New York Senate Approves Bill to Combat Employee Misclassification

On March 4, 2025, the New York Senate unanimously passed Senate Bill S1514, which gives the Commissioner of New York’s Department of Labor (NYDOL) the authority to issue stop-work orders to employers that knowingly misclassify employees as independent contractors. In addition, the bill permits the Commissioner to issue stop-work orders to employers for providing false, incomplete, or misleading information to an insurance company regarding the number of employees the employer has.

Strong Enforcement Powers for the NYDOL Commissioner

The proposed legislation would give employers just 72 hours after receiving notice of the Commissioners’ intent to issue a stop-work order to come to compliance. The bill further requires the notices of intent to issue stop-work orders to state the “factual basis upon which the commissioner has based their decision to issue a stop-work order and how such employer shall come into compliance.”

Support from Labor Leaders and Advocates

According to Senator Pete Harckham, the sponsor of S1514, 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.”

Thomas Carey, president of the Westchester/Putnam Central Labor AFL-CIO, praised Senator Harckham for “looking out for the health and safety of workers,” adding 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.”

Adding to the positive dialogue, the business manager of International Union of Operating Engineers (IUOE) Local 137, Jeff Loughlin, commented 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.”

The Broader Problem of Misclassification in New York

This proposed legislation comes amidst a package of legislation supporting workers’ rights in New York, including by cracking down on the rampant issue of worker misclassification. In June 2022, the Center for New York City Affairs found that one in 10 New Yorkers are misclassified. This most severely impacts workers in major low-paid industries, such as transportation, construction, administrative and support services, and personal care services.

Misclassified workers from these sectors miss out on the valuable legal protections and rights afforded employees, including overtime compensation, minimum wage, and mandated benefits, such as sick and family leave. The study additionally found that independent contractors receive only half to two thirds of the wages payroll workers receive in the same industries.

In addition to harming misclassified employees, the Center for New York City Affairs also notes that worker misclassification hurts State social insurance programs and creates unfair competition for employers abiding by the law. In other words, misclassification is a serious issue with consequences for all.

To combat illegal misclassification, Senate Bill S1514 imposes monetary penalties for employers that fail to abide by stop-work orders. Once this legislation is enacted, employers will be charged $1,000 to $5,000, in addition to any other penalties afforded by the law, for each day of noncompliance. Stop-work orders will remain in effect until the Commissioner finds the employer has come to compliance and has paid the requisite penalties, at which point the Commissioner will release the stop-work order. Employers have ten days after the stop-work order is issued to contest a violation identifies by the Commissioner should they seek to do so.

In important addition, the bill includes certain provisions to limit the negative consequences an employer’s failure to comply with a stop-work order may have on their employees. Specifically, employees impacted by a stop-work order will be paid their regular rate for their first ten days of scheduled work. Moreover, the legislation protects employees who file complaints regarding misclassification against illegal retaliation from their employer.

Senate Bill S1514 had previously passed the New York Senate in a prior legislative session but died in the Labor Committee. S1514’s companion bill, A6664, is currently under review by the New York State Assembly’s Labor Committee.