N.Y. Labor Law § 861-e: Violations and penalties

§ 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.