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The New York State Construction Industry Fair Play Act (Chapter 418 of the Laws of 2010) became effective on October 26, 2010. This law created a new standard for determining whether a worker is an employee or independent contractor in the construction industry and provides penalties for employers who fail to properly classify their employees.
Standard: Individuals working for an employer in the construction industry will be presumed to be employees unless they meet all three criteria below. The individual must be:
free from control and direction in performing the job, both under contract and in fact;
performing services outside of the usual course of business for the company; and
engaged in an independently established trade, occupation, or business that is similar to the service they perform.
Separate business entity: The law also contains a twelve‑part test for determining when a sole proprietor, partnership, corporation, or other entity will be considered a separate business entity from the contractor for whom it is providing a service. If an entity meets all of the 12 criteria, it will not be considered an employee of the contractor but will instead be a separate business that is itself subject to the law regarding its own employees.
Agencies covered: The standard for determining employment applies to determinations under the New York State Labor Law (including labor standards, prevailing wage law, and UI) and the New York State Workers’ Compensation Law. The penalties provided by the law apply to determinations of misclassification under the Labor Law, Workers’ Compensation Law, and the New York State Tax Law.
Penalties: An employer that willfully violates the Fair Play Act by failing to properly classify its employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee for a first violation and up to $5,000 per misclassified employee for a second violation within a five-year period.
Employers may also be subject to criminal prosecution (a misdemeanor) for violations of the Fair Play Act, with a penalty of up to 30 days in jail, up to a $25,000 fine, and debarment from Public Work for up to one year for a first offense. Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000 fine, and debarment from performing Public Work for up to five years.
Posting: Construction industry employers must post a notice about the Fair Play Act in a prominent and accessible place on the job site. Failure to post the notice can result in penalties of up to $1,500 for a first offense and up to $5,000 for a second offense. A poster may be downloaded at dol.ny.gov or can be ordered by calling the Employer Hotline toll‑free at 1‑888‑899‑8810.
Contact us: If you have any questions concerning the Fair Play Act or if you wish to report suspected worker misclassification, contact the New York State Department of Labor at 1-866-435-1499 or dol.misclassified@dol.ny.gov . The full text of the Fair Play Act is posted on the Department of Labor’s website.