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This entry was published on 2014-09-22
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SECTION 861-E
Violations and penalties
Labor (LAB) CHAPTER 31, ARTICLE 25-B
§ 861-e. Violations and penalties. 1. Any contractor who wilfully
fails to properly classify an individual as an employee as provided
under section eight hundred sixty-one-c of this article shall be subject
to the civil and criminal penalties provided under this section. The
civil penalties set forth in this section shall be imposed as follows:
by the commissioner where such penalty is based on a violation of this
chapter; by the chair of the workers' compensation board where such
penalty is based on a violation of the workers' compensation law; and by
the commissioner of tax and finance when such penalty is based on a
violation of the tax law, provided that no more than one civil penalty
under this section may be imposed per employee per incident of
misclassification.

(a) The workers' compensation board shall provide a copy of any order
relating to the misclassification of an employee, the intentional and
material underpayment or concealment of payroll, or the failure to
secure workers' compensation in the construction industry to the
commissioner and commissioner of taxation and finance no later than
seven days after the issuance of the order.

(b) Notwithstanding the secrecy provisions contained in articles
nine-A and twenty-two of the tax law, the department of taxation and
finance shall provide a copy of any assessment for failure to pay
business, corporate or personal income tax by an employer in the
construction industry arising out of the misclassification of an
employee to the commissioner and chair of the workers' compensation
board no later than seven days after the issuance of the assessment.

(c) Upon the issuance of an order or determination by the commissioner
for a violation and penalties under this article, the commissioner shall
provide a copy of the order to the chair of the workers' compensation
board and the commissioner of taxation and finance no later than seven
days after the issuance of the order.

2. For the purposes of this section, the term "willfully violates"
means a contractor knew or should have known that his or her conduct was
prohibited by this section.

3. Any contractor who willfully violates section eight hundred
sixty-one-c of this article shall be subject to a civil penalty of up to
twenty-five hundred dollars for the first violation per misclassified
employee and to a civil penalty of up to five thousand dollars for each
subsequent violation per misclassified employee within a five year
period.

4. In addition to civil penalties, the criminal penalties imposed on a
contractor who willfully violates the provisions of this article shall
be a misdemeanor and upon conviction shall be punished for a first
offense by imprisonment for not more than thirty days or a fine not to
exceed twenty-five thousand dollars and for a subsequent offense by
imprisonment for not more than sixty days or a fine not to exceed fifty
thousand dollars.

5. If the contractor is a corporation, any officer of such corporation
or shareholder who owns or controls at least ten percent of the
outstanding stock of such corporation who knowingly permits the
corporation to willfully violate the provisions of this article shall
also be in violation of this article and the civil and criminal
penalties herein shall attach to such officer upon conviction.

6. Any contractor subject to civil penalties under this article shall
also be subject to any other applicable penalties or remedies provided
by law for failure to pay any other statutory payment or coverage
obligations, including but not limited to, unemployment insurance,
workers' compensation insurance, or business, corporate or personal
income tax, as follows:

(a) for failure to pay unemployment insurance tax, the penalties
imposed by section five hundred seventy of this chapter.

(b) for intentional and material understatement or concealment of
payroll or failure to secure workers' compensation insurance, the
penalties imposed by paragraph (d) of subdivision one of section
fifty-two of the workers' compensation law, and for failure to keep a
true and accurate record pursuant to section one hundred thirty-one of
the workers' compensation law, the penalties of section one hundred
thirty-one of the workers' compensation law.

(c) for failure to pay business, corporate or personal income tax, the
penalties imposed by section six hundred eighty-five and one thousand
eighty-five of the tax law.

7. Any contractor or any officer or shareholder who owns or controls
at least ten percent of the outstanding stock of such corporation that
has been convicted of a misdemeanor shall be subject to debarment and be
ineligible to submit a bid on or be awarded any public works contract
with the state, any municipal corporation, public benefit corporation,
public authority or public body for a period of up to one year from the
date of such conviction or final determination, or up to five years in
the event of any subsequent violation.

8. Any substantially owned affiliated entity of a contractor, as
defined by paragraph g of subdivision five of section two hundred twenty
of this chapter, shall be subject to the same civil penalty provided
under this article for a violation of such provision.

9. Any penalties imposed under this section by the commissioner shall
be appealed to the industrial board of appeals in accordance with
article three of this chapter. Any penalties imposed under this section
by the workers' compensation board or commissioner of taxation and
finance shall be appealed in the same manner as the underlying
violation.

10. Nothing in this section shall limit the availability of other
remedies at law or in equity for a violation of this article.

11. Any fee or penalty assessed for a violation of this article shall
be deposited into the department's fee and penalty account.