New York State Construction Industry Fair Play Act
Due to significant employee misclassification, New York passed the New York State Construction Industry Fair Play Act. It provides that a person performing services for a construction contractor or subcontractor is an employee, unless (a) the individual is free from direction and control in performing the job based on both his/her contract and in fact; (b) the services performed are outside the usual course of business for which the service is performed, and (c) the individual is usually working in an independently established trade, occupation, profession or business that is similar to the service being performed for a construction contractor/subcontractor. A business entity will be considered a separate entity from the contractor or subcontractor if all of the following 12 criteria are met:
- the business entity is performing the service free from the direction or control over the means and manner of providing the service, subject only to the right of the contractor/subcontractor to specify the desired result;
- the business entity is not subject to cancellation or destruction upon severance of the relationship with the contractor/subcontractor;
- the business entity has a substantial investment of capital in the business entity beyond ordinary tools, equipment and a personal vehicle;
- the business entity owns the capital goods and gains the profits and bears the losses of the business entity;
- the business entity makes its services available to the general public or business community on a continuing basis;
- the business entity indicates its services on a federal income tax schedule as an independent business or profession;
- the business entity performs services for the contractor/subcontractor under the business entity’s name;
- the business entity obtains and pays for any required license or permit in the business entity’s name;
- the business entity provides its own tools and equipment needed to provide the service;
- the business entity hires its own employees without contractor/subcontractor approval, pays the employees without reimbursement from the contractor and reports its employees’ income to the Internal Revenue Service;
- the contractor does not represent the business entity as an employee of the contractor to its customers, and
- the business entity has the right to perform similar services for others on whatever basis it chooses and whenever it chooses.
The law also requires construction contractors and subcontractors to post a notice at each work site listing the responsibility of the independent contractors to pay taxes and the right of employees to workers’ compensation, unemployment benefits, minimum wages, overtime, and other federal and state protections. Contractors and subcontractors that fail to post the required notices or improperly classify an employee are subject to civil and criminal penalties. The civil penalties provide for a $2,500 fine for the first misclassification violation and $5,000 for each subsequent violation within five years. Criminal penalties include 30 days in prison or a fine of up to $25,000 for the first violation, and 60 days in prison and $50,000 for each subsequent violation. Any officer of the corporation or shareholder holding a minimum of a ten percent interest in the corporation is also subject to civil and criminal liability. Any person, contractor or subcontractor convicted of a misdemeanor is barred from submitting bids on New York contracts for up to one year for the first violation and up to five years for any subsequent violation.
Bereavement Leave Rights to Same-Sex Partners
New York employers who provide bereavement leave for the death of an employee’s spouse or the child, parent or other relative of the spouse, must provide the same leave to an employee for the death of the employee’s same-sex committed partner or the child, parent or other relative of the same-sex committed partner. The new law does not require employers to provide bereavement leave to employees. Same-sex committed partners is defined as “those who are financially and emotionally interdependent in a manner commonly presumed of spouses.”
New York City Employers Subject to Expanded Religious Accommodation Requirements
Effective August 31, 2011, the New York City Human Rights Law (NYCHRL) was amended by The Workplace Religious Freedom Act. An employer is not required to provide a religious accommodation to its New York City employees if doing so would pose “undue hardship.” Such an employer has the burden of demonstrating:
“Undue Hardship” as used in this subdivision shall mean an accommodation requiring significant expense or difficulty (including a significant interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system). Factors to be considered in determining whether the accommodation constitutes an undue economic hardship shall include, but not be limited to:
- the identifiable cost of the accommodation, including the costs of loss of productivity and of retaining or hiring employees or transferring employees from one facility to another, in relation to the size and operating cost of the employer;
- the number of individuals who will need the particular accommodation to a sincerely held religious observance or practice, and
- for an employer with multiple facilities, the degree to which the geographic separateness or administrative or fiscal relationship of the facilities will make the accommodation more difficult or expensive.
New York City employers who violate The Workplace Religious Freedom Act are subject to a civil penalty of up to $125,000.
If you have any specific questions about these new laws, please contact your employment counsel at Smith, Gambrell & Russell, LLP.