The New York State Construction Industry Fair Play Act (CIFPA) was signed by Governor Paterson in late August and became effective on October 26, 2010. Under this new law, a construction worker is presumed to be an employee, as opposed to an independent contractor, unless they meet the following three criteria:
(1) the individual must be free from control and direction in performing the job, both under contract and in fact;
(2) the individual must be performing services outside of the usual course of business for the company, and
(3) the individual must be engaged in an independently established trade, occupation or business that is similar to the service they perform.
The law also contains a twelve (12) part test to determine when a sole proprietor, partnership, corporation or other entity will be considered a “separate business entity” from the contractor for whom it provides a service. If an entity meets all of the twelve (12) criteria, it will not be considered an employee of the contractor, but rather a separate business. You can find the twelve factors, as well as an outline of CIFPA, at the New York State Department of Labor Fact Sheet issued in conjunction with the new law:
The new law applies to all contractors in the construction industry.
The new standard for determining employment applies to determinations under the labor law (including prevailing wage law, other wage issues and unemployment insurance) and the Workers’ Compensation law, but not New York Tax Law.
An employer that willfully violates CIFPA by failing to properly classify its employees will be subject to civil penalties of up to a $2,500.00 per mis-classified employee for a first offense, and $5,000.00 per mis-classified employee for a second violation within a five (5) year period. Employers may also be subject to criminal prosecutions for violations of the law. In addition, corporate officers and certain shareholders may also be individually liable for the fines and penalties if they knowingly permit the violation(s) to occur.
Finally, construction industry employers must post a notice regarding CIFPA in a prominent and accessible place on the job site. Failure to do so may result in a monetary penalty. The New York Department of Labor is expected to post the required notice on its website shortly.