§ 861-E — Violations and penalties

§ 861-e. Violations and penalties. 1. Any contractor who wilfully\nfails to properly classify an individual as an employee as provided\nunder section eight hundred sixty-one-c of this article shall be subject\nto the civil and criminal penalties provided under this section. The\ncivil penalties set forth in this section shall be imposed as follows:\nby the commissioner where such penalty is based on a violation of this\nchapter; by the chair of the workers' compensation board where such\npenalty is based on a violation of the workers' compensation law; and by\nthe commissioner of tax and finance when such penalty is based on a\nviolation of the tax law, provided that no more than one civil penalty\nunder this section may be imposed per employee per incident of\nmisclassification.\n (a) The workers' compensation board shall provide a copy of any order\nrelating to the misclassification of an employee, the intentional and\nmaterial underpayment or concealment of payroll, or the failure to\nsecure workers' compensation in the construction industry to the\ncommissioner and commissioner of taxation and finance no later than\nseven days after the issuance of the order.\n (b) Notwithstanding the secrecy provisions contained in articles\nnine-A and twenty-two of the tax law, the department of taxation and\nfinance shall provide a copy of any assessment for failure to pay\nbusiness, corporate or personal income tax by an employer in the\nconstruction industry arising out of the misclassification of an\nemployee to the commissioner and chair of the workers' compensation\nboard no later than seven days after the issuance of the assessment.\n (c) Upon the issuance of an order or determination by the commissioner\nfor a violation and penalties under this article, the commissioner shall\nprovide a copy of the order to the chair of the workers' compensation\nboard and the commissioner of taxation and finance no later than seven\ndays after the issuance of the order.\n 2. For the purposes of this section, the term "willfully violates"\nmeans a contractor knew or should have known that his or her conduct was\nprohibited by this section.\n 3. Any contractor who willfully violates section eight hundred\nsixty-one-c of this article shall be subject to a civil penalty of up to\ntwenty-five hundred dollars for the first violation per misclassified\nemployee and to a civil penalty of up to five thousand dollars for each\nsubsequent violation per misclassified employee within a five year\nperiod.\n 4. In addition to civil penalties, the criminal penalties imposed on a\ncontractor who willfully violates the provisions of this article shall\nbe a misdemeanor and upon conviction shall be punished for a first\noffense by imprisonment for not more than thirty days or a fine not to\nexceed twenty-five thousand dollars and for a subsequent offense by\nimprisonment for not more than sixty days or a fine not to exceed fifty\nthousand dollars.\n 5. If the contractor is a corporation, any officer of such corporation\nor shareholder who owns or controls at least ten percent of the\noutstanding stock of such corporation who knowingly permits the\ncorporation to willfully violate the provisions of this article shall\nalso be in violation of this article and the civil and criminal\npenalties herein shall attach to such officer upon conviction.\n 6. Any contractor subject to civil penalties under this article shall\nalso be subject to any other applicable penalties or remedies provided\nby law for failure to pay any other statutory payment or coverage\nobligations, including but not limited to, unemployment insurance,\nworkers' compensation insurance, or business, corporate or personal\nincome tax, as follows:\n (a) for failure to pay unemployment insurance tax, the penalties\nimposed by section five hundred seventy of this chapter.\n (b) for intentional and material understatement or concealment of\npayroll or failure to secure workers' compensation insurance, the\npenalties imposed by paragraph (d) of subdivision one of section\nfifty-two of the workers' compensation law, and for failure to keep a\ntrue and accurate record pursuant to section one hundred thirty-one of\nthe workers' compensation law, the penalties of section one hundred\nthirty-one of the workers' compensation law.\n (c) for failure to pay business, corporate or personal income tax, the\npenalties imposed by section six hundred eighty-five and one thousand\neighty-five of the tax law.\n 7. Any contractor or any officer or shareholder who owns or controls\nat least ten percent of the outstanding stock of such corporation that\nhas been convicted of a misdemeanor shall be subject to debarment and be\nineligible to submit a bid on or be awarded any public works contract\nwith the state, any municipal corporation, public benefit corporation,\npublic authority or public body for a period of up to one year from the\ndate of such conviction or final determination, or up to five years in\nthe event of any subsequent violation.\n 8. Any substantially owned affiliated entity of a contractor, as\ndefined by paragraph g of subdivision five of section two hundred twenty\nof this chapter, shall be subject to the same civil penalty provided\nunder this article for a violation of such provision.\n 9. Any penalties imposed under this section by the commissioner shall\nbe appealed to the industrial board of appeals in accordance with\narticle three of this chapter. Any penalties imposed under this section\nby the workers' compensation board or commissioner of taxation and\nfinance shall be appealed in the same manner as the underlying\nviolation.\n 10. Nothing in this section shall limit the availability of other\nremedies at law or in equity for a violation of this article.\n 11. Any fee or penalty assessed for a violation of this article shall\nbe deposited into the department's fee and penalty account.\n