNDRED SEVENTY MILLION DOLLARS. IN ADDITION THE GOVERNMENT AND PROVIDERS WERE FORCED TO PAY AN ADDITIONAL ONE HUNDRED FORTY-EIGHT MILLION DOLLARS FOR HEALTH CARE COSTS FRAUDU- LENTLY SHIFTED FROM EMPLOYERS. FINALLY, IT WAS ESTIMATED THAT THE GOVERNMENT WAS CHEATED OUT OF ALMOST SEVENTY MILLION DOLLARS IN LOST INCOME TAXES DUE. MISCLASSIFICATION FRAUD CREATES SIGNIFICANT PROBLEMS FOR WORKERS. THESE WORKERS ARE NOT COVERED BY WORKERS' COMPENSATION, UNEMPLOYMENT INSURANCE, OR TEMPORARY DISABILITY. THEY ARE LIABLE FOR TAXES THEY DO NOT OWE AND LOSE OVERTIME AND HEALTH BENEFITS. FINALLY, UNSCRUPULOUS CONTRACTORS WHO ENGAGE IN FRAUD ARE ABLE TO UNDERCUT LAW-A- BIDING CONTRACTORS BY AS MUCH AS THIRTY PERCENT IN THE PRICE OF CONSTRUCTION SERVICES. THEREFORE, THE LEGISLATURE HEREBY FINDS AND DECLARES THAT GOVERNMENT HAS AN OBLIGATION TO CURB THIS UNDERGROUND ECONOMY, ENFORCE LONG-STAND- ING EMPLOYMENT LAWS, ENSURE COMPLIANCE WITH ESSENTIAL SOCIAL INSURANCE PROTECTIONS AND ELIMINATE THE UNFAIR COMPETITIVE ADVANTAGE FROM CONTRAC- TORS IN THE UNDERGROUND ECONOMY BY AND THROUGH THE ENACTMENT OF THE NEW YORK STATE CONSTRUCTION INDUSTRY FAIR PLAY ACT. S 861-B. DEFINITIONS. AS USED IN THIS ARTICLE: 1. "CONSTRUCTION" MEANS CONSTRUCTING, RECONSTRUCTING, ALTERING, MAIN- TAINING, MOVING, REHABILITATING, REPAIRING, RENOVATING OR DEMOLITION OF ANY BUILDING, STRUCTURE, OR IMPROVEMENT, OR RELATING TO THE EXCAVATION OF OR OTHER DEVELOPMENT OR IMPROVEMENT TO LAND. 2. "CONTRACTOR" MEANS ANY SOLE PROPRIETOR, PARTNERSHIP, FIRM, CORPO- RATION, LIMITED LIABILITY COMPANY, ASSOCIATION OR OTHER LEGAL ENTITY PERMITTED BY LAW TO DO BUSINESS WITHIN THE STATE OF NEW YORK WHO ENGAGES IN CONSTRUCTION AS DEFINED IN THIS ARTICLE. 3. "CONTRACTOR" INCLUDES A GENERAL CONTRACTOR AND A SUBCONTRACTOR. 4. "DEPARTMENT" MEANS THE DEPARTMENT OF LABOR. 5. "COMMISSIONER" MEANS THE COMMISSIONER OF LABOR. 6. "EMPLOYER" MEANS ANY CONTRACTOR THAT EMPLOYS AN INDIVIDUAL CLASSI- FIED AS AN EMPLOYEE UNDER THIS ARTICLE. S 861-C. PRESUMPTION OF EMPLOYMENT IN THE CONSTRUCTION INDUSTRY. 1. ANY PERSON PERFORMING SERVICES FOR A CONTRACTOR SHALL BE CLASSIFIED AS AN EMPLOYEE UNLESS ALL OF THE FOLLOWING CRITERIA ARE MET: (A) THE INDIVIDUAL IS FREE FROM CONTROL AND DIRECTION IN PERFORMING THE JOB, BOTH UNDER HIS OR HER CONTRACT AND IN FACT; (B) THE SERVICE MUST BE PERFORMED OUTSIDE THE CONTRACTOR'S USUAL COURSE OF BUSINESS; AND (C) THE INDIVIDUAL MUST BE CUSTOMARILY ENGAGED IN AN INDEPENDENTLY ESTABLISHED TRADE, OCCUPATION, PROFESSION, OR BUSINESS THAT IS SIMILAR TO THE SERVICE AT ISSUE.S. 5847--A 3
2. THE FAILURE TO WITHHOLD FEDERAL OR STATE INCOME TAXES OR TO PAY UNEMPLOYMENT COMPENSATION CONTRIBUTIONS OR WORKERS' COMPENSATION PREMI- UMS WITH RESPECT TO AN INDIVIDUAL'S WAGES SHALL NOT BE CONSIDERED IN MAKING A DETERMINATION UNDER THIS SECTION. 3. AN INDIVIDUAL'S ACT OF SECURING WORKERS' COMPENSATION INSURANCE WITH A CARRIER AS A SOLE PROPRIETOR OR PARTNERSHIP SHALL NOT BE CONSID- ERED IN MAKING A DETERMINATION UNDER THIS SECTION. S 861-D. NOTICE TO PERSONS RECEIVING REMUNERATION FROM CONTRACTORS AND SUBCONTRACTORS. 1. CONTRACTORS SHALL PROVIDE TO ALL INDIVIDUALS RECEIV- ING REMUNERATION TO PERFORM CONSTRUCTION WORK A WRITTEN NOTICE, PROVIDED BY THE COMMISSIONER, THAT DESCRIBES THE RESPONSIBILITY OF INDEPENDENT CONTRACTORS TO PAY TAXES REQUIRED BY STATE AND FEDERAL LAW AND THE RIGHTS OF EMPLOYEES TO WORKERS' COMPENSATION, UNEMPLOYMENT BENEFITS, MINIMUM WAGE, OVERTIME AND OTHER FEDERAL AND STATE WORKPLACE PROTECTIONS. SUCH INFORMATION SHALL ALSO CONTAIN CONTACT INFORMATION FOR SUCH PERSONS TO FILE COMPLAINTS OR INQUIRE WITH THE COMMISSIONER ABOUT EMPLOYMENT CLASSIFICATION STATUS. IN ADDITION, THE NOTICE SHALL CONTAIN THE ADDRESS TO THE WEB SITE DESCRIBED IN SUBDIVISION THREE OF THIS SECTION, THE PROTECTIONS AGAINST RETALIATION IN THIS ARTICLE AND THE PENALTIES IN THIS ARTICLE IF THE CONTRACTOR HAS FAILED TO PROPERLY CLAS- SIFY THE PERSON AS AN EMPLOYEE. 2. THE INFORMATION IN SUBDIVISION ONE OF THIS SECTION SHALL BE PROVIDED IN SPANISH OR OTHER LANGUAGES REQUIRED BY THE COMMISSIONER. 3. WITHIN SIX MONTHS OF THE EFFECTIVE DATE OF THIS ARTICLE, THE COMMISSIONER SHALL CREATE THE NOTICE DESCRIBED IN SUBDIVISION ONE OF THIS SECTION. IN ADDITION, WITHIN THE SAME TIME PERIOD, THE COMMISSIONER SHALL CREATE A WEB SITE THAT CONTAINS THE SAME INFORMATION AND THE NOTICE. SUCH NOTICE SHALL BE PROVIDED TO CONTRACTORS THROUGH DOWNLOADING FROM THE WEB SITE. 4. CONTRACTORS IN THEIR AGREEMENTS WITH ALL SUBCONTRACTORS SHALL REQUIRE THEM TO: (A) PROVIDE THE NOTICE DESCRIBED IN THIS SECTION, AND (B) PLACE THE NOTICE REQUIREMENT IN CONTRACTS WITH ANY LOWER TIER SUBCONTRACTORS. 5. CONTRACTORS WHO VIOLATE THIS SECTION SHALL BE SUBJECT TO THE FOLLOWING CIVIL PENALTIES: (A) TWO THOUSAND DOLLARS PER INDIVIDUAL WHO IS NOT NOTIFIED; AND (B) FIVE THOUSAND DOLLARS PER CONTRACT WITH A SUBCONTRACTOR OR LOWER TIER SUBCONTRACTOR THAT DOES NOT CONTAIN THE NOTICE REQUIREMENT. S 861-E. VIOLATION AND PENALTIES. 1. ANY CONTRACTOR WHO FAILS TO PROP- ERLY CLASSIFY AN INDIVIDUAL AS AN EMPLOYEE AS PROVIDED UNDER SECTION EIGHT HUNDRED SIXTY-ONE-C OF THIS ARTICLE SHALL BE SUBJECT TO THE CIVIL AND CRIMINAL PENALTIES PROVIDED UNDER THIS SECTION. 2. FOR THE PURPOSES OF THIS SECTION, THE TERM "WILLFULLY VIOLATES" MEANS A CONTRACTOR KNEW OR SHOULD HAVE KNOWN THAT HIS OR HER CONDUCT WAS PROHIBITED BY THIS SECTION. 3. ANY CONTRACTOR WHO WILLFULLY VIOLATES SECTION EIGHT HUNDRED SIXTY- ONE-C OF THIS ARTICLE SHALL BE SUBJECT TO A CIVIL PENALTY OF UP TO TWEN- TY-FIVE HUNDRED DOLLARS FOR THE FIRST VIOLATION PER EMPLOYEE, AND TO A CIVIL PENALTY OF UP TO FIVE THOUSAND DOLLARS FOR EACH SUBSEQUENT VIOLATION PER EMPLOYEE. 4. IF THE CONTRACTOR IS A CORPORATION, ANY OFFICER OF SUCH CORPORATION OR SHAREHOLDER WHO OWNS OR CONTROLS AT LEAST TEN PERCENT OF THE OUTSTANDING STOCK OF SUCH CORPORATION WHO KNOWINGLY PERMITS THE CORPO- RATION TO WILLFULLY VIOLATE ANY PROVISION OF THIS ARTICLE SHALL BES. 5847--A 4
SUBJECT TO THE SAME CIVIL PENALTY PROVIDED UNDER THIS ARTICLE FOR A VIOLATION OF SUCH PROVISION. 5. IF ANY CONTRACTOR WILLFULLY VIOLATES SECTION EIGHT HUNDRED SIXTY-ONE-C OF THIS ARTICLE AND SUCH VIOLATION RESULTS IN A FAILURE BY THE CONTRACTOR TO PAY UNEMPLOYMENT INSURANCE TAX, WORKERS' COMPENSATION, OR CORPORATE OR PERSONAL INCOME TAX FOR THE MISCLASSIFICATION OF AN EMPLOYEE, THE CONTRACTOR SHALL BE SUBJECT, AT THE DISCRETION OF THE COMMISSIONER, TO ADDITIONAL CIVIL PENALTIES AS FOLLOWS: (A) FOR FAILURE TO PAY UNEMPLOYMENT INSURANCE TAX, THE PENALTIES IMPOSED BY SECTION FIVE HUNDRED SEVENTY OF THIS CHAPTER, (B) FOR FAILURE TO PAY WORKERS' COMPENSATION INSURANCE, THE PENALTIES IMPOSED BY SECTION TWENTY-FIVE AND TWO HUNDRED TWENTY OF THE WORKERS' COMPENSATION LAW, AND (C) FOR FAILURE TO PAY CORPORATE OR PERSONAL INCOME TAX, THE PENALTIES IMPOSED BY SECTIONS SIX HUNDRED EIGHTY-FIVE AND ONE THOUSAND EIGHTY-FIVE OF THE TAX LAW. 6. IN ADDITION TO ANY CIVIL PENALTIES IMPOSED UNDER THIS ARTICLE, A CONTRACTOR WHO WILLFULLY VIOLATES SECTION EIGHT HUNDRED SIXTY-ONE-C OF THIS ARTICLE SHALL BE GUILTY OF A MISDEMEANOR AND UPON CONVICTION, SHALL BE PUNISHED FOR A FIRST OFFENSE BY IMPRISONMENT FOR NOT MORE THAN THIRTY DAYS AND FOR A SUBSEQUENT OFFENSE, BY IMPRISONMENT FOR NOT MORE THAN SIXTY DAYS. 7. ANY CONTRACTOR WHO HAS BEEN CONVICTED OF A MISDEMEANOR OR AGAINST WHOM A FINAL CIVIL DETERMINATION HAS BEEN RENDERED FOR A WILLFUL VIOLATION OF SECTION EIGHT HUNDRED SIXTY-ONE-C OF THIS ARTICLE SHALL BE INELIGIBLE TO SUBMIT A BID ON OR BE AWARDED ANY PUBLIC CONTRACT WITH THE STATE, ANY MUNICIPAL CORPORATION, PUBLIC BENEFIT CORPORATION OR PUBLIC BODY FOR A PERIOD OF UP TO FIVE YEARS FROM THE DATE OF SUCH CONVICTION OR FINAL DETERMINATION. 8. ANY EMPLOYEE AGGRIEVED BY A VIOLATION OF THIS ARTICLE, OR AN ORGAN- IZATION REPRESENTING AN AGGRIEVED EMPLOYEE, MAY FILE A CIVIL ACTION TO RECOVER LOST WAGES, TREBLE DAMAGES, ATTORNEY'S FEES AND COSTS WITHIN THREE YEARS FROM THE DATE OF SUCH VIOLATION. 9. A PENALTY IMPOSED UNDER THIS SECTION AGAINST A CONSTRUCTION INDUS- TRY EMPLOYER SHALL BE IN EFFECT AGAINST ANY SUCCESSOR CORPORATION OR BUSINESS ENTITY THAT HAS ONE OR MORE OF THE SAME PRINCIPALS OR OFFICERS AS THE EMPLOYER AGAINST WHOM THE PENALTY WAS IMPOSED. 10. NOTHING IN THIS SECTION SHALL LIMIT THE AVAILABILITY OF OTHER REMEDIES AT LAW OR IN EQUITY FOR A VIOLATION OF THIS ARTICLE. S 861-F. ADVISORY COMMITTEE ON EMPLOYMENT CLASSIFICATION. 1. THERE IS HEREBY ESTABLISHED THE ADVISORY COMMITTEE ON EMPLOYMENT CLASSIFICATION. THE PURPOSE OF SUCH ADVISORY COMMITTEE IS TO DEVELOP RECOMMENDATIONS FOR A COMPREHENSIVE AND STRATEGIC STATEWIDE APPROACH TO ADDRESSING THE PROB- LEM OF EMPLOYEE MISCLASSIFICATION AND TO ENSURE CONTRACTOR COMPLIANCE WITH THE "NEW YORK STATE CONSTRUCTION INDUSTRY FAIR PLAY ACT". 2. THE ADVISORY COMMITTEE SHALL BE COMPOSED OF THE COMMISSIONER OR A DESIGNEE; THE ATTORNEY GENERAL OR A DESIGNEE; THE COMMISSIONER OF TAXA- TION AND FINANCE OR A DESIGNEE; THE CHAIR OF THE WORKERS' COMPENSATION BOARD OR A DESIGNEE; THIRTEEN MEMBERS WHO SHALL BE APPOINTED BY THE GOVERNOR AND SHALL SERVE AT HIS PLEASURE AS FOLLOWS: THREE REPRESEN- TATIVES FROM THREE DIFFERENT BUILDING TRADE UNIONS; THREE REPRESEN- TATIVES OF THE NEW YORK STATE AMERICAN FEDERATION OF LABOR-CONGRESS OF INDUSTRIAL ORGANIZATIONS; THREE REPRESENTATIVES OF THE BUSINESS COMMUNI- TY; ONE REPRESENTATIVE OF RESIDENTIAL DEVELOPERS; ONE REPRESENTATIVE OF RESIDENTIAL CONSTRUCTION CONTRACTORS; ONE REPRESENTATIVE OF COMMERCIALS. 5847--A 5
DEVELOPERS; AND ONE REPRESENTATIVE OF COMMERCIAL CONSTRUCTION CONTRAC- TORS. 3. THE COMMISSIONER SHALL SERVE AS THE CHAIR OF THE ADVISORY COMMIT- TEE. ALL PUBLIC MEMBERS OF THE ADVISORY COMMITTEE SHALL SERVE WITHOUT COMPENSATION. VACANCIES ON THE ADVISORY COMMITTEE SHALL BE FILLED IN THE SAME MANNER AS THE ORIGINAL APPOINTMENT. 4. THE ADVISORY COMMITTEE SHALL BE AUTHORIZED TO: (A) MAKE RECOMMENDATIONS TO THE DEPARTMENT, THE ATTORNEY GENERAL, THE DEPARTMENT OF TAXATION AND FINANCE AND THE WORKERS' COMPENSATION BOARD WITH RESPECT TO SYNCHRONIZING EACH RESPECTIVE DEPARTMENT'S REGULATIONS AND POLICIES REGARDING EMPLOYEE MISCLASSIFICATION; (B) MAKE RECOMMENDATIONS TO ENHANCE MECHANISMS FOR IDENTIFYING EMPLOY- EE MISCLASSIFICATION WHERE IT DOES OCCUR; AND (C) WORK WITH BUSINESS, LABOR AND COMMUNITY GROUPS TO DEVELOP EDUCA- TIONAL MATERIALS THAT DISTINGUISH THE DIFFERENCE BETWEEN AN INDEPENDENT CONTRACTOR AND AN EMPLOYEE. 5. THE ADVISORY COMMITTEE SHALL ISSUE A REPORT ANNUALLY TO THE GOVER- NOR AND LEGISLATURE ON THE STATUS OF IMPLEMENTATION OF THE NEW YORK STATE CONSTRUCTION INDUSTRY FAIR PLAY ACT, TO INCLUDE PUBLICLY AVAILABLE INFORMATION REGARDING: CASES BROUGHT, WAGES AND TAXES RECOVERED ON BEHALF OF THE STATE, OUTCOMES OF CASES, LEGAL OR ADMINISTRATIVE BARRIERS TO SUCCESSFUL IMPLEMENTATION, A REVIEW OF THE PROCESS USED TO ADJUDICATE MISCLASSIFICATION CASES, AND PROPOSALS FOR ANY ADDITIONAL LEGISLATIVE ACTION THAT MAY BE NEEDED TO ENHANCE THE STATE'S EFFORTS TO ADDRESS EMPLOYEE MISCLASSIFICATION IN THE CONSTRUCTION INDUSTRY IN THE STATE. 6. THE ADVISORY COMMITTEE MAY REQUEST ANY DEPARTMENT, OFFICE, DIVISION OR AGENCY OF THE STATE TO PROVIDE DATA AND OTHER INFORMATION, PERSONNEL OR ASSISTANCE AVAILABLE TO SUCH AGENCY AS THE ADVISORY COMMITTEE DEEMS NECESSARY TO DISCHARGE ITS DUTIES UNDER THIS ARTICLE SUBJECT TO CONFI- DENTIALITY PROVISIONS UNDER LAW. EACH DEPARTMENT, OFFICE, DIVISION OR AGENCY OF THE STATE SHALL, TO THE EXTENT NOT INCONSISTENT WITH LAW, COOPERATE FULLY WITH THE ADVISORY COMMITTEE AND FURNISH SUCH ASSISTANCE ON AS TIMELY A BASIS AS IS NECESSARY TO ACCOMPLISH THE PURPOSES OF THIS ARTICLE. THE ADVISORY COMMITTEE MAY CONSULT WITH EXPERTS OR OTHER KNOW- LEDGEABLE INDIVIDUALS IN THE PUBLIC OR PRIVATE SECTOR IN CARRYING OUT ITS PURPOSE AND DUTIES. S 861-G. RETALIATION. 1. IT IS A VIOLATION OF THIS ARTICLE FOR AN EMPLOYER OR ANY AGENT OF AN EMPLOYER, TO RETALIATE THROUGH DISCHARGE OR IN ANY OTHER MANNER AGAINST ANY PERSON IN THE TERMS AND CONDITIONS OF HIS OR HER EMPLOYMENT FOR EXERCISING ANY RIGHTS GRANTED UNDER THIS ARTI- CLE FOR: (A) MAKING A COMPLAINT TO AN EMPLOYER, CO-WORKER OR TO A PUBLIC BODY THAT RIGHTS GUARANTEED UNDER THIS ARTICLE HAVE BEEN VIOLATED; (B) CAUSING TO BE INSTITUTED ANY PROCEEDING UNDER OR RELATED TO THIS ARTICLE; OR (C) PROVIDING INFORMATION TO, OR TESTIFYING BEFORE, ANY PUBLIC BODY CONDUCTING AN INVESTIGATION, HEARING OR INQUIRY INTO ANY SUCH VIOLATION OF A LAW, RULE OR REGULATION BY SUCH EMPLOYER. 2. ANY ACT OF RETALIATION UNDER THIS SECTION SHALL SUBJECT AN EMPLOYER TO THE CIVIL PENALTIES UNDER SECTION EIGHT HUNDRED SIXTY-ONE-E OF THIS ARTICLE, OR TO A PRIVATE CAUSE OF ACTION, OR BOTH. S 2. Paragraph (b) of subdivision 1 of section 511 of the labor law is amended by adding a new subparagraph 1-b to read as follows: (1-B) AS AN EMPLOYEE IN THE CONSTRUCTION INDUSTRY UNLESS THE PRESUMP- TION OF EMPLOYMENT CAN BE OVERCOME, AS PROVIDED UNDER SECTION EIGHT HUNDRED SIXTY-ONE-C OF THIS CHAPTER,S. 5847--A 6
S 3. The opening paragraph of subdivision 4 of section 2 of the work- ers' compensation law, as amended by chapter 205 of the laws of 1993, is amended to read as follows: "Employee" means a person engaged in one of the occupations enumerated in section three or who is in the service of an employer whose principal business is that of carrying on or conducting a hazardous employment upon the premises or at the plant, or in the course of his employment away from the plant of his employer; "EMPLOYEE" SHALL ALSO MEAN FOR THE PURPOSES OF THIS CHAPTER ANY INDIVIDUAL PERFORMING SERVICES FOR A CONTRACTOR WHO DOES NOT OVERCOME THE PRESUMPTION OF EMPLOYMENT AS PROVIDED UNDER SECTION EIGHT HUNDRED SIXTY-ONE-C OF THE LABOR LAW; "employee" shall also mean for the purposes of this chapter civil defense volunteers who are personnel of volunteer agencies sponsored or authorized by a local office under regulations of the civil defense commission, to the extent of the provisions of groups seventeen and nineteen; "employee" shall at the election of a municipal corporation made pursuant to local law duly enacted also mean a member of an auxil- iary police organization authorized by local law; and for the purposes of this chapter only a newspaper carrier under the age of eighteen years as defined in section thirty-two hundred twenty-eight of the education law, and shall not include domestic servants except as provided in section three of this chapter, and except where the employer has elected to bring such employees under the law by securing compensation in accordance with the terms of section fifty of this chapter. The term "employee" shall not include persons who are members of a supervised amateur athletic activity operated on a non-profit basis, provided that said members are not also otherwise engaged or employed by any person, firm or corporation participating in said athletic activity, nor shall it include the spouse or minor child of an employer who is a farmer unless the services of such spouse or minor child shall be engaged by said employer under an express contract of hire nor shall it include an executive officer of a corporation who at all times during the period involved owns all of the issued and outstanding stock of the corporation and holds all of the offices pursuant to paragraph (e) of section seven hundred fifteen of the business corporation law or two executive offi- cers of a corporation who at all times during the period involved between them own all of the issued and outstanding stock of such corpo- ration and hold all such offices except as provided in subdivision six of section fifty-four of this chapter provided, however, that where there are two executive officers of a corporation each officer must own at least one share of stock, nor shall it include a self-employed person or a partner of a partnership as defined in section ten of the partner- ship law who is not covered under a compensation insurance contract or a certificate of self-insurance as provided in subdivision eight of section fifty-four of this chapter, nor shall it include farm laborers except as provided in group fourteen-b of section three of this chapter. If a farm labor contractor recruits or supplies farm laborers for work on a farm, such farm laborers shall for the purposes of this chapter be deemed to be employees of the owner or lessee of such farm. The term "employee" shall not include baby sitters as defined in subdivision three of section one hundred thirty-one and subdivision three of section one hundred thirty-two of the labor law or minors fourteen years of age or over engaged in casual employment consisting of yard work and house- hold chores in and about a one family owner-occupied residence or the premises of a non-profit, non-commercial organization, not involving the use of power-driven machinery. The term "employee" shall not includeS. 5847--A 7
persons engaged by the owner in casual employment consisting of yard work, household chores and making repairs to or painting in and about a one-family owner-occupied residence. The term "employee" shall not include the services of a licensed real estate broker or sales associate if it be proven that (a) substantially all of the remuneration (whether or not paid in cash) for the services performed by such broker or sales associate is directly related to sales or other output (including the performance of services) rather than to the number of hours worked; (b) the services performed by the broker or sales associate are performed pursuant to a written contract executed between such broker or sales associate and the person for whom the services are performed within the past twelve to fifteen months; and (c) the written contract provided for in paragraph (b) herein was not executed under duress and contains the following provisions: S 4. Paragraph 1 of subsection (a) of section 671 of the tax law, as amended by chapter 760 of the laws of 1992, is amended to read as follows: (1) Every employer maintaining an office or transacting business with- in this state and making payment of any wages taxable under this article, INCLUDING AN EMPLOYER AS DEFINED IN SUBDIVISION SIX OF SECTION EIGHT HUNDRED SIXTY-ONE-B OF THE LABOR LAW, shall deduct and withhold from such wages for each payroll period a tax computed in such manner as to result, so far as practicable, in withholding from the employee's wages during each calendar year an amount substantially equivalent to the tax reasonably estimated to be due under this article resulting from the inclusion in the employee's New York adjusted gross income or New York source income of his wages received during such calendar year. The method of determining the amount to be withheld shall be prescribed by regulations of the commissioner, with due regard to the New York with- holding exemptions of the employee and the sum of any credits allowable against his tax. S 5. The state finance law is amended by adding a new section 99-t to read as follows: S 99-T. CONSTRUCTION INDUSTRY CLASSIFICATION FUND. 1. THERE IS HEREBY ESTABLISHED IN THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSIONER OF TAXATION AND FINANCE AN ACCOUNT IN THE MISCELLANEOUS SPECIAL REVENUE FUND TO BE KNOWN AS THE "CONSTRUCTION INDUSTRY CLASSI- FICATION FUND". 2. THE CONSTRUCTION INDUSTRY CLASSIFICATION FUND SHALL CONSIST OF ALL MONEYS RECEIVED BY THE STATE AS FEES AND CIVIL PENALTIES PURSUANT TO ARTICLE TWENTY-FIVE-B OF THE LABOR LAW. 3. SUCH FUND SHALL BE SUBJECT TO APPROPRIATION BY THE DEPARTMENT OF LABOR FOR ADMINISTRATION, INVESTIGATION AND OTHER EXPENSES INCURRED IN CARRYING OUT ITS POWERS AND DUTIES PURSUANT TO ARTICLE TWENTY-FIVE-B OF THE LABOR LAW AND THE DEPARTMENT MAY HIRE AS MANY INVESTIGATORS AND OTHER PERSONNEL AS MAY BE NECESSARY TO CARRY OUT SUCH DUTIES. ANY MONEYS IN THE FUND AT THE END OF THE FISCAL YEAR IN EXCESS OF ANY MONEYS NECES- SARY FOR THE DEPARTMENT OF LABOR TO CARRY OUT ITS POWERS AND DUTIES UNDER ARTICLE TWENTY-FIVE-B SHALL BE AVAILABLE TO THE DEPARTMENT OF LABOR FOR THE NEXT FISCAL YEAR FOR ANY OF THE DEPARTMENT OF LABOR'S DUTIES UNDER ARTICLE TWENTY-FIVE-B OF THE LABOR LAW. S 6. This act shall take effect on the sixtieth day after it shall have become a law.