S T A T E   O F   N E W   Y O R K
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                                   21

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by Sens. SQUADRON, ADAMS, DIAZ, DUANE, KLEIN, KRUEGER, MONT-
  GOMERY, PARKER, SERRANO, STAVISKY -- read twice and  ordered  printed,
  and when printed to be committed to the Committee on Labor

AN ACT to amend the labor law, in relation to independent contractors

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The labor law is amended by adding two new  sections  196-b
and 196-c to read as follows:
  S 196-B. DEFINITIONS. FOR PURPOSES OF THIS SECTION THE TERM:
  1.  "COMPENSATION"  MEANS  THE  EARNINGS OF AN INDEPENDENT CONTRACTOR.
THE TERM "COMPENSATION" ALSO INCLUDES REIMBURSEMENT FOR EXPENSES.
  2. "INDEPENDENT CONTRACTOR" MEANS A SOLE  PROPRIETOR  WHO  IS  NOT  AN
EMPLOYEE AND WHO IS HIRED OR RETAINED BY A CLIENT FOR AN AMOUNT EQUAL TO
OR GREATER THAN SIX HUNDRED DOLLARS.
  3. "CLIENT" INCLUDES A PERSON, CORPORATION, LIMITED LIABILITY COMPANY,
ASSOCIATION  OR  NON-PROFITMAKING ORGANIZATION CONTRACTING WITH AN INDE-
PENDENT CONTRACTOR IN  ANY  OCCUPATION,  INDUSTRY,  TRADE,  BUSINESS  OR
SERVICE FOR AN AMOUNT EQUAL TO OR GREATER THAN SIX HUNDRED DOLLARS.  THE
TERM "CLIENT" SHALL NOT INCLUDE A GOVERNMENTAL AGENCY.
  S  196-C.  PAYMENT  OF  INDEPENDENT  CONTRACTORS.  1.  AN  INDEPENDENT
CONTRACTOR SHALL BE PAID THE COMPENSATION EARNED IN ACCORDANCE WITH  THE
AGREED WORK TERMS BUT NOT LATER THAN THE LAST DAY OF THE MONTH FOLLOWING
THE  MONTH  IN  WHICH  THE COMPENSATION IS EARNED. THE AGREED WORK TERMS
SHALL BE REDUCED IN WRITING, SIGNED BY BOTH THE CLIENT AND THE INDEPEND-
ENT CONTRACTOR, KEPT ON FILE BY THE CLIENT FOR A PERIOD OF NOT LESS THAN
SIX YEARS AND MADE AVAILABLE TO  THE  COMMISSIONER  UPON  REQUEST.  SUCH
WRITING SHALL INCLUDE A DESCRIPTION OF HOW COMPENSATION EARNED AND PAYA-
BLE SHALL BE CALCULATED. THE FAILURE OF A CLIENT TO PRODUCE SUCH WRITTEN
WORK  TERMS,  UPON  REQUEST  OF  THE  COMMISSIONER, SHALL GIVE RISE TO A

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00047-01-1
              

S. 21                               2

PRESUMPTION THAT THE TERMS THAT THE INDEPENDENT CONTRACTOR HAS PRESENTED
ARE THE AGREED TERMS.
  2.  THE COMMISSIONER SHALL INVESTIGATE AND ATTEMPT TO ADJUST EQUITABLY
CONTROVERSIES BETWEEN CLIENTS AND INDEPENDENT  CONTRACTORS  RELATING  TO
THIS SECTION.
  3. THE COMMISSIONER MAY TAKE ASSIGNMENTS OF CLAIMS FOR COMPENSATION AS
DEFINED  IN  SECTION ONE HUNDRED NINETY-SIX-B OF THIS ARTICLE FROM INDE-
PENDENT CONTRACTORS OR THIRD  PARTIES  IN  TRUST  FOR  SUCH  INDEPENDENT
CONTRACTORS  OR  FOR THE VARIOUS FUNDS FOR SUCH INDEPENDENT CONTRACTORS.
ALL SUCH ASSIGNMENTS SHALL RUN TO THE COMMISSIONER AND HIS SUCCESSOR  IN
OFFICE.  THE  COMMISSIONER MAY SUE COMPANIES ON COMPENSATION CLAIMS THUS
ASSIGNED. HE MAY JOIN IN A SINGLE  ACTION  ANY  NUMBER  OF  COMPENSATION
CLAIMS AGAINST THE SAME COMPANY.
  4.  ANY  INDEPENDENT  CONTRACTOR  MAY  FILE  WITH  THE  COMMISSIONER A
COMPLAINT REGARDING A VIOLATION OF THIS ARTICLE FOR AN INVESTIGATION  OF
SUCH  COMPLAINT  AND  STATEMENT  SETTING THE APPROPRIATE REMEDY, IF ANY.
FAILURE OF A CLIENT TO KEEP ADEQUATE RECORDS SHALL NOT OPERATE AS A  BAR
TO  FILING  OF A COMPLAINT BY AN INDEPENDENT CONTRACTOR.  IN SUCH A CASE
THE CLIENT IN VIOLATION SHALL  BEAR  THE  BURDEN  OF  PROVING  THAT  THE
COMPLAINING INDEPENDENT CONTRACTOR WAS PAID COMPENSATION.
  5.  ON BEHALF OF ANY INDEPENDENT CONTRACTOR PAID LESS THAN THE COMPEN-
SATION TO WHICH HE OR SHE IS ENTITLED UNDER THE AGREED WORK TERMS  UNDER
THE  PROVISIONS  OF  THIS  ARTICLE, THE COMMISSIONER MAY BRING ANY LEGAL
ACTION NECESSARY, INCLUDING ADMINISTRATIVE ACTION, TO COLLECT SUCH CLAIM
AND AS PART OF SUCH LEGAL ACTION, IN ADDITION TO ANY OTHER REMEDIES  AND
PENALTIES  OTHERWISE  AVAILABLE UNDER THIS ARTICLE, THE COMMISSIONER MAY
ASSESS AGAINST THE CLIENT AN ADDITIONAL  AMOUNT  AS  LIQUIDATED  DAMAGES
EQUAL  TO  TWENTY-FIVE PERCENT OF THE TOTAL AMOUNT OF COMPENSATION FOUND
TO BE DUE, UNLESS THE CLIENT PROVES A GOOD  FAITH  BASIS  FOR  BELIEVING
THAT ITS UNDERPAYMENT OF COMPENSATION WAS IN COMPLIANCE WITH THE LAW. IN
ANY  ACTION    INSTITUTED  IN THE COURTS UPON A COMPENSATION CLAIM BY AN
INDEPENDENT CONTRACTOR OR THE  COMMISSIONER  IN  WHICH  THE  INDEPENDENT
CONTRACTOR  PREVAILS,  THE COURT SHALL ALLOW SUCH INDEPENDENT CONTRACTOR
REASONABLE ATTORNEY'S FEES AND, UNLESS THE CLIENT PROVES  A  GOOD  FAITH
BASIS TO BELIEVE THAT ITS UNDERPAYMENT OF COMPENSATION WAS IN COMPLIANCE
WITH  THE LAW, AN ADDITIONAL AMOUNT AS LIQUIDATED DAMAGES EQUAL TO TWEN-
TY-FIVE PERCENT OF THE TOTAL AMOUNT OF COMPENSATION FOUND TO BE DUE. THE
REMEDIES PROVIDED BY THIS ARTICLE  MAY  BE  ENFORCED  SIMULTANEOUSLY  OR
CONSECUTIVELY SO FAR AS NOT INCONSISTENT WITH EACH OTHER.
  6.  NOTWITHSTANDING  ANY  OTHER PROVISION OF LAW, AN ACTION TO RECOVER
UPON A LIABILITY IMPOSED BY THIS ARTICLE MUST BE  COMMENCED  WITHIN  SIX
YEARS.  ALL INDEPENDENT CONTRACTORS SHALL HAVE THE RIGHT TO RECOVER FULL
COMPENSATION  ACCRUED DURING THE SIX YEARS PREVIOUS TO THE COMMENCING OF
SUCH ACTION, WHETHER  SUCH  ACTION  IS  INSTITUTED  BY  THE  INDEPENDENT
CONTRACTOR OR BY THE COMMISSIONER.
  7.  EACH  INDEPENDENT  CONTRACTOR  WHO  FILES  A COMPLIANT REGARDING A
VIOLATION OF A PROVISION OF THIS ARTICLE SHALL BE PROVIDED WITH A  WRIT-
TEN  DESCRIPTION OF THE ANTICIPATED PROCESSING OF THE COMPLAINT, INCLUD-
ING INVESTIGATION, CASE CONFERENCE, POTENTIAL CIVIL AND CRIMINAL  PENAL-
TIES, AND COLLECTION PROCEDURES.
  8.  EACH INDEPENDENT CONTRACTOR AND HIS OR HER REPRESENTATIVE SHALL BE
NOTIFIED IN WRITING OF ANY CASE CONFERENCE BEFORE IT IS HELD  AND  GIVEN
THE OPPORTUNITY TO ATTEND.
  9.  EACH INDEPENDENT CONTRACTOR AND HIS OR HER REPRESENTATIVE SHALL BE
NOTIFIED IN WRITING OF ANY AWARD AND COLLECTION OF BACK COMPENSATION AND
CIVIL PENALTIES, AND OF ANY INTENT TO SEEK CRIMINAL  PENALTIES.  IN  THE

S. 21                               3

EVENT  THAT CRIMINAL PENALTIES ARE SOUGHT THE INDEPENDENT CONTRACTOR AND
HIS OR HER REPRESENTATIVE SHALL BE NOTIFIED OF  THE  OUTCOME  OF  PROSE-
CUTION.
  10.  IF  THE  COMMISSIONER  DETERMINES  THAT  A  CLIENT HAS VIOLATED A
PROVISION OF THIS ARTICLE, OR A RULE OR  REGULATION  PROMULGATED  THERE-
UNDER,  BY FAILING TO PAY THE COMPENSATION OF THEIR INDEPENDENT CONTRAC-
TORS, THE COMMISSIONER SHALL ISSUE TO  THE  CLIENT  AN  ORDER  DIRECTING
COMPLIANCE  THEREWITH,  WHICH  SHALL DESCRIBE PARTICULARLY THE NATURE OF
THE ALLEGED VIOLATION, AND ORDER THE PAYMENT OF INTEREST AT THE RATE  OF
INTEREST  THEN  IN EFFECTED AS PRESCRIBED BY THE SUPERINTENDENT OF BANKS
PURSUANT TO SECTION FOURTEEN-A OF THE BANKING LAW  PER  ANNUM  FROM  THE
DATE  OF  THE  UNDERPAYMENT  TO  THE DATE OF THE PAYMENT. IN ADDITION TO
DIRECTING PAYMENT OF COMPENSATION FOUND TO BE DUE, SUCH ORDER, IF ISSUED
TO A CLIENT  WHO  PREVIOUSLY  HAS  BEEN  FOUND  IN  VIOLATION  OF  THOSE
PROVISIONS,  RULES  OR  REGULATIONS,  OR  TO A CLIENT WHOSE VIOLATION IS
WILLFUL OR EGREGIOUS, SHALL DIRECT PAYMENT TO  THE  COMMISSIONER  OF  AN
ADDITIONAL SUM AS A CIVIL PENALTY IN AN AMOUNT EQUAL TO DOUBLE THE TOTAL
AMOUNT FOUND TO BE DUE.
  11. EVERY CLIENT WHO DOES NOT PAY THE COMPENSATION OF ALL OF ITS INDE-
PENDENT  CONTRACTORS  IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER,
AND THE OFFICERS AND AGENTS OF  ANY  CLIENT  WHO  KNOWINGLY  PERMIT  THE
CLIENT TO VIOLATE THIS CHAPTER BY FAILING TO PAY THE COMPENSATION OF ANY
OF  ITS INDEPENDENT CONTRACTORS IN ACCORDANCE WITH THE PROVISIONS THERE-
OF, SHALL BE GUILTY OF A MISDEMEANOR FOR  THE  FIRST  OFFENSE  AND  UPON
CONVICTION  THEREFOR  SHALL BE FINED NOT LESS THAN FIVE HUNDRED NOR MORE
THAN TWENTY THOUSAND DOLLARS OR IMPRISONED FOR NOT MORE THAN  ONE  YEAR,
AND,  IN  THE  EVENT THAT ANY SECOND OR SUBSEQUENT OFFENSE OCCURS WITHIN
SIX YEARS OF THE DATE OF CONVICTION FOR A PRIOR OFFENSE, SHALL BE GUILTY
OF A FELONY FOR THE SECOND OR SUBSEQUENT OFFENSE,  AND  UPON  CONVICTION
THEREFOR, SHALL BE FINED NOT LESS THAN FIVE HUNDRED NOR MORE THAN TWENTY
THOUSAND  DOLLARS OR IMPRISONED FOR NOT MORE THAN ONE YEAR PLUS ONE DAY,
OR PUNISHED BY BOTH SUCH FINE AND IMPRISONMENT, FOR EACH SUCH OFFENSE.
  S 2. This act shall take effect immediately.