New York State Commercial Goods Transportation Industry Fair Play Act
On January 10, 2014, Governor Cuomo signed into law the New York State Commercial Goods Transportation Industry Fair Play Act. It went into effect on April 10, 2014. This law can have a far reaching impact on whether you classify your workers as employees or independent contractors.
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:
- Be free from direction or control by the contractor over the means and manner of providing the service.
- The contractor may only specify the desired result of the work or provide direction required by federal rule or regulation
- Have invested substantial capital in its business entity beyond ordinary tools and equipment
- Own or lease the capital goods, gain the profits and bear the losses of the business entity.
- Make its services available to the general public or others in the business community not a party to the business entity’s written contract on a continuing basis.
- If required by law, provide services reported on a federal income tax form 1099.
- Perform services for the contractor under a written contract and under the business entity’s name. The contract must state that the relationship between the contractor and the business entity is that of independent contractors or separate business entities.
- Obtain and pay for any required license or permit in the entity’s own name or, if allowed by law, pay for the use of the contractor’s license or permit.
- Hire its own employees without contractor approval and pay those employees without reimbursement from the contractor.
- The contractor must not represent the business entity or employees of the business entity as its own employees to the contractor’s customers.
- Have the right to perform similar services for others on whatever basis and whenever it chooses.
This 11 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/commercial-goods-transportation-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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