Several factors decide if an individual is an employee under the Workers' Compensation Law. These factors include:
- The right to control
- The method of payment
- Providing of equipment or materials
- The right to hire/fire
New York State Construction Industry Fair Play Act
The Construction Industry Fair Play Act covers all employees, contractors and subcontractors. The law says that you are an employee unless ALL three of these conditions apply:
- You are free from direction and control in performing your job, AND
- You perform work that is not part of the usual work done by the business that hired you, AND
- You have an independently established business
Your employer cannot consider you to be an independent contractor unless all three of these facts apply to your work. The NYS Department of Labor enforces the Construction Industry Fair Play Act.
Commercial Goods Transportation Industry Fair Play Act
Drivers of commercial vehicles who transport goods are presumed to be employees unless payments for their services are reported on federal income tax Form 1099. In addition, to be an independent contractor they must be a separate business entity or must be:
- Free from control and direction in performing the job, both under contract and in fact
- Performing services outside of the usual course of business for the employer
- Engaged in an independently-established trade, occupation or business that is similar to the service they perform
A legal separate business entity is a sole proprietor, partnership, corporation or other entity that meets 11 criteria under the law.
You May Still be Charged for Subcontractors with a Certificate of Insurance
Per the New York Compensation Insurance Rating Board, any executive officer, sole proprietor, partner or member of an LLC who is excluded from coverage under their own company policy must be included on the policy of the hiring company when performing duties for the hiring company. In such cases, the hiring entity must meet all criteria in the tables below.
For more information regarding this requirement, visit the New York Compensation Insurance Rating Board Liability Insurance Manual, Part I, Rule IX (Special Conditions), Subsection C.
Fair Play Acts Comparison
Table 1:
These are the criteria used to determine if an individual is an independent contractor.
| Construction Fair Play Act | Commercial Goods Transportation Industry Fair Play Act |
|---|---|
| Applies to an individual who performs services for a construction contractor. | Applies to an individual who performs services for a commercial goods transportation contractor. Payments for services are reported on a Federal Income Tax Form 1099. |
| The individual is free from direction and control in performing the job, AND | Same |
| The individual performs works that is not part of the usual work done by the business that hired the individual, AND | Same |
| The individual has an independently established business. | Same |
Table 2:
These are the criteria used to determine if the business entity through which the individual performs services, whether a sole proprietor, partnership, corporation or other entity, is a separate business entity from the hiring contractor.
| Construction Fair Play Act | Commercial Goods Transportation Industry Fair Play Act |
|---|---|
| Applies to an individual who performs services for a construction contractor. | Applies to an individual who performs services for a commercial goods transportation contractor. Payments for services are reported on a Federal Income Tax form 1099. |
| The hired entity is performing the service free from the direction or control over the means and manner of providing the service, subject only to the right of the contractor, for whom the service is being provided, to specify the desired results. | Same |
| The hired entity is not subject to cancellation or destruction upon severance of the relationship with the contractor. (The alleged independent business is not dissolved merely because the contract with the hiring contractor has ended.) | Same |
| The hired entity has a substantial investment of capital in the business entity beyond ordinary tools, equipment and a personal vehicle. | The hired entity has a substantial investment of capital in the business entity beyond ordinary tools and equipment. |
| The hired entity owns the capital goods and gains the profits and bears the losses of the business entity. | The hired entity owns or leases the capital goods and gains the profits and bears the losses of the business entity. |
| The hired entity makes its services available to the general public or the business community on a continuing basis. | The hired entity may make its services available to the general public or the business community (including entities that are not subject to any written contract with the hiring entity) on a continuing basis. |
| The hired entity includes services rendered on a federal income tax schedule as an independent business or profession. | The hired entity provides services reported on a federal income tax form 1099, if required by law. |
| The hired entity performs services for the contractor under the business entity‘s name. | The hired entity performs services for the commercial goods transportation contractor pursuant to a written contract, under the business entity‘s name, specifying their relationship to be as an independent contractor or separate business entity. |
| When the services being provided require a license or permit, the hired entity obtains and pays for the license or permit in the business entity’s name. | When the services being provided require a license or permit, the hired entity obtains and pays for the license or permit in the business entity’s name or where permitted pays for reasonable use of the commercial goods transportation contractor’s license or permit. |
| The hired entity furnishes the tools and equipment necessary to provide the service. | If necessary, the hired entity hires its own employees without contractor approval, pays the employees without reimbursement from the contractor and reports the employees’ income to the Internal Revenue Service. |
| If necessary, the hired entity hires its own employees without contractor approval, pays the employees without reimbursement from the contractor and reports the employees’ income to the Internal Revenue Service. | The commercial goods transportation contractor does not represent the hired entity as an employee to its customers. |
| The contractor does not represent the hired entity as an employee to its customers, AND | The hired entity has the right to perform similar services for others on whatever basis and whenever it chooses. |
| The hired entity has the right to perform similar services for others on whatever basis and whenever it chooses. | N/A |