senate Bill S630

2011-2012 Legislative Session

Relates to payment of independent contractors

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to labor
Jan 05, 2011 referred to labor

Co-Sponsors

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S630 - Bill Details

Current Committee:
Law Section:
Labor Law
Laws Affected:
Add ยงยง196-b & 196-c, Lab L
Versions Introduced in 2009-2010 Legislative Session:
A11520

S630 - Bill Texts

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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, and authorizes the award of attorney fees and liquidated damages.

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BILL NUMBER:S630

TITLE OF BILL:
An act
to amend the labor law, in relation to independent
contractors

PURPOSE:
To grant the Department of Labor greater oversight over employment
contracts involving independent contractors, to afford them the same
compensation guarantees as traditional employees.

SUMMARY OF PROVISIONS:
The labor law is amended by adding two new sections, 196-b&c. 196-b:
Adds definitions for "Compensation," "Independent Contractor" and
"Client," etc. 196-c:

-Requires independent contractors to be compensated for their work
within a reasonable amount of time, in accordance with a written
agreement.

-Requires work terms to be defined in a written contract and held by
the client for no less than 6 years.

-Empowers the Commissioner of the Department of Labor to
take action to pursue violations of written agreements and recoup
unpaid compensation owed to independent contractors.

-Explains rights of independent contractors to file complaints about
contract violations.

-Provides that the Department of Labor must provide independent
contractors with continuation of their filed complaints with an
explanation 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.

-Sets forth penalties for violations of this section.

JUSTIFICATION:
Since the original enactment of the labor law regulations the
workforce composition of New York State has changed significantly.
The modern economy has led to the rise of individual workers
considered "independent contractors" or "freelancers." An independent
contractor, as defined by this legislation, 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.

These people 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
3000 independent 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
productivity is lost because independent contractors are forced to
spend time pursuing compensation when they could be performing
valuable and constructive work activity.

LEGISLATIVE HISTORY:
2010: A.11520

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   630

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by Sen. SQUADRON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Labor

AN ACT to amend the labor law, in relation to independent contractors

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The labor law is amended by adding two new sections 196-b
and 196-c to read as follows:
  S 196-B. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE THE TERM:
  1. "COMPENSATION" MEANS THE EARNINGS  OF  AN  INDEPENDENT  CONTRACTOR.
THE TERM "COMPENSATION" ALSO INCLUDES REIMBURSEMENT FOR EXPENSES.
  2.  "INDEPENDENT  CONTRACTOR"  MEANS  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.
  3. "CLIENT" INCLUDES A CORPORATION, LIMITED LIABILITY  COMPANY,  PART-
NERSHIP,  ASSOCIATION  OR NON-PROFITMAKING ORGANIZATION CONTRACTING WITH
AN INDEPENDENT CONTRACTOR IN ANY OCCUPATION, INDUSTRY,  TRADE,  BUSINESS
OR  SERVICE  FOR  COMPENSATION  EQUAL  TO  OR  GREATER  THAN SIX HUNDRED
DOLLARS.  THE TERM "CLIENT" SHALL NOT  INCLUDE  A  GOVERNMENTAL  ENTITY,
INCLUDING  BUT NOT LIMITED TO, ANY AGENCY, BOARD, DEPARTMENT, COMMISSION
OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF; AND CLIENT SHALL  NOT
INCLUDE  A PERSON. THE TERM "CLIENT" SHALL NOT INCLUDE OWNERS OF ONE AND
TWO-FAMILY DWELLINGS.
  S  196-C.  PAYMENT  OF  INDEPENDENT  CONTRACTORS.  1.  AN  INDEPENDENT
CONTRACTOR  SHALL BE PAID THE COMPENSATION EARNED IN ACCORDANCE WITH THE
AGREED WORK TERMS BUT NOT LATER THAN THE LAST DAY OF THE MONTH FOLLOWING
THE MONTH IN WHICH THE COMPENSATION IS EARNED.  THE  AGREED  WORK  TERMS
SHALL BE REDUCED IN WRITING, SIGNED BY BOTH THE CLIENT AND THE INDEPEND-
ENT CONTRACTOR, KEPT ON FILE BY THE CLIENT FOR A PERIOD OF NOT LESS THAN
SIX  YEARS  AND  MADE  AVAILABLE  TO THE COMMISSIONER UPON REQUEST. SUCH
WRITING SHALL INCLUDE A DESCRIPTION OF HOW COMPENSATION EARNED AND PAYA-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01856-01-1

S. 630                              2

BLE SHALL BE CALCULATED. THE FAILURE OF A CLIENT TO PRODUCE SUCH WRITTEN
WORK TERMS, UPON REQUEST OF THE  COMMISSIONER,  SHALL  GIVE  RISE  TO  A
PRESUMPTION THAT THE TERMS THAT THE INDEPENDENT CONTRACTOR HAS PRESENTED
ARE THE AGREED TERMS.
  2.  THE COMMISSIONER SHALL INVESTIGATE AND ATTEMPT TO ADJUST EQUITABLY
CONTROVERSIES BETWEEN CLIENTS AND INDEPENDENT  CONTRACTORS  RELATING  TO
THIS SECTION.
  3. THE COMMISSIONER MAY TAKE ASSIGNMENTS OF CLAIMS FOR COMPENSATION AS
DEFINED  IN  SECTION ONE HUNDRED NINETY-SIX-B OF THIS ARTICLE FROM INDE-
PENDENT CONTRACTORS OR THIRD  PARTIES  IN  TRUST  FOR  SUCH  INDEPENDENT
CONTRACTORS  OR  FOR THE VARIOUS FUNDS FOR SUCH INDEPENDENT CONTRACTORS.
ALL SUCH ASSIGNMENTS SHALL RUN TO THE COMMISSIONER AND HIS SUCCESSOR  IN
OFFICE.  THE  COMMISSIONER MAY SUE COMPANIES ON COMPENSATION CLAIMS THUS
ASSIGNED. HE MAY JOIN IN A SINGLE  ACTION  ANY  NUMBER  OF  COMPENSATION
CLAIMS AGAINST THE SAME COMPANY.
  4.  ANY  INDEPENDENT  CONTRACTOR  MAY  FILE  WITH  THE  COMMISSIONER A
COMPLAINT REGARDING A VIOLATION OF THIS ARTICLE FOR AN INVESTIGATION  OF
SUCH  COMPLAINT  AND  STATEMENT  SETTING THE APPROPRIATE REMEDY, IF ANY.
FAILURE OF A CLIENT TO KEEP ADEQUATE RECORDS SHALL NOT OPERATE AS A  BAR
TO  FILING  OF A COMPLAINT BY AN INDEPENDENT CONTRACTOR.  IN SUCH A CASE
THE CLIENT IN VIOLATION SHALL  BEAR  THE  BURDEN  OF  PROVING  THAT  THE
COMPLAINING INDEPENDENT CONTRACTOR WAS PAID COMPENSATION.
  5.  ON BEHALF OF ANY INDEPENDENT CONTRACTOR PAID LESS THAN THE COMPEN-
SATION TO WHICH HE OR SHE IS ENTITLED UNDER THE AGREED WORK TERMS  UNDER
THE  PROVISIONS  OF  THIS  ARTICLE, THE COMMISSIONER MAY BRING ANY LEGAL
ACTION NECESSARY, INCLUDING ADMINISTRATIVE ACTION, TO COLLECT SUCH CLAIM
AND AS PART OF SUCH LEGAL ACTION, IN ADDITION TO ANY OTHER REMEDIES  AND
PENALTIES  OTHERWISE  AVAILABLE UNDER THIS ARTICLE, THE COMMISSIONER MAY
ASSESS AGAINST THE CLIENT AN ADDITIONAL  AMOUNT  AS  LIQUIDATED  DAMAGES
EQUAL  TO  TWENTY-FIVE PERCENT OF THE TOTAL AMOUNT OF COMPENSATION FOUND
TO BE DUE, UNLESS THE CLIENT PROVES A GOOD  FAITH  BASIS  FOR  BELIEVING
THAT ITS UNDERPAYMENT OF COMPENSATION WAS IN COMPLIANCE WITH THE LAW. IN
ANY  ACTION    INSTITUTED  IN THE COURTS UPON A COMPENSATION CLAIM BY AN
INDEPENDENT CONTRACTOR OR THE  COMMISSIONER  IN  WHICH  THE  INDEPENDENT
CONTRACTOR  PREVAILS,  THE COURT SHALL ALLOW SUCH INDEPENDENT CONTRACTOR
REASONABLE ATTORNEY'S FEES AND, UNLESS THE CLIENT PROVES  A  GOOD  FAITH
BASIS TO BELIEVE THAT ITS UNDERPAYMENT OF COMPENSATION WAS IN COMPLIANCE
WITH  THE LAW, AN ADDITIONAL AMOUNT AS LIQUIDATED DAMAGES EQUAL TO TWEN-
TY-FIVE PERCENT OF THE TOTAL AMOUNT OF COMPENSATION FOUND TO BE DUE. THE
REMEDIES PROVIDED BY THIS ARTICLE  MAY  BE  ENFORCED  SIMULTANEOUSLY  OR
CONSECUTIVELY SO FAR AS NOT INCONSISTENT WITH EACH OTHER.
  6.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AN ACTION TO RECOVER
UPON A LIABILITY IMPOSED BY THIS ARTICLE MUST BE  COMMENCED  WITHIN  SIX
YEARS.  ALL INDEPENDENT CONTRACTORS SHALL HAVE THE RIGHT TO RECOVER FULL
COMPENSATION  ACCRUED DURING THE SIX YEARS PREVIOUS TO THE COMMENCING OF
SUCH ACTION, WHETHER  SUCH  ACTION  IS  INSTITUTED  BY  THE  INDEPENDENT
CONTRACTOR OR BY THE COMMISSIONER.
  7.  EACH  INDEPENDENT  CONTRACTOR  WHO  FILES  A COMPLIANT REGARDING A
VIOLATION OF A PROVISION OF THIS ARTICLE SHALL BE PROVIDED WITH A  WRIT-
TEN  DESCRIPTION OF THE ANTICIPATED PROCESSING OF THE COMPLAINT, INCLUD-
ING INVESTIGATION, CASE CONFERENCE, POTENTIAL CIVIL AND CRIMINAL  PENAL-
TIES, AND COLLECTION PROCEDURES.
  8.  EACH INDEPENDENT CONTRACTOR AND HIS OR HER REPRESENTATIVE SHALL BE
NOTIFIED IN WRITING OF ANY CASE CONFERENCE BEFORE IT IS HELD  AND  GIVEN
THE OPPORTUNITY TO ATTEND.

S. 630                              3

  9.  EACH INDEPENDENT CONTRACTOR AND HIS OR HER REPRESENTATIVE SHALL BE
NOTIFIED IN WRITING OF ANY AWARD AND COLLECTION OF BACK COMPENSATION AND
CIVIL PENALTIES, AND OF ANY INTENT TO SEEK CRIMINAL  PENALTIES.  IN  THE
EVENT  THAT CRIMINAL PENALTIES ARE SOUGHT THE INDEPENDENT CONTRACTOR AND
HIS  OR  HER  REPRESENTATIVE  SHALL BE NOTIFIED OF THE OUTCOME OF PROSE-
CUTION.
  10. IF THE COMMISSIONER  DETERMINES  THAT  A  CLIENT  HAS  VIOLATED  A
PROVISION  OF  THIS  ARTICLE, OR A RULE OR REGULATION PROMULGATED THERE-
UNDER, BY FAILING TO PAY THE COMPENSATION OF THEIR INDEPENDENT  CONTRAC-
TORS,  THE  COMMISSIONER  SHALL  ISSUE  TO THE CLIENT AN ORDER DIRECTING
COMPLIANCE THEREWITH, WHICH SHALL DESCRIBE PARTICULARLY  THE  NATURE  OF
THE  ALLEGED VIOLATION, AND ORDER THE PAYMENT OF INTEREST AT THE RATE OF
INTEREST THEN IN EFFECTED AS PRESCRIBED BY THE SUPERINTENDENT  OF  BANKS
PURSUANT  TO  SECTION  FOURTEEN-A  OF THE BANKING LAW PER ANNUM FROM THE
DATE OF THE UNDERPAYMENT TO THE DATE OF  THE  PAYMENT.  IN  ADDITION  TO
DIRECTING PAYMENT OF COMPENSATION FOUND TO BE DUE, SUCH ORDER, IF ISSUED
TO  A  CLIENT  WHO  PREVIOUSLY  HAS  BEEN  FOUND  IN  VIOLATION OF THOSE
PROVISIONS, RULES OR REGULATIONS, OR TO  A  CLIENT  WHOSE  VIOLATION  IS
WILLFUL  OR  EGREGIOUS,  SHALL  DIRECT PAYMENT TO THE COMMISSIONER OF AN
ADDITIONAL SUM AS A CIVIL PENALTY IN AN AMOUNT EQUAL TO DOUBLE THE TOTAL
AMOUNT FOUND TO BE DUE.
  11. EVERY CLIENT WHO DOES NOT PAY THE COMPENSATION OF ALL OF ITS INDE-
PENDENT CONTRACTORS IN ACCORDANCE WITH THE PROVISIONS OF  THIS  CHAPTER,
AND  THE  OFFICERS  AND  AGENTS  OF  ANY CLIENT WHO KNOWINGLY PERMIT THE
CLIENT TO VIOLATE THIS CHAPTER BY FAILING TO PAY THE COMPENSATION OF ANY
OF ITS INDEPENDENT CONTRACTORS IN ACCORDANCE WITH THE PROVISIONS  THERE-
OF,  SHALL  BE  GUILTY  OF  A MISDEMEANOR FOR THE FIRST OFFENSE AND UPON
CONVICTION THEREFOR SHALL BE FINED NOT LESS THAN FIVE HUNDRED  NOR  MORE
THAN  TWENTY  THOUSAND DOLLARS OR IMPRISONED FOR NOT MORE THAN ONE YEAR,
AND, IN THE EVENT THAT ANY SECOND OR SUBSEQUENT  OFFENSE  OCCURS  WITHIN
SIX YEARS OF THE DATE OF CONVICTION FOR A PRIOR OFFENSE, SHALL BE GUILTY
OF  A  FELONY  FOR THE SECOND OR SUBSEQUENT OFFENSE, AND UPON CONVICTION
THEREFOR, SHALL BE FINED NOT LESS THAN FIVE HUNDRED NOR MORE THAN TWENTY
THOUSAND DOLLARS OR IMPRISONED FOR NOT MORE THAN ONE YEAR PLUS ONE  DAY,
OR PUNISHED BY BOTH SUCH FINE AND IMPRISONMENT, FOR EACH SUCH OFFENSE.
  S 2. This act shall take effect immediately.

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