New York State Construction Industry Fair Play Act
This law went into effect on October 26, 2010. This law can have a far reaching impact on whether you classify your workers as employees or independent contractors in the construction industry.
It is presumed that workers are employees unless they meet one of two new standards.
The first is extremely strict and independent contractor classification requires that the worker is:
- 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 employer and
- Engaged in an independently-established trade, occupation or business that is similar to the service they perform.
In the alternate, the workers can prove themselves as a separate business entity and meet the threshold for being an independent contractor. To be a separate business entity the worker is required to be:
- 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 to specify the desired result
- Not be subject to cancellation when its work with the contractor ends
- Have a substantial investment of capital in the entity beyond ordinary tools and equipment and a personal vehicle
- Own the capital goods and gain the profits and bear the losses of the entity
- Make its services available to the general public or business community on a regular basis
- Include the services provided on a federal income tax schedule as an independent business
- Perform the services under the entity’s name
- Obtain and pay for any required license or permit in the entity’s name
- Furnish the tools and equipment necessary to provide the service
- Hire its own employees without contractor approval, pay the employees without reimbursement from the contractor and report the employees’ income to the Internal Revenue Service
- Have the right to perform similar services for others on whatever basis and whenever it chooses; and
- The contractor does not represent the entity or the employees of the entity as its own employees to the customer
This 12 part test does contain more elements but it does not contain the requirement that the worker is “Performing services outside of the usual course of business for the employer” requirement of the 3 part test which will be the most difficult to meet for most employers.
More information is available at http://www.labor.ny.gov/legal/construction-industry-fair-play-act.shtm
If you have any questions about the requirements of this law please do not hesitate to contact us.
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