New Registration Requirement for Contractors and Subcontractors Performing Public Works and Covered Private Projects in New York

On December 30, 2022, New York Governor signed into law Labor Law Section 240-i, establishing a registration system for contractors and subcontractors engaged in public work and covered private projects in New York. This law will require contractors to register with the New York State Department of Labor (the “Department of Labor”) every two years, by submitting various disclosures about their businesses, in order to ensure that contractors do not have previous labor law violations, and will abide by New York labor laws and regulations, including prevailing wage requirements. The Department of Labor will establish and maintain a public on-line system where registrations and disclosures are available.

The law provides that, by December 30, 2023, contractors and subcontractors must register with the Department of Labor, Bureau of Public Works prior to submitting a bid on a contract for public work or commencing work on a covered project under private contract. The registration form requires the contractor to submit documents and answer questions relating to the following:

• The business name, address, phone number, and its owners and officers;
• Whether the contractor has any outstanding wage assessments against it;
• Whether the contractor has been debarred under New York, other state, or federal law within the last ten years;
• Whether the contractor has been determined to have violated labor laws or employment tax laws;
• Whether the contractor has been determined to have violated any workplace safety standards, such as OSHA; and
• Whether the contractor is a minority or women-owned business enterprise.

The contractor also must submit documentation of workers’ compensation coverage for all workers, and pay a non-refundable registration fee of $200 to the commissioner. The fee will be reduced for minority or women-owned business enterprises.

The Commissioner of Labor (the “Commissioner”) shall then either (1) issue a registration certificate, valid for two years, or (2) determine that the contractor is unfit to be registered.  “Unfit” is defined under the law as “a contractor who the [C]ommissioner determines to be unable to lawfully adhere to contractual obligations of this article and responsibilities including prevailing wage requirements pursuant to this article.” While the law as written does not expand upon this definition, the legislation directs the Commissioner to promulgate regulations to determine under what circumstances a contractor would be deemed “unfit” to be registered. However, the law does state that a contractor will not be deemed unfit solely because of debarment in the last ten years, unless the contractor remains debarred as of the date of the registration filing, or otherwise ineligible under a labor law. An initial determination that the contractor is unfit, based solely upon the registration application, must be in writing and state the factual basis upon which the determination is based. A hearing will then be scheduled. Additional grounds for denial of registration should be clarified in the regulations.   

Applications for registration will not be accepted as a substitute for a certificate of registration that must be submitted at the time the bid is made. Any contractor who bids or submits a bid on a contract for covered work where the contractor is unregistered, or where the contractor knew or should have known that the bid included unregistered subcontractors will be assessed a penalty up to $1,000, after notice and hearing. The Commissioner may also revoke or suspend the registration of a contractor or subcontractor if it is determined to be in violation of the law.

Crowell & Moring LLP will be tracking the regulations under this law, which are expected to be issued by June 28, 2023.  In the meantime, companies bidding on public works projects in New York should begin to compile the required information to submit for registration in order to prepare for compliance with the law.