BILL NO A06695
SAME AS No Same as
MLTSPNSR Cook, Gottfried, Rivera, Robinson
Add S399-ggg, Gen Bus L
Creates a right of action in favor of a contractor whose bid is denied against
the winning bidder where such winning bidder knowingly misclassified one or
more of its employees as independent contractors to avoid paying workers'
compensation premiums on such employee; provides for payment of damages by the
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6695
SPONSOR: Perry (MS)
TITLE OF BILL: An act to amend the general business law, in relation
to a right of action for violation of statutes in bids on construction
PURPOSE OF THE BILL: This bill is intended to encourage fairness in
competitive bidding by addressing problems created when bidders on
construction projects misclassify workers as independent contractors, by
establishing a private cause of action for legitimate contractors
against winning bidders who have misclassified employees in their bid
SUMMARY OF PROVISIONS: This bill amends the general business law by
adding a new section 399-e which allows any person whose competitive bid
for a construction project was rejected, to bring an action for damages
against the winning bidder, if the winning bidder has violated labor and
workers' compensation laws by failing to pay taxes for any reason
including misclassifying a worker(s) in its bid cost. A winning bidder
who is a defendant in such an action shall not be liable for damages if
it is established that failure to comply was not a knowing violation.
JUSTIFICATION: By misclassifying workers as independent contractors
or subcontractors, employers avoid paying workers' compensation premiums
and employment and social security taxes, which illegally reduces their
labor costs, and thereby provides an unfair competitive advantage over
those employers who comply with the laws governing employee classifica-
tion. Not only does this abusive practice put legitimate employers at a
disadvantage in the highly competitive construction industry, it further
strains the workers' compensation system by reducing the funds available
to pay benefits. Moreover, employee misclassification results in a loss
of state and federal tax revenues.
PRIOR LEGISLATIVE HISTORY: 2013-2014 A.4688 2011-2012 A.3258
2009-2010 A.3522 2006-2008 A.4098 2005-2006 A.3816 2003-2004 A.5231
2001-2002 A.3667 1999-2000 A.925 1997-1998 A.2681 1995-1996 A.9448
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK
2015-2016 Regular Sessions
March 30, 2015
Introduced by M. of A. PERRY -- Multi-Sponsored by -- M. of A. COOK,
GOTTFRIED, RIVERA, ROBINSON -- read once and referred to the Committee
AN ACT to amend the general business law, in relation to a right of
action for violation of statutes in bids on construction projects
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The general business law is amended by adding a new section
2 399-ggg to read as follows:
3 § 399-ggg. Fairness in competitive bidding. 1. For the purpose of
4 this section:
5 (a) The term "person" shall include any individual, firm, association,
6 partnership or corporation.
7 (b) The term "construction project" shall include any project involv-
8 ing the construction, modernization, improvement, rehabilitation,
9 repair, maintenance, replacement or renovation of a building, road or
10 structure, or any portion of such a project performed pursuant to a
11 subcontracting arrangement.
12 2. (a) Any person whose competitive bid for a construction project has
13 been rejected and instead awarded to another person may bring an action
14 for damages in a court of competent jurisdiction against the winning
15 bidder if the winning bidder has violated the labor law or the workers'
16 compensation law by failing to pay required taxes or secure insurance
17 pursuant to such laws for any reason including misclassifying one or
18 more of its workers other than an employee in its bid cost.
19 (b) The determination whether a worker on a construction project is
20 properly classified as an employee shall be made in accordance with
21 applicable state law.
22 3. (a) A party unsuccessfully bidding on a construction project will
23 be deemed to have suffered an injury by virtue of not having been
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.
A. 6695 2
1 awarded the bid, regardless of whether the winning bidder realizes a net
2 profit on the performance of the contract.
3 (b) A winning bidder who is a defendant in an action brought pursuant
4 to this section shall not be liable for damages if he establishes, as an
5 affirmative defense, that the failure to comply with state laws requir-
6 ing employers to pay state unemployment insurance or secure workers'
7 compensation coverage resulting from the misclassification of an employ-
8 ee as other than an employee if the bid was not a knowing violation.
9 4. Any party who successfully maintains an action under this section
10 shall be entitled to damages from the winning bidder in an amount not
11 less than ten percent of the amount of the successful bid, or such
12 greater amount as shall be determined by the court, and in addition to
13 any other damages awarded, shall be entitled to the payment of all of
14 its costs and reasonable attorneys' fees in bringing the action.
15 § 2. This act shall take effect immediately.