New York Senate Passes Employee Misclassification Bill to Protect Workers

On March 7, 2025, the New York Senate announced it unanimously passed Senate Bill S1514, an employee misclassification bill that amends state labor law.  This bill is part of a package of state legislation supporting workers’ rights.

Once enacted, the legislation will protect misclassified workers by permitting the Commissioner of New York’s Department of Labor (NYDOL) to issue stop-work orders to employers for (1) misclassifying employees as independent contractors; and (2) providing false, incomplete, or misleading information to an insurance company regarding the number of employees the employer has.

The NYDOL regards the purposeful misclassification of employees as independent contractors as one of the most serious issues impacting the United States workforce.  More than a mere issue of terminology, workers classified as independent contractors do not enjoy the same legal protections and rights as employees.  Unfortunately, employers are often incentivized to make improper classification decisions.  For example, businesses reduce labor costs by employing independent contractors because they do not need to provide independent contractors with certain protections, hourly wages, and benefits, such as sick and family leave.  Misclassified employees miss out on these rights to which they are entitled.

This issue is prevalent in New York state.  According to a June 2022 report by the Center for New York City Affairs studying the “statewide phenomena” of misclassification, over 870,000 New York workers – about one in 10 New Yorkers – are misclassified.  The report found that independent contractor misclassification is particularly present in low-paid industries, such as transportation, construction, administrative and support services, and personal care services.  These four industries make up the lowest paid occupations for independent contractors.

S1514 also increases the New York DOL’s power to enforce existing labor laws.  Once the legislation is enacted, employers will have 72 hours after receiving notification of the Commissioners’ intent to issue a stop-work order to come to correct the violation and notify the Commissioner of its compliance.  Refusal to comply with a stop-work order carries a heavy penalty, starting at $1,000 to $5,000 for each day of noncompliance, in addition to any other penalties afforded by the law.  Notably, employees impacted by a stop-work order will be paid their regular rate for the first ten days they were scheduled to work.  The legislation also includes important protections for employees who file complaints regarding their misclassification against illegal retaliation from their employer.  Should employers seek to contest a violation identified by the Commissioner, they may do so within ten days after the stop-work order is issued.

The sponsor of S1514, Senator Pete Harckham from the 40th Congressional District in the Hudson Valley, commented that the “legislation will result in decisive action being undertaken by the state to safeguard the rights of workers. We need to be able to shut down the places where these violations are being committed and check corporate scofflaws.”

According to the New York Senate’s press release, organized labor leaders and area building trades have lauded the bill for holding business who take advantage of misclassified workers accountable.  Jeff Loughlin, business manager of International Union of Operating Engineers (IUOE) Local 137 explained that “[f]or too long, employers have exploited workers by misclassifying them, depriving them of fair compensation and proper workplace protections.  Holding these bad actors accountable is a big step forward. I want to thank Senator Harckham for his continued dedication to protecting workers’ rights in New York.”  Similarly, Thomas Carey, president of the Westchester/Putnam Central Labor AFL-CIO, praised Senator Harckham for “looking out for the health and safety of workers.”  He added that “[m]isclassification of workers not only puts our workforce in danger, it also can be detrimental to the consumer and the job site itself.  We hope our Labor Commissioner will strictly enforce this important legislation and are grateful to have a strong representative in Senator Harckham.  Labor applauds Senator Harckham for prioritizing the safety of the workforce.”