Construction Industry Fair Play Act creates presumption of employment

As if the Lead Liability Issue hasn't been enough of a challenge for contractors to deal with, now the NY State has a new law changing the rules on Workers Compensation Coverage.  Effective Oct. 26, 2010, there's a major shift in the way New York state officially views workers in the construction trades, due to enactment of “The New York State Construction Industry Fair Play Act.” The law makes it extremely hard to qualify construction workers as independent contractors.


Because the law defines “construction” so broadly (see below), activities other than “new” construction are affected. Also, the new law makes it clear that someone cannot qualify as an independent contractor merely by maintaining a workers' compensation policy, as some may have assumed in the past.

Presumption-of-employment established. This new law (S.5847-F) creates a strong legal presumption that construction workers are employees. This represents quite a paradigm shift in an industry where a large portion of workers traditionally have been treated as independent contractors.

The “presumption” of employment can be overcome, so these workers can be classified as independent contractors—but only if they meet certain very specific criteria. To be treated as independent contractors, they must qualify as a separate business entity (as defined), plus meet certain tests showing true independence from the contractor that hires them.

Willful misclassification of construction workers carries stiff new penalties—and a greater chance of being detected and penalized, due to heightened information sharing among state agencies.

Summary of legal tests. The New York State Department of Labor (DOL) has boiled down the law's somewhat complicated tests into a simpler, more understandable three-part formula. The DOL's explanation for construction workers is a good place to start, in understanding the ramifications of the new law:

“The law says that you are an employee unless:

• you are free from direction and control in performing your job; AND

• you perform work that is not part of the usual work done by the business that hired you; AND

• you have an independently established business.

Your employer cannot consider you to be an independent contractor unless all three of these facts apply to your work.

IT IS AGAINST THE LAW FOR AN EMPLOYER TO MISCLASSIFY EMPLOYEES AS INDEPENDENT CONTRACTORS OR PAY EMPLOYEES OFF THE BOOKS.”

Notice requirement. As of the law's effective date (Oct. 26, 2010), contractors are required to post information on its provisions at job sites. The DOL, as required by law, has developed a poster that will fulfill this requirement, as well as a fact sheet. The DOL poster and related information can be viewed here: http://www.labor.ny.gov/sites/legal/laws/construction-industry-fair-play-act.page.

How the law works. First, the law adds some new definitions:

“Construction” is defined very broadly to embrace not just new construction but also repairs, demolition, excavation, etc.

“Contractor ” means any legal entity engaged in construction in New York, including both general contractors and subcontractors. (The law is designed so that independent contractors who qualify as separate business entities automatically are considered “contractors” in their own right. Thus, in turn, these individuals become subject to the law's requirements with respect to any workers they may hire.)

“Employee” (as defined in Workers' Compensation Law) is amended to include any individual performing services in construction for a contractor who does not overcome the presumption of employment.

Here's the “presumption” part: “Any person performing services for a contractor shall be classified as an employee unless the person is a separate business entity OR all of the following criteria are met, in which case the person shall be an independent contractor” [emphasis added]. In other words, the “person” here can be either a natural person or a business entity; and in each case the law applies certain tests before it will consider them an independent contractor.

Test for independent contractors. To be considered an independent contractor, an individual performing services for a contractor, must:

• be free from control and direction in performing the job, both under contract terms and in fact;

• perform services outside the usual course of business of the contractor for which the service is performed; AND

• have an independently established business.

Test of independently established business. To be considered a “separate business entity” from the contractor for which services are performed, the business must meet ALL of the following (for exact language, consult the text of the law):

• be free from direction or control (except as to the desired result);

• not be subject to dissolution upon severance of its relationship with the contractor;

• have a substantial capital investment in the business, beyond ordinary tools, equipment and a personal vehicle;

• own the capital goods, gain the profits and bear the losses;

• make services available to the general public or business community on a continuing basis;

• file federal taxes as an independent business or profession;

• perform services for the contractor under the business entity's name;

• furnish the tools needed to perform the job;

• obtain and pay for any licenses or permits in the business entity's name;

• if necessary, hire its own employees without contractor approval, pay them without reimbursement from the contractor and report its employees' income to the IRS;

• not be represented to others by the contractor as an employee; AND

• have the right to perform similar services for others on whatever basis, and whenever it chooses.

Enforcement. The bill imposes stiff penalties for failing to classify construction workers properly, which extend to certain individuals who are corporate officers or shareholders. Mandatory information sharing among the Workers' Compensation Board, the Labor Department and the Department of Taxation and Finance make it more likely that a contractor coming to the attention of one state agency will be scrutinized by the others. Workers who question their status or become whistleblowers are protected from reprisals.

For more information about how this law may impact your business, give us a call at 516-799-6900.

It's getting cold, time to turn on the Heat!

Had to break down and turn on the heat last night.  I enjoy the colder weather, but the family was complaining that it was too cold. It's a good thing that I had the furnace serviced a few weeks ago.  Unfortunately, many people let their service go because they need to save some money, but that can lead to a major hazard, the oil burner puff back!

What You Need to Know


A puff back can be caused by a malfunction of the combustion chamber inside the oil burner.  Explosions can be caused by the oil vapors which build up inside the oil burnerThis may seem like a harmful and frightening situation. However, if the fumes made by the malfunctioned gas burners revert back to the vents and air ducts in your home, it can cause damage to the home and will lead to poor indoor air quality and can heavily affect the air circulation as well.

Anything that comes into contact with the fumes will be covered in petroleum based particles and soot when that malfunction happens. There is a misconception that puff backs basically mean that dust is being blown back. However, the proper definition is that it is a release of oil-based particles that can do much more damage compared to dust.

When it comes to puff backs, there are primarily two ways they can spread: either they spread rapidly or they can spread gradually. Often times, puff backs appear as dark circles on your ceilings, walls and furniture. This makes it hard to notice there is actually an on-going problem happening. You might even think that they are just dirty finger prints. It may seem like only dirt or dust but when you try removing it you will realize that it is actually oil-based and cannot be removed easily.

On the other hand, there are also times when puff backs are extremely rapid. In just a short span of time, this may cause severe damage to your property and your house as well. When this happens, you will notice that everything will start to get covered by soot and you should take the necessary precautions since a potential explosion can occur.

How to Handle Puff Back Situations

Keep in mind that you need to act quickly so that you can minimize the damage if you notice any sort of puff back. When it comes to restorations in terms of what has been damaged by puff back residue and soot, the best thing to do is to hire a restoration service professional. However, if you don’t have the means to hire a professional restoration service, there are still a few ways you can handle the situation yourself. Always remember to wear a protective mask and the right disposable clothing so you can prevent direct contact with the toxic soot.

Checking the furnace and the oil burner is the very first thing you should inspect. Testing should be your priority since this may very well be the primary source of the problem. It is highly recommended that you seek the help of a professional technician. Eliminating the source of the problem before treating its effects should be one of the first things you should do. The malfunctioning oil burner is the main source of the problem.

If you have a gas leak inside your house, it can lead to higher levels of carbon dioxide that can be extremely hazardous to your family’s health. This situation may also be considered as a puff back. The carbon dioxide levels must be tested if you are experiencing dizziness or nausea when you are inside your house.

Installing carbon dioxide monitors is advisable so that the carbon dioxide levels can be tested frequently. When you notice carbon dioxide levels increasing slowly, this is a clear indicator of a gradual puff back and this need to be addressed until it worsens. Make sure you take the initiative and inspect if there are any problems with your oil burners or if there are any gas leaks when you start seeing that the levels of carbon dioxide in your house are rising.

Puff Back Restoration Services

Professional puff back restorations offer various services, including specialized vacuuming services. Since ordinary vacuums cannot clean puff backs, professional services use a heavy duty vacuum to remove the soot from the surface and store it instead of allowing it blow out into the air. Another service would be structural cleaning, which restores your house to its original state if the whole house or parts of it is affected by puff backs. The extreme options would be demolition or a complete shut down if the majority of the property is affected.

Upholstered furniture and carpets are prone to soot since it is an oil-based material. Hence, this will make it difficult to remove on your carpets and upholstered furniture. Restoration services should be able to remove the soot using their specialized methods. Moreover, since a smoky odor may be emitted by puff backs as well, puff back restoration services apply odor removal processes to eliminate the odor from the affected areas. If a puff back adheres to your clothes, the best thing to do would be to ask restoration services to wash and dry clean them so they can be restored to their original state. Even if you think you can wash the clothes on your own, you may not have the cleaning agents and the necessary appliances to clean the clothes well.

Preventive Tips on How to Deal with Puff Backs

When it comes to puff backs, the best thing to do is to implement preventive measures. To be able to make sure that you won’t fall victim to puff backs, it is highly advisable to make routine checks on your oil burners and furnace. Acting immediately by getting in touch with a restoration service as soon as possible to minimize the extent of the damage is another important thing to do if you find yourself in a dire puff back situation.

Some home insurance policies protect you from the puff backs, so the cost of the cleanup should be covered.  But it is better to avoid the situation by taking the time to have a routine check of your heating system every year.  Call us now to see if you have this valuable coverage. 

More Rain, water damage and flooded basements

We had a break on Wednesday, but the rain is really coming down today.  We have been getting many calls about water damage and basements being flooded.  The questions always come out as to what to do, so here are some helpful hints as to what is covered and what is not:

Water Damage:  Most home policies will cover from water damage, except from a flood.  So if you have water in the basement that is seeping in, this is normally excluded.  If you have a roof leak, you need to determine where the leak is coming from.

We had some pretty powerful winds last night, so you might be missing shingles.  If that is the case, then the shingles and water damage should be covered.  If there is evidence that there has been a leak for a long period of time, then it wouldn't be covered. 

Home insurance covers an event.  This is know as "Sudden and Accidental" damage.  If you have mold or rot, then the damage has been there over a long period of time, which is caused by maintenance.  So if your roof is old and leaky, the new water damage should be covered, but not the roof. 

Basement Flooding: The amount of rain we are having is causing the ground to be so saturated, that the water is looking for a place to go.  Basements are usually the first place to have a problem.  Some people have French Drains or Sump Pumps because this is common in their area.  If you have water back up coverage, and the drain or sump pump gets backed up, the damage would be covered. 

If you have Flood Insurance, damage to your home and mechanical equipment in the basement would be covered by ground water.  Contents aren't covered, so furniture and personal belongings won't be covered.  Just the walls, electrical outlets and wires, washer, dryer, refrigerator, a/c, heating, and other permanent part of the house would be covered by flood.

What to do:  The first thing to do if you have water damage is to stop further damage.  Get someone to patch the roof, or get a pump to get the water out of the basement.  Then you need to get someone to clean up the damage.  Mold can be a problem, so you need to minimize it. There are companies that specialize in water damage cleanups out there.  Many insurance companies will send one out just to stop further damage.

If the damage is minimal, you might not want to file a claim.  Home insurance rates in New York have been climbing because of all of the recent storms that we have had over the past two years.  On Long Island, it is getting tougher to get coverage, especially on the South Shore.  Fortunately, I have several companies who have great rates to help.  If you have any questions, give us a call. 888-900-2173