HOUSE LABOR AND HUMAN RESOURCES COMMITTEE SUBSTITUTE FOR

HOUSE BILL 653

47th legislature - STATE OF NEW MEXICO - first session, 2005

AN ACT

RELATING TO EMPLOYMENT; ESTABLISHING A PRESUMPTION OF EMPLOYER AND EMPLOYEE RELATIONSHIP IN THE CONSTRUCTION INDUSTRIES; SETTING STANDARDS TO INDICATE WHEN A WORKER IS AN INDEPENDENT CONTRACTOR AND NOT AN EMPLOYEE; IMPOSING CRIMINAL PENALTIES AND LICENSE SANCTIONS FOR IMPROPERLY REPORTING AN EMPLOYEE AS AN INDEPENDENT CONTRACTOR.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Construction Industries Licensing Act is enacted to read:

     "[NEW MATERIAL] EMPLOYER AND EMPLOYEE RELATIONSHIP--INDEPENDENT CONTRACTOR--IMPROPER REPORTING--PENALTY--LICENSE SANCTIONS.--

          A. For purposes of the employer and employee relationship within those construction industries subject to the Construction Industries Licensing Act, a contractor who is an employer shall consider a person providing labor or services to the contractor for compensation to be an employee of the contractor and not an independent contractor unless the following standards indicative of an independent contractor are met:

                (1) the person providing labor or services is free from direction and control over the means and manner of providing the labor or services, subject only to the right of the person for whom the labor or services are provided to specify the desired results;

                (2) the person providing labor or services is responsible for obtaining business registrations or licenses required by state law or local ordinance for the person to provide the labor or services;

                (3) the person providing labor or services furnishes the tools or equipment necessary to provide the labor or services;

                (4) the person providing labor or services has the authority to hire and fire employees to perform the labor or services;

                (5) payment for labor or services is made upon completion of the performance of specific portions of a project or is made on the basis of a periodic retainer; and

                (6) the person providing labor or services represents to the public that the labor or services are to be provided by an independently established business. A person is engaged in an independently established business when four or more of the following circumstances exist:

                     (a) labor or services are primarily performed at a location separate from the person's residence or in a specific portion of the residence that is set aside for performing labor or services;

                     (b) commercial advertising or business cards are purchased by the person, or the person is a member of a trade or professional association;

                     (c) telephone or email listings used for the labor or services are different from the person's personal listings;

                     (d) labor or services are performed only pursuant to a written contract;

                     (e) labor or services are performed for two or more persons within a period of one year; or

                     (f) the person assumes financial responsibility for errors and omissions in labor or services as evidenced by insurance, performance bonds and warranties relating to the labor or services being provided.

          B. A contractor who intentionally and willfully reports to a state agency that an employee is an independent contractor or who, for the purposes of a program administered by a state agency, intentionally and willfully treats or otherwise lists an employee as an independent contractor when the employee's status does not meet the standards indicative of an independent contractor as identified in Subsection A of this section is guilty of a misdemeanor and shall be punished by a fine of not more than five thousand dollars ($5,000) or by imprisonment for a definite term not to exceed six months or both. For the purposes of this subsection, "state agency" means an administration, board, commission, department or division of this state.

          C. Conviction of a contractor for violating Subsection B of this section shall be grounds for the commission to take action to suspend, revoke or refuse to renew a license issued by the division to that contractor."

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