New York Construction Industry Fair Play Act Poster Mandatory

The New York State Construction Industry Fair Play Act 
took effect on October 26, 2010. The law creates a new 
standard for determining whether a worker is an employee 
or independent contractor in the construction industry.   
It provides new penalties for employers who fail to properly 
classify their employees. 
Studies estimate that anywhere from 15 to 25 percent of 
construction workers may be misclassified in New York 
State. Employee misclassification occurs when employers 
treat workers who should be considered employees as 
independent contractors or simply do not report them   
(pay them “off the books”).
NEW STANDARD
The law presumes that individuals working for an 
employer are employees unless they meet all three 
criteria below. The individual must be:
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.
3.  Engaged in an independently established trade, 
occupation or business that is similar to the service   
they perform.
SEPARATE BUSINESS ENTITY
The law also contains a 12-part test to determine when 
a sole proprietor, partnership, corporation or other entity 
will be considered a “separate business entity” from the 
contractor for whom it provides a service. If an entity 
meets all of the 12 criteria, it will not be considered an 
employee of the contractor. Instead it will be a separate 
business that is itself subject to the new law regarding its 
own employees. The 12 criteria for a separate business 
entity appear on the back page of this fact sheet. COVERAGE  
The law applies to all contractors in the construction 
industry. Construction is defined as including constructing, 
reconstructing, altering, maintaining, moving, rehabilitating, 
repairing, renovating or demolition of any building, structure 
or improvement or relating to the excavation of or other 
development or improvement to land.
AGENCIES COVERED   
The new standard for determining employment applies 
to determinations under the Labor Law (including labor 
standards, prevailing wage law and unemployment insurance) 
and the Workers’ Compensation Law. It does not apply 
to determinations under the New York State Tax Law. 
The New York State Department of Taxation and Finance 
will continue to use its existing standards for determining 
employment status. The penalties provided by the new law 
apply to determinations of 	
misclassification under the Labor 
Law, Workers’ Compensation
 Law and the New York State 
Tax Law.
PENALTIES  
An employer that willfully violates the Fair Play Act by 
failing to properly classify its employees will be subject 
to civil penalties of up to a $2,500 fine per misclassified 
employee for a first violation and up to $5,000 per 
misclassified employee for a second violation within a 
five-year period.
Employers also may be subject to criminal prosecution (a 
misdemeanor) for violations of the act with a penalty of 
up to 30 days in jail, up to a $25,000 fine and debarment 
from Public Work for up to one year for a first offense. 
Subsequent misdemeanor offenses would be punishable 
by up to 60 days in jail, up to a $50,000 fine and debarment 
from performing Public Work for up to five years.	
FAIR PLAY ACT	
New York State Construction Industry

Employers also remain subject to all of the existing penalties,  
taxes and restitution for Labor Law, Workers’ Compensation 
Law and Tax Law violations that result from the worker 
misclassification. Corporate officers and certain shareholders 
may be personally liable for the fines and penalties under 
the Act, where they knowingly permit the violations to occur.
POSTING  
Construction industry employers must post a notice about 
the Fair Play Act in a prominent and accessible place on  
the job site. The required notice is available on the Department	 
of Labor’s web site. Failure to post the notice can result 
in penalties of up to $1,500 for a first offense and up to 
$5,000 for a second offense.
CONTACT US  
If you have any questions concerning the Fair Play Act or 
if you wish to report suspected worker misclassification, 
please call the Department of Labor toll-free at  	
866-435-1499 or e-mail us at [email protected].
The full text of the Fair Play Act appears on the department’s 
web site at www.labor.ny.gov.
To find out more about the New York State Department of 
Labor go to www.labor.ny.gov.	
SEPARATE BUSINESS ENTITY TEST   
To be considered a separate business entity from the  
business to which services are provided, a sole proprietor, 
partnership, corporation or other entity must:
1.  Be 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 to 
specify the desired result.
2.  Not be subject to cancellation when its work with the 
contractor ends.
3.  Have a substantial investment of capital in the entity 
beyond ordinary tools and equipment and a personal 
vehicle.
4.  Own the capital goods and gain the profits and bear 
the losses of the entity.
5.  Make its services available to the general public or 
business community on a regular basis.
6.  Include the services provided on a federal income tax 
schedule as an independent business.
7.  Perform the services under the entity’s name.
8.  Obtain and pay for any required license or permit in 
the entity’s name.
9.  Furnish the tools and equipment necessary to provide 
the service.
10.  Hire its own employees without contractor approval, 
pay the employees without reimbursement from the 
contractor and report the employees’ income to the 
Internal Revenue Service.
11.  Have the right to perform similar services for others on 
whatever basis and whenever it chooses.
12.  The contractor does not represent the entity or the 
employees of the entity as its own employees to its 
customers. 
The entity must meet all 12 criteria to be considered a 
separate business entity.	
The New York State Department of Labor is an Equal Opportunity Employer/Program. Auxiliary aids and services are available upon request to individuals wit\
h disabilities.
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