In October of 2010, the New York Construction Industry Fair Play Act
took effect. The law created a definition specifically for the construction industry as to who was an 'employee'. There will also now be penalties for employers who fail to properly classify the employee.
Here is how you determine whether someone is an independent contractor. (They must meet all three of the criteria below):
(1) Free from control and direction in performing the job, both under contract and in fact.
(2) Performing services outside of the usual course of business for the company and;
(3) Engaged in an independently established trade, occupation or business that is similar to the service they perform.
In the past the company that hired the subcontractor used to have to pay for workers compensation coverage for all monies paid to the subcontractor but in a lessor expensive class code used solely to identify subcontractors. Now if they don't meet the criteria above the monies paid will all be put into the governing class code on the policy. For carpentry or roofing this could be VERY expensive bill at the end of the year.
There are SEVERE penalties for employers who violate the newly enacted law.
Today, most companies that have a workers' compensation policy in place will require that any person they hire as a subcontractor also has their own insurance.
You can read about the Fair Play Act here: http://www.labor.ny.gov/formsdocs/wp/P738.pdf
Here is a poster also provided by NYS Department of Labor: http://www.labor.ny.gov/formsdocs/ui/IA999.pdf
If you are interested in more information or a worker's compensation quote, please feel free to check out our website at www.tiains.com
or stop by one of our three locations.