IC Alert: New York
The Independent Contractor Monitor
[Reprinted with permission from Contractor Management Services, LLC]
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New York
In October 2005, the Unemployment Insurance Division, the Division of Labor Standards and the Division of Safety and Health adopted guidelines to use in analyzing whether drivers, both on-demand and routed, in the messenger and/or courier industries are employees or independent contractors. The guidelines help clarify the relationship and provide a level of certainty in a confusing and gray issue. Unfortunately, there are still efforts at the New York Assembly to pass legislation that would undo the gains made by the guidelines and hinder, possibly severally, the ability of companies in the courier and messenger industries to use the services of independent contractors.
Assembly Bill A08686 - (Sponsored by Rep. John; co-sponsored by Brodsky):
A08686 was first introduced in 2005, but no action was taken on it. However, on January 4, 2006, it was again referred to the Labor Committee. Hopefully, it will not gain any traction this time around and will merely die for lack of action. However, the potential impact of this bill, and the fact that it re-surfaced even after the departments adopted the guidelines, is a reason for concern and attention.
A08686 would apply to independent contractor issues for purposes of tax and finance, workers’ compensation, or any issues arising through the Dept. of Labor (which includes unemployment). It adopts the “ABC” test for all New York labor and tax related issues. However, like the 2004 change made in Massachusetts, the B factor is modified to require that the services performed by an IC be outside the employer’s usual course of business. The Massachusetts change was adopted to address an issue in the construction trades, but was so broadly written that it had unintended consequences of applying to any business that uses the services of an IC. New York bill A08686 is written with the same language as the Massachusetts 2004 change and will have the same broad impact. CMS expects A08686 to die this year for lack of action; however, vigilance and oversight are required by the industry so the bill does not gain support and pass without noticing as happened in MA.
Assembly Bill A03347 - (Sponsored by Rep. John; co-sponsored by Nolan, Colton, McLaughlin and Cohen M):
This bill, like A08686, was first introduced in 2005 and did not receive any action. A03347 was also again referred to the Labor Committee on January 4, 2006. The stated purpose of A03347 is to specify specific criteria for a determination of independent contractor status. The bill expressly replicates the Minnesota statute (M.S.A. 176.042) addressing the employee/independent contractor status issue. A worker will only be deemed an independent contractor if all the following criteria are met:
1. Worker maintains a separate business with the worker’s own office, equipment, materials and other facilities;
2. Worker holds or has applied for a federal employer identification number;
3. The worker operates under contracts to perform specific services or work for the specific amounts of money and under which the worker controls the means of performing the services or work;
4. Worker incurs the main expenses related to the service/work performed under the contract;
5. Worker is responsible for the satisfactory completion of the work/services the worker contracts to perform and is liable for failure to complete the service/work;
6. Worker receives compensation for work/service on a commission, per job or competitive bid basis and not on any other basis;
7. Worker may realize a profit or suffer a loss under contracts to perform work/service;
8. Worker has continuing or recurring business liabilities or obligations; and
9. Success or failure of the worker’s business depends on the relationship of business receipts to expenditures.
The New York guidelines adopted in October 2005 are designed specifically for the courier and delivery industries. They address both on-demand and routed drivers, and help provide more certainty to the independent contractor issues for the industry. While A03347 also provides valuable guidance for independent contractor issues, and would be welcomed by those operating in states like California, the application of A03347 to the courier and delivery industries would be a step backward from the guidelines.
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Dennis P. Roccaforte
President - Contractor Management Services, LLC.
If you would like to speak to a CMS representative you can contact us at (800) 742-7508 or visit our website at www.ICTheRightWay.com.
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