Independent Contractors New York
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Independent Contractors: New York by Peter C. Godfrey and John M. Godwin, Hodgson Russ LLP, with Practical Law Labor & Employment Law stated as of 16 Jan 2025 • New York, United States A Q&A guide to state law on independent contractor status for private employers in New York. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification, and practices to avoid misclassification.
Federal, local, or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool). Independent Contractor Basics Independent Contractor Tests Administration and Enforcement Avoiding Penalties for Misclassification Other State-Specific Requirements Independent Contractor Basics 1. Summarize how the issue of independent contractors is analyzed under state law.
There is no single, established definition of independent contractor under New York law. Instead, various tests are applied to determine whether an individual or entity is properly classified as an independent contractor for purposes of:
• Common law.
• Unemployment insurance.
• State and city withholding tax.
• Workers' compensation and disability insurance.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• Wage and hour laws.
• Human rights laws.
2. Is the term independent contractor defined by statute, regulation, or case law (not including any required elements)? If so, what is the definition? Please cite the appropriate authority. New York Common Law New York common law does not define the term independent contractor. Courts use a direction-and-control test to determine whether an individual is an independent contractor (see Question 4: New York Common Law).
New York unemployment insurance laws do not define the term independent contractor. However, the Unemployment Insurance Division of the New York State Department of Labor follows the common law analysis (see Question 4: New York Common Law). State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 State and city tax laws do not define the term independent contractor. However, the New York State Department of Taxation and Finance follows the common law analysis (see Question 4: New York Common Law).
The New York Workers' Compensation Law and state disability laws do not define the term independent contractor. However, New York courts generally apply the common law analysis in the context of workers' compensation and disability insurance (see Question 4: New York Common Law). There are separate tests for the construction industry and the commercial goods transportation industry (see Question 4: New York Common Law: Construction Industry ABC Test and Commercial Goods Transportation Industry ABC Test).
New York's wage and hour law gives employees and independent contractors essentially the same meaning as in the Fair Labor Standards Act (see Question 4: Wage and Hour Laws).
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 The New York Human Rights Law (HRL) does not define the term independent contractor. In enforcing the HRL, which governs discrimination and retaliation claims, the New York State Division of Human Rights applies the common law analysis to determine worker classification (see Question 4: New York Common Law).
3.For each type of independent contractor, please describe the benefits of using an independent contractor over an employee to perform work. New York's unemployment insurance law does not cover independent contractors. Therefore, employers are not required to pay unemployment insurance taxes for independent contractors.
State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 New York's tax laws do not cover independent contractors. Therefore, employers are not required to withhold unemployment insurance taxes for independent contractors. With limited exceptions, New York's workers' compensation laws do not cover independent contractors. Therefore, employers generally are not required to provide independent contractors with:
• Workers' compensation insurance.
• Disability benefits insurance.
Exceptions to this general rule include individuals working as:
• Professional musicians or in the performing arts.
• Contractors in the construction industry.
• Professional models.
• Jockeys.
(N.Y. Workers' Comp. Law §§ 2(4) and 201(5).)
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 New York's wage and hour laws generally do not cover independent contractors for:
• Minimum wage.
• Overtime.
• Meal periods.
• Rest periods.
• Frequency of wage payment.
• Deductions from wages.
(N.Y. Lab. Law §§ 2, 190, and 651.) Independent contractors generally cannot file discrimination or retaliation claims under the New York State Human Rights Law (see Frishberg v. Esprit de Corp., Inc., 778 F. Supp. 793, 798 (S.D.N.Y. 1991), aff'd without opinion, 969 F.2d 1042 (2d Cir.1992)). Under the New York City Human Rights Law, however, individual independent contractors who are not employees under the law are protected (N.Y.C. Admin. Code § 8-102).
Independent Contractor Tests 4. What tests are used to evaluate whether a worker is an independent contractor? Please describe each test and explain when each is used. New York Common Law Direction-and-Control Test
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 In New York, the common law direction-and-control test is generally applied to determine whether a worker is an employee or independent contractor for:
• Unemployment insurance obligations.
• State income tax withholding obligations.
• Workers' compensation and disability claims.
• Discrimination and retaliation claims.
Under the direction-and-control test, a worker qualifies as an employee if the employer exercises control over either:
• The results produced by the worker.
• The means used to achieve those results.
(In re Charles A. Field Delivery Serv., Inc., 66 N.Y.2d 516, 521 (N.Y. 1985).) N.Y.2d at 521). An employer's incidental control over the results produced by a worker, without further evidence of control over the means, does not suffice to show that a worker is an employee (In re Ted is Back Corp., 64 N.Y.2d 725, 726 (N.Y. 1984)).
Common Law Test for Professionals New York courts apply a separate test to determine the employee status of workers who are deemed professionals. A worker may qualify as a professional where the nature of the professional services does not lend itself to an employer's control over the results produced or the means used. A professional nevertheless may be classified as an employee if the employer, despite not exercising control over the results produced or the means used, nonetheless exercises control over other important aspects of the services. (In re Concourse Ophthalmology Assocs., 60 N.Y.2d 734, 736-37 (N.Y. 1983).) Under this test, workers who are deemed to be professionals and classified as employees include:
• Physicians (In re Stat Servs., P.C., 539 N.Y.S.2d 531 (N.Y. App. Div. 3d Dep't 1989)).
• Accountants (In re Stephen Abramson, 783 N.Y.S.2d 881 (N.Y. App. Div. 3d Dep't 2004)).
• Teachers (In re Steve Clorfeine, 589 N.Y.S.2d 952 (N.Y. App. Div. 3d Dep't 1992)).
• Tutors (In re Faculty Tutoring Serv., Inc., 664 N.Y.S.2d 674 (N.Y. App. Div. 3d Dep't 1997)).
• Photographers (In re Irving G. Goldberg, 589 N.Y.S.2d 707 (N.Y. App. Div. 3d Dep't 1992)).
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Construction Industry ABC Test The Construction Industry Fair Play Act (CFPA) (N.Y. Lab. Law §§ 861 to 861-g) governs worker classification in the construction industry. The construction industry is defined as performing any of the following on a building, structure, or other excavation or improvement of land:
• Construction.
• Reconstruction.
• Alteration.
• Maintenance.
• Moving.
• Rehabilitation.
• Repair.
• Renovation.
• Demolition.
(N.Y. Lab. Law § 861-b.) The CFPA covers worker classification determinations under:
• Labor laws, including:
• labor standards;
• the prevailing wage law; and
• unemployment insurance.
• Workers' compensation laws.
The CFPA does not apply to determinations under New York tax law. (New York State Department of Labor: Fact Sheet: New York State Construction Industry Fair Play Act.) The CFPA presumes that persons working for a contractor are employees unless they satisfy either:
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• The ABC test. The ABC test examines whether a worker is:
• 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 company; and
• engaged in an independently established trade, occupation, or business similar to the service that the worker is
performing.
• The separate business entity test. To constitute a "separate business entity," a sole proprietor, partnership,
corporation, or other business entity must:
• perform the service free from direction or control over the means and manner of providing the service, subject only
to the employer's right to specify the desired result;
• not be subject to termination when its work with the employer ends;
• have a substantial investment of capital in the entity beyond ordinary tools and equipment and a personal vehicle;
• own the capital goods, gain the entity's profits, and bear the entity's losses;
• make its services available to the general public or business community on a regular basis;
• include the services provided on a federal income tax schedule as an independent business;
• perform the services under the entity's name;
• obtain and pay for any required license or permit in the entity's name;
• furnish the tools and equipment necessary to provide the service;
• hire its own employees without the employer's approval, pay employees without reimbursement from the
employer, and report employees' income to the Internal Revenue Service (IRS);
• have the right to perform similar services for others on whatever basis and whenever it chooses; and
• not be represented by the employer to its customers as the employer's employee.
(N.Y. Lab. Law § 861-c; New York State Department of Labor: Fact Sheet: New York State Construction Industry Fair Play Act.) Commercial Goods Transportation Industry ABC Test
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 The Commercial Goods Transportation Industry Fair Play Act (TFPA) governs worker classification in the commercial goods transportation industry (N.Y. Lab. Law §§ 862 to 862-e). The TFPA applies to all employers in the commercial goods transportation industry. Commercial goods transportation is defined as the transportation of goods for compensation by a driver who:
• Has a state-issued driver's license.
• Transports goods in New York State.
• Operates a commercial motor vehicle as defined in N.Y. Transp. Law § 2(4-a).
(N.Y. Lab. Law § 862-a(3).) In addition, all commercial vehicle drivers who operate trucks with a Gross Vehicle Weight Rating or Gross Combination Weight of 10,001 pounds or more transporting goods for compensation within the State of New York, as well as some passenger vehicles and vehicles that transport hazardous material, are employees unless they satisfy either:
• The ABC test. The ABC test examines whether a worker is:
• 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 company; and
• engaged in an independently established trade, occupation, or business similar to the service that the worker is
performing.
• The separate business entity test. To constitute a "separate business entity," a sole proprietor, partnership,
corporation, or other business entity must:
• perform the service free from direction or control over the means and manner of providing the service, subject only
to the employer's right to specify the desired result or provide direction required by federal rule or regulation;
• not be subject to termination when its work with the employer ends;
• have a substantial investment of capital in the entity beyond ordinary tools and equipment;
• own or lease the capital goods, gain the entity's profits, and bear the entity's losses;
• make its services available to the general public or others in the business community not a party to the business
entity's written contract on a continuing basis;
• include the services provided on a federal income tax form 1099, if required by law;
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• perform the services under a written contract and under the entity's name, specifying the relationship between the
entity and the employer to be as independent contractors or separate business entities;
• obtain and pay for any required license or permit in the entity's name or, if allowed by law, pay for the use of the
employer's license or permit;
• hire its own employees without the employer's approval, subject to applicable qualification requirements or federal
or state law, and pay employees without reimbursement from the employer;
• have the right to perform similar services for others on whatever basis and whenever it chooses; and
• not be represented by the employer to its customers as the employer's employee.
(N.Y. Lab. Law § 862-b; New York State Department of Labor: Fact Sheet: New York State Commercial Goods Transportation Industry Fair Play Act.) The Unemployment Insurance Division (UID) of the New York Department of Labor (NYDOL) applies the common law test for worker classification (see New York Common Law). The UI and Independent Contractors Frequently Asked Questions page describes factors that are significant indicators of independent contractor status under the common law test for unemployment insurance obligations. Though New York law does not afford these factors specific weight, experience with NYDOL investigators suggests that factors demonstrating that the worker maintained an independent business presence tend to be the most persuasive. New York courts consider whether a worker has:
• Media advertising.
• A commercial telephone listing.
• Business cards and stationery.
• Business insurance.
• Maintenance of the worker's own establishment.
• Significant investment in facilities.
• A risk of profit or loss in providing services.
• The freedom to work their own hours and schedule their own activities.
• No requirement to attend meetings or training sessions or provide reports.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• The freedom to provide services for other businesses.
(NYDOL: UI and Independent Contractors FAQ.) New York's unemployment insurance law designates certain workers as employees even though the circumstances under which they work may not satisfy the common law test. These workers include:
• Agent- and commission-drivers involved in distributing laundry and certain food and drink.
• Certain salespeople.
• Certain professional musicians or persons in the performing arts.
• Certain professional models.
(N.Y. Lab. Law § 511(1).) Additionally, the Court of Appeals of New York recently held that couriers who contracted with Postmates were employees for purposes of the New York Unemployment Insurance Law (Matter of Vega, 125 N.Y.S.3d 640, 644-45 (2020); see Question 13: Marketplace Platforms). For unemployment insurance purposes, the law designates the following workers as independent contractors when certain conditions are met:
• Licensed real estate brokers or sales associates.
• Licensed insurance agents or brokers.
(N.Y. Lab. Law § 511(19), (21); see Question 11.) The NYDOL published a Covered or Excluded Employment chart identifying many statutory employees covered under the Unemployment Insurance Law. State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 The New York State Department of Taxation and Finance applies the common law test for worker classification (see New York Common Law). New York withholding obligations, however, generally incorporate the federal common law as applied by the IRS (20 NYCRR § 171.1(b)). The 20-factor test set out in IRS Revenue Ruling 87-41 applies to an analysis of New York withholding tax issues (In re Manhattan Fire Extinguisher, Inc., DTA No. 813561 (N.Y. Tax Appeals Tribunal, Sept. 18, 1997). IRS determinations are generally applicable to New York income tax withholding (20 NYCRR § 171.3(b)).
For more information, see Practice Note, Independent Contractor Classification: The Common Law 20-Factor Test.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 New York courts generally apply the common law analysis in the context of workers' compensation and disability insurance (see New York Common Law). There are separate tests for the construction industry and commercial goods transportation industry (see New York Common Law: Construction Industry ABC Test and Commercial Goods Transportation Industry ABC Test).
In determining a worker's status under New York's wage and hour laws, the NYDOL and courts apply an economic realities test consistent with the Fair Labor Standards Act of 1938 (Ansoumana v. Gristede's Operating Corp., 255 F. Supp. 2d 184, 190 (S.D.N.Y. 2003)). This test asks whether the worker is economically dependent on the entity to which the worker provides services. For more information on the economic realities test generally, see Practice Note, Independent Contractor Classification:
The Economic Realities Test: The FLSA Standard. The US Department of Labor's interpretation of the economic realities test has evolved in recent years and the agency published a new rule January 10, 2024. The viability of the rule and its influence, if any, on federal court interpretation and New York law remains to be seen. For more information, see Independent Contractor Classification Under the FLSA: DOL Rulemaking Tracker.
In New York, courts applying the economic realities test consider several factors, including whether an employer:
• Can hire and fire employees.
• Controls work schedules or employment conditions.
• Determines the rate or method of payment.
• Maintains employment records.
F.3d 61, 69 (2nd Cir 2003).) Satisfying any one factor does not necessarily determine employee status. Instead, courts examine the totality of the circumstances to determine worker classification (Herman, 172 F.3d at 139). A positive finding on all four factors is not necessary to establish an employment relationship (Ling Nan Zheng, 355 F.3d at 69).
In the context of wage and hour issues in the construction industry and commercial goods transportation industry, different tests are used (see Construction Industry ABC Test and Commercial Goods Transportation Industry ABC Test). To determine whether a worker is an independent contractor under the Human Rights Law (N.Y. Exec. Law §§ 290 to 301), the New York State Division of Human Rights and courts apply the common law test (see New York Common Law) (Scott v.
Mass. Mut. Life Ins., 633 N.Y.S.2d 754, 756 (N.Y. 1995); State Div. of Hum. Rts. v. GTE Corp., 487 N.Y.S.2d 234, 235 (N.Y. App. Div. 1985)).
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Administration and Enforcement 5. For each independent contractor type, what entity administers and enforces independent contractor
classification?
The Unemployment Insurance Division of the New York State Department of Labor (NYDOL) administers and enforces worker classification under the Unemployment Insurance Law. State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 The New York State Department of Taxation and Finance and the New York City Department of Finance administer and enforce worker classification for state and New York City withholding tax, respectively.
The New York State Workers' Compensation Board administers and enforces worker classification for purposes of the New York Workers' Compensation Law. The NYDOL Division of Labor Standards administers and enforces worker classification under New York's wage and hour laws. Parties may commence litigation asserting wage and hour claims without first pursuing claims at the NYDOL (N.Y. Lab. Law §§ 198 and 663(1)).
The New York State Division of Human Rights (DHR) administers and enforces worker classification under the New York State Human Rights Law. Parties may commence private litigation, asserting claims under these laws without first pursuing claims before the DHR. The Law Enforcement Bureau of the New York City Commission on Human Rights administers and enforces worker classification under the New York City Human Rights Law.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 6. How are independent contractor classifications selected for misclassification evaluation by each enforcement
agency (for example, by random selection or by complaint by a worker or both)?
Worker classification audits by the Unemployment Insurance Division (UID) of the New York State Department of Labor (NYDOL) often arise from:
• Routine random business audits.
• Applications filed by former workers seeking unemployment insurance benefits.
• Statements filed with new business registrations.
• Referrals from other state agencies.
UID determinations apply to both:
• The worker who is the subject of the unemployment insurance claims.
• All other similarly situated workers.
State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 New York State Department of Taxation and Finance and New York City Department of Finance worker classification audits typically accompany withholding audits. Withholding audits are performed for a variety of reasons, but often occur when tax filings are made to correct unemployment insurance tax matters.
New York State Workers' Compensation Board audits of worker classification issues typically result from:
• Business tax or other filings.
• Referrals from other state agencies.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Worker classification audits by the NYDOL Division of Labor Standards often arise from:
• Complaints that a particular service provider was not paid properly.
• Referrals from other state agencies.
New York State Division of Human Rights investigations regarding worker classification typically arise out of discrimination or retaliation claims filed by a service provider. New York City Commission on Human Rights investigations regarding worker classification typically arise out of discrimination claims filed by a service provider.
7. Please describe how aggressively independent contractor classification is enforced by each agency. Joint Task Force on Employee Misclassification New York's Joint Enforcement Task Force on Employee Misclassification (JETF) aggressively enforces worker classification. The JETF:
• Coordinates the investigation and enforcement of worker misclassification among state agencies.
• Promotes interagency cooperation, information sharing, and joint prosecution of businesses that misclassify workers.
• Seeks penalties for employer noncompliance.
The Unemployment Insurance Division of the New York State Department of Labor (NYDOL) is particularly aggressive in its enforcement of worker classification matters. A service provider's application for unemployment insurance benefits often results in a worker classification audit, even where the service provider does not contest their independent contractor status.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 The New York State Department of Taxation and Finance and New York City Department of Finance are not overly aggressive in conducting worker classification audits. However, employees often must make corrective tax filings with these agencies due to:
• Determinations made by other agencies.
• The combined nature of New York tax reporting forms.
The New York State Workers' Compensation Board is aggressive in its enforcement of worker classification matters. Worker classification audits by the NYDOL Division of Labor Standards (DLS) often arise from:
• Complaints that a particular worker did not receive minimum wage or overtime.
• Findings referred from other state agencies.
If the issue of worker classification arises during a DLS investigation or audit, the DLS typically pursues the issue aggressively. New York State Division of Human Rights (DHR) investigations regarding worker classification typically arise from discrimination or retaliation claims filed by a worker. The DHR typically does not enforce worker classification issues aggressively.
Avoiding Penalties for Misclassification 8. For each independent contractor type, is there a safe harbor available for employers that unintentionally misclassify workers as independent contractors? If so, please describe it. New York has no safe harbor for employers that unintentionally misclassify workers as independent contractors.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 However, both the New York State Department of Taxation and Finance (DTF) and New York State Tax Appeals Tribunal indicate that they may provide relief to taxpayers meeting the requirements of Section 530 of the Internal Revenue Service Act of 1978.
For more information on the Section 530 safe harbor provisions, see Practice Note, Independent Contractor Classification: Mitigating the Tax Consequences of Misclassification: Section 530 Safe Harbor. The DTF also operates a voluntary disclosure program that may be useful in limiting liability when correcting worker misclassification.
9. For each independent contractor type, can employers request a determination of worker status to assist them in determining whether to classify particular workers as independent contractors? If so, please describe:
• How an employer would make the request.
• The process and time frame for a response.
• The possible benefits and risks of making such a request.
Employers can obtain an opinion on worker classification by written request to the Liability and Determination Section of the New York State Department of Labor (NYDOL). The time frame for a response varies from several weeks to several months. Requesting a formal determination provides a business with the benefit of potentially reducing its exposure to penalties. However, if a business has misclassified workers for a period of time, requesting a formal determination places the NYDOL on notice of the violation. The NYDOL states that its determinations are not binding if additional facts or circumstances become known.
State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 The New York State Department of Taxation and Finance and New York City Department of Finance can issue advisory opinions on withholding tax issues. Petitions for advisory opinions are filed with the Office of Tax Policy Analysis Technical Services Division. Response times generally range from six months to a year.
The New York State Workers' Compensation Board (WCB) does not have a formal process for requesting an opinion on worker classification matters. Information on worker classification is available on the WCB's website.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 The NYDOL Division of Labor Standards no longer issues advisory opinions on worker classification. The New York State Division of Human Rights and New York City Commission on Human Rights do not issue advisory opinions on worker classification.
10. Please describe the penalties for improper classification for each independent contractor type. New York employers that fail to pay unemployment insurance tax premiums for misclassified workers are liable for:
• Interest on unpaid premiums accruing at 1% per month.
• A penalty of an additional 50% of the unpaid amount, if the deficiency is attributable to fraud.
(N.Y. Lab. Law § 570(3), (4).) When unpaid premiums are paid promptly following an audit by the New York Department of Labor, no penalties are assessed. If premiums are not paid, an employer may face:
• Civil penalties for non-payment.
• Criminal sanctions against corporate officers.
(N.Y. Lab. Law §§ 573 and 631.) State and City Withholding Tax: 20 NYCRR §§ 171.1 to 171.12 New York's tax withholding requirements do not apply to independent contractors. However, an employer that misclassifies a worker as an independent contractor is:
• Liable for amounts that should have been withheld or remitted, less the amount paid by the employee.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• Subject to penalties and interest.
(20 Nycrr § 176.1.)
If an employer fails to withhold tax from an employee's wages but can show by filing an NYS AU 7 form that the employee paid some or all of the withholding tax due, the employer is not required to pay the amount of the tax that the employee already paid. However, even if the employee pays the full amount due, the employer is still liable for penalties and interest. (20 NYCRR § 176.1.) Employers that fail to provide workers' compensation or disability coverage are subject to:
• Assessments for unpaid premiums.
• Civil claims by injured misclassified employees.
Additionally, failure to secure workers' compensation can result in:
• A penalty of $2,000 for every ten-day period of non-compliance.
• Personal liability for the president, secretary, and treasurer, if the employer is a corporation.
• Criminal penalties against corporate officers.
• Other penalties.
(N.Y. Workers' Comp. Law §§ 11, 26-a, 52, and 131.) Employers that fail to provide disability benefits coverage for employees are subject to:
• Penalties of:
• 0.5% of the employer's weekly payroll for the period of the failure; and
• $500.
• Criminal penalties for willful violations.
(N.Y. Workers' Comp. Law § 220.)
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Employers that fail to pay required overtime and minimum wage or to comply with New York's wage payment requirements may be liable for unpaid wages, interest, and penalties (see State Q&A, Wage and Hour Laws: New York: Question 3: Penalties for Failure to Pay Overtime and Question 12).
The law does not impose specific penalties for improper classification. Construction Industry Fair Play Act: N.Y. Lab. Law § 861-e An employer that violates the Fair Play Act by willfully misclassifying its workers is subject to civil penalties of up to:
• $2,500 per misclassified employee for a first violation.
• $5,000 per misclassified employee for each subsequent violation within a five-year period.
(N.Y. Lab. Law § 861-e(3).) An employer also may be subject to criminal penalties of up to:
• 30 days in jail, a fine of up to $25,000, and debarment from public work for up to one year for a first offense.
• 60 days in jail, a fine of up to $50,000, and debarment from public work for up to five years for a subsequent offense.
(N.Y. Lab. Law § 861-e(4), (7).) Other State-Specific Requirements 11. Must independent contractor agreements include any particular language that is not required under federal law? If so, please insert that language and explain the requirement. Although New York generally does not require particular language to be included in independent contractor agreements, Section 2 of the Workers' Compensation Law provides that individuals in the following occupations must include specific provisions in their agreements to be considered independent contractors:
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• Licensed real estate brokers or sales associates.
• Licensed insurance agents or brokers.
• Certain media sales representatives.
(N.Y. Workers' Comp. Law § 2(4).) The unemployment insurance law requires similar provisions for statutory independent contractor status for:
• Licensed real estate brokers or sales associates (N.Y. Lab. Law § 511(19)).
• Licensed insurance agents or brokers (N.Y. Lab. Law § 511(21)).
12. Please describe any other variance in how independent contractors in your jurisdiction are treated compared to under federal law. Following the October 2019 and February 2020 amendments to the New York Human Rights Law, independent contractors may bring discrimination and retaliation claims against employers in New York (N.Y. Exec. Law §§ 296-d and 292(5)). Similar changes were made to the New York City Human Rights Law in January 2020 (N.Y.C. Admin. Code § 8-107(23)). For more information on New York State and City Human Rights Laws, see State Q&A, Anti-Discrimination Laws: New York.
Freelance Isn't Free Act: N.Y. Gen. Bus. Law §§ 1410 to 1415 As of August 28, 2024, the statewide Freelance Isn't Free Act (FIFA) gives freelance workers the right to:
• A written contract.
• Timely and full payment for their work.
• Protection from discrimination.
(N.Y. Gen. Bus. Law §§ 1411, 1412, and 1413.) The law defines a freelance worker as any person or organization composed of no more than one person hired or retained as an independent contractor to provide services valued at $800 or more, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days (N.Y. Gen. Bus. Law § 1410(3)). The law excludes from the definition of freelance workers:
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• Sale representatives, as defined by N.Y. Lab. Law § 191-a.
• Persons engaged in the practice of law who are:
• members in good standing of the bar of the highest court of any state, possession, territory, commonwealth, or the
District of Columbia; and
• not under any court order suspending, enjoining, restraining, disbarring, or otherwise restricting them in the
practice of law.
• Licensed medical professionals.
• Construction contractors.
(N.Y. Gen. Bus. Law § 1410(3).) FIFA may also cover gig workers, if the worker is hired or retained as an independent contractor by the same hiring party to provide services valued at $800 or more during the immediately preceding 120 days (N.Y. Gen. Bus. Law § 1410(3)). For more information on gig workers, see Question 13.
The written contract between the hiring party and the freelance worker must include all of the following:
• The name and mailing address of both parties.
• An itemization of all services to be provided by the freelance worker, the value of the services, and the rate and method
of compensation.
• The date on which the hiring party must pay the contracted compensation or the mechanism by which the date for
payment will be determined.
• The date by which the freelance worker must submit a list of services rendered under the contract.
(N.Y. Gen. Bus. Law § 1412(2).) The New York Department of Labor has developed a model contract that can be used to meet the law's requirements. The hiring party must pay the contracted compensation to the freelance worker either:
• On or before the date completion is due under the terms of the contract.
• If the contract does not specify the date when the hiring party must pay or the mechanism by which the date will be
determined, then no later than 30 days after the freelance worker has completed services under the contract.
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 (N.Y. Gen. Bus. Law § 1411(1).) The law protects freelance workers from:
• Threats, intimidation, discipline, harassment, discrimination, or denial of work opportunities.
• Any other action that penalizes them for or is likely to deter them from exercising or attempting to exercise any right
guaranteed under the law. (N.Y. Gen. Bus. Law § 1413.) For FIFA violations, freelance workers may either:
• File a complaint with the New York state attorney general.
• Bring an action for damages in any court of competent jurisdiction.
(N.Y. Gen. Bus. Law § 1414.) Penalties for FIFA violations include:
• Double damages.
• Injunctive relief.
• Attorneys' fees and costs.
• Civil penalties from $1,000 (for a first violation) to $25,000 (for employers engaged in a pattern or practice of violations).
(N.Y. Gen. Bus. Law § 1414.) New York City Freelance Isn't Free Act: N.Y.C. Admin. Code §§ 20-927 to 20-936 Prior to the statewide law, New York City enacted its own Freelance Isn't Free Act in 2017. Its law is enforced by the New York City Department of Consumer and Worker Protection and similarly provides freelance workers with the right to:
• A written contract.
• Timely and full payment.
• Protection from retaliation.
(N.Y.C. Admin. Code §§ 20-928, 20-929, and 20-930.)
Independent Contractors: New York, Practical Law State Q&A 8-506-4766 Under New York City's Freelance Isn't Free Act, freelance workers are natural persons or organizations of no more than one person, whether or not incorporated or employing a trade name, who are hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation. The law specifically excludes certain workers, including but not limited to sales representatives and licensed medical professionals. (N.Y.C. Admin. Code § 20-927.) 13. Is there a state law specific to gig economies, including marketplace platforms and transportation network companies? If so, please summarize that law's requirements regarding the classification of gig economy workers.
Transportation Network Companies In New York, a transportation network company (TNC) is a person, corporation, partnership, sole proprietorship, or other entity that:
• Is licensed in New York.
• Operates in New York State exclusively using a digital network to connect TNC passengers to TNC drivers who provide
TNC prearranged trips. (N.Y. Veh. & Traf. Law § 1691(3).) TNCs do not include:
• Taxicabs under N.Y. Veh. & Traf. Law § 148-a or N.Y.C. Admin. Code § 19-502.
• Livery vehicles under N.Y. Veh. & Traf. Law § 121-e.
• Black cars, limousines, or luxury limousines under N.Y.C. Admin. Code § 19-502.
• For-hire vehicles under N.Y.C. Admin. Code § 19-502.
• Buses under N.Y. Veh. & Traf. Law § 104.
• Motor vehicles:
• weighing more than 6,500 pounds unloaded;
• with a seating capacity of more than seven passengers; or
Independent Contractors: New York, Practical Law State Q&A 8-506-4766
• subject to New York Vehicle and Traffic Law Section 370.
(N.Y. Veh. & Traf. Law § 1691(1)(c).) New York law does not:
• Define TNC drivers as either independent contractors or employees.
• State that the TNC is not deemed to control, direct, or manage a TNC driver who connects to its digital network.
The New York State Department of Motor Vehicles administers New York's TNC law (N.Y. Veh. & Traf. Law § 1692; 15 NYCRR § 80.9). Marketplace Platforms The Court of Appeals of New York recently held that couriers who contracted with Postmates were employees for purposes of the New York Unemployment Insurance Law. The court focused on the fact that the couriers were low-paid workers who performed unskilled labor and had little discretion over how they performed their work. (Matter of Vega, 125 N.Y.S.3d at 644-45.) Although outside the scope of this Q&A, New York City has enacted minimum-wage requirements that apply to app-based restaurant delivery workers. For more information, see NYC Consumer and Worker Protection: Minimum Pay Rate for App- Based Restaurant Delivery Workers.
Although outside the scope of this Q&A, New York has extended paid family and medical leave to self-employed individuals and independent contractors, allowing them to opt in by purchasing an insurance policy. For more information, see New York State: Paid Family Leave for Self-Employed Individuals.