Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comAuthor: Scarinci Hollenbeck, LLC|February 4, 2014
New York Gov. Andrew Cuomo recently signed a new law, effective March 1, 2014, that will punish businesses in the transportation and delivery industries that misclassify workers who deliver commercial goods as being independent contractors.
The New York Commercial Goods Transportation Industry Fair Play Act applies to all “commercial goods transportation contractors,” which are defined as New York sole proprietorships, partnership, corporations, or other business entities that compensate commercial drivers who have a commercial driver’s license to transport goods in New York State.
The new law creates a presumption that any person operating a commercial motor vehicle with a gross vehicle weight rating (GVWR) of more than 10,000 pounds performing transportation services of commercial goods for a commercial goods transportation contractor is an employee and not an independent contractor unless one of two tests is satisfied. The first test determines whether the worker is an independent contractor while the second determines whether the worker qualifies as a separate business entity.
Any New York business violating the law may be subject to civil penalties of up to $1,500 for a first violation and up to $5,000 for a subsequent violation within a five-year period. Willful violations (when the company knew or should have known that it was committing a violation) can result in monetary fines of up to $2,500 per worker for the first violation and up to $5,000 per worker for subsequent violations within a five-year period.
The law also adds potential criminal liability for those who are found to have willfully violated the law. A first offense is punishable as a misdemeanor and may include imprisonment of up to 30 days or a fine of up to $25,000. Any subsequent offense exposes the employer to up to 60 days’ imprisonment and a fine not to exceed $50,000.
Where the commercial goods transportation contractor is a corporation, each shareholder owning 10 percent or more of the company and each officer “who knowingly permits the corporation to willfully violate” the new law shall be personally liable for the civil and criminal penalties upon conviction. In addition, controlled group liability will be imposed upon any “substantially owned affiliated entity.”
New York has adopted a tough approach to worker misclassification in the trucking industry. To avoid costly compliance failures, trucking businesses that employ “independent contractors” should work closely with experienced counsel to determine if such workers need to be reclassified in light of the new, more stringent requirements.
The Firm
201-896-4100 info@sh-law.comNew York Gov. Andrew Cuomo recently signed a new law, effective March 1, 2014, that will punish businesses in the transportation and delivery industries that misclassify workers who deliver commercial goods as being independent contractors.
The New York Commercial Goods Transportation Industry Fair Play Act applies to all “commercial goods transportation contractors,” which are defined as New York sole proprietorships, partnership, corporations, or other business entities that compensate commercial drivers who have a commercial driver’s license to transport goods in New York State.
The new law creates a presumption that any person operating a commercial motor vehicle with a gross vehicle weight rating (GVWR) of more than 10,000 pounds performing transportation services of commercial goods for a commercial goods transportation contractor is an employee and not an independent contractor unless one of two tests is satisfied. The first test determines whether the worker is an independent contractor while the second determines whether the worker qualifies as a separate business entity.
Any New York business violating the law may be subject to civil penalties of up to $1,500 for a first violation and up to $5,000 for a subsequent violation within a five-year period. Willful violations (when the company knew or should have known that it was committing a violation) can result in monetary fines of up to $2,500 per worker for the first violation and up to $5,000 per worker for subsequent violations within a five-year period.
The law also adds potential criminal liability for those who are found to have willfully violated the law. A first offense is punishable as a misdemeanor and may include imprisonment of up to 30 days or a fine of up to $25,000. Any subsequent offense exposes the employer to up to 60 days’ imprisonment and a fine not to exceed $50,000.
Where the commercial goods transportation contractor is a corporation, each shareholder owning 10 percent or more of the company and each officer “who knowingly permits the corporation to willfully violate” the new law shall be personally liable for the civil and criminal penalties upon conviction. In addition, controlled group liability will be imposed upon any “substantially owned affiliated entity.”
New York has adopted a tough approach to worker misclassification in the trucking industry. To avoid costly compliance failures, trucking businesses that employ “independent contractors” should work closely with experienced counsel to determine if such workers need to be reclassified in light of the new, more stringent requirements.
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