Relates to payment of independent contractors and authorizes the department of labor to investigate complaints, make claims for compensation, assess liquid damages, civil penalties and criminal penalties; authorizes the award of attorney fees and liquidated damages; excludes construction contractors.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7548
SPONSOR: Silver TITLE OF BILL: An act to amend the labor law, in relation to inde-
pendent contractors
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to grant the Department of Labor (DOL)
broader oversight over employment contracts involving independent
contractors, to afford them the same compensation guarantees as tradi-
tional employees.
SUMMARY OF SPECIFIC PROVISIONS:
The labor law is amended by adding two new sections, 196-b and 196-c.
Section 196-b would set forth the definitions of compensation, independ-
ent contractor, client, construction contractor and construction
project. Independent contractor would be defined as a sole proprietor
who is not an employee and who is hired or retained by a client for an
amount equal to or greater than six hundred dollars. Under the bill: an
independent contractor shall not include a construction contractor, a
"client" would be defined as a corporation, limited liability company,
partnership, association or non-profit making organization contracting
with an independent contractor in any occupation, industry, trade, busi-
ness or service for compensation equal to ,or greater than six hundred
dollars; and, 'client' would not be deemed to include a governmental
entity or a person.
Section 196-c would:
-require independent contractors to be compensated for their work in
accordance with agreed work terms. If an independent contractor and
client did not agree on a date for payment of compensation earned, the
independent contractor shall be paid the compensation earned not later
than the last day of the month following the month in which the compen-
sation is earned;
-require work terms to be defined in a written contract and kept on file
by the client for a period of not less than six years;
-empower the commissioner of DOL to take action to pursue violations of
written agreements and recoup unpaid compensation owed to independent
contractors;
-explain the rights of independent contractors to file complaints about
contract violations;
-provide that DOL must provide independent contractors with an explana-
tion of actions to be taken on their behalf, and detail the outcomes of
actions taken on their behalf, including the amount awarded for unpaid
compensation;
-set forth penalties for violations of the section; and,
-provide that the section shall not apply to real estate brokers, asso-
ciate brokers or salespersons licensed pursuant to Article 12A of the
real property law, work performed on one or two family dwellings, or
construction contractors or construction projects.
EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:
Independent contractors currently do not receive the same protections
under the labor law as traditional employees.
JUSTIFICATION:
Since the original enactment of the labor law the workforce composition
of New York State has changed significantly. The modem economy has led
to the rise of individual workers considered "independent contractors"
or "freelancers". An independent contractor, as defined by this legis-
lation, is a sole proprietor who is not an employee and who is hired or
retained by a client for an amount equal to or greater than six hundred
dollars, the threshold for which a company or person must provide a form
1099 to the U.S. Internal Revenue Service. Independent contractors do
not include construction contractors under the bill.
Independent contractors often participate in work alongside traditional
employees, yet they are not afforded the same protections under the law
as their traditionally employed counterparts. They are especially
vulnerable because their compensation is not guaranteed under the labor
law, and their main forum for relief is to go to small claims court.
This bill seeks to correct that by amending the labor law to extend
protection to this population of workers. A recent survey of 3,000 inde-
pendent contractors revealed that they spent 17,000 hours pursuing $3
million dollars in owed compensation. This indicates not only the
disproportionate burden placed on these individuals to collect payments
that are rightfully theirs, but also illustrates how much productively
is lost because independent contractors are forced to spend time pursu-
ing compensation when they could be performing valuable and constructive
work activity.
PRIOR LEGISLATIVE HISTORY:
2013-14: A.5472(Silver) - Passed Assembly.
2011-12: A.6698-C (Silver) - Passed Assembly.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately.
