A general contractor working in New York has to comply with a stack of separate laws rather than one construction code: local licensing rules, the General Business Law’s home improvement contract requirements, mandatory workers’ compensation and liability insurance, the Lien Law’s mechanic’s lien and trust-fund provisions, the Prompt Payment Act, state and federal wage rules, worker classification standards, building codes and permits, and sales tax rules on the work itself. The New York general contractor law requirements below cover what each of those pieces demands and what happens when a contractor gets one of them wrong.
Licensing Depends on Where You Work
New York has no statewide general contractor license. Requirements are set locally, so the same job can be regulated very differently depending on the county or city.
In New York City, anyone performing home improvement work needs a Home Improvement Contractor license from the Department of Consumer and Worker Protection. The fee ranges from $25 to $100 depending on where you apply in the two-year licensing cycle, and renewals cost $100.1NYC.gov: Business. Home Improvement Contractor License Electrical and plumbing work require separate licenses from their own boards.
Outside the city, the rules vary county by county. Westchester County, for example, charges a $750 home improvement license application fee as of January 2026, with additional charges for expedited processing and vehicle decals.2Westchester County Department of Consumer Protection. Home Contractors and Trades Nassau and Suffolk counties run their own systems with their own fees.
Working without the required local license can make your contracts unenforceable. That means completing the job and then having no legal path to collect payment if the customer refuses to pay.
What a Home Improvement Contract Must Contain
General Business Law Section 771 requires every home improvement contract to be written and signed by all parties. The statute lists the required content: the contractor’s name, address, phone number, and license number; approximate start and completion dates with any contingencies that could shift those dates; and a detailed description of the work and materials, including brand names and model numbers, along with the agreed price.3New York State Senate. New York General Business Law 771 – Contract Provisions
Three consumer notices must appear in bold. First, a warning that unpaid contractors or suppliers may file a mechanic’s lien. Second, a statement that the contractor is required to deposit progress payments in an escrow account or post a bond guaranteeing their proper use. Third, a cancellation notice telling the homeowner they can cancel until midnight of the third business day after signing, without penalty.3New York State Senate. New York General Business Law 771 – Contract Provisions
If the contract includes progress payments, it must show a schedule with each payment in dollars and cents, tied to a specific stage of completion, and each payment must bear a reasonable relationship to the work completed at that point. Skipping any of this weakens the contractor’s position in a payment dispute and can invite enforcement action from the Attorney General’s office.
Insurance and Bonding
Workers’ compensation insurance is mandatory for virtually all New York employers, construction firms included.4Workers’ Compensation Board. Is Workers’ Compensation Coverage Required? Employers also have to carry disability benefits and paid family leave coverage.5Workers’ Compensation Board. Disability and Paid Family Leave Benefits Coverage Requirements Operating without workers’ comp can bring an immediate stop-work order plus civil penalties of up to $2,000 for every 10 days without coverage. If more than five employees are uncovered, the violation becomes a felony carrying fines of $5,000 to $50,000.6Workers’ Compensation Board. Violations of Workers’ Compensation Law (Liability and Penalties)
General liability requirements in New York City are set by the Department of Buildings and scaled to the project. Minimums depend on permit type, the height of the proposed construction, and the height of the tallest adjacent building. A new building or major alteration near structures under seven stories starts at $5 million. Taller projects climb to $15 million or $25 million. Any job using a tower crane requires $80 million regardless of permit type, and even installing a sidewalk shed or scaffold requires at least $1 million.7NYC Department of Buildings. 1 RCNY 101-08 – Required Insurance and Indemnification
Performance and payment bonds are required on state public improvement contracts under the State Finance Law, though agency heads can waive them for contracts under $100,000.8New York State Senate. New York State Finance Law STF 137
The Scaffold Law
Labor Law Section 240, the Scaffold Law, imposes absolute liability on contractors and property owners for gravity-related injuries on construction sites. If a worker falls because proper scaffolding, hoists, ladders, or other safety equipment was not provided, the contractor is liable regardless of whether the worker was partly at fault.9New York State Senate. New York Labor Law Section 240 This strict standard drives liability insurance premiums in New York roughly 30 percent higher than in other states. Owners of one- and two-family homes who hire a contractor without directing or controlling the work are exempt from Scaffold Law liability.
Getting Paid: Liens, Trust Funds, and Prompt Payment
New York’s Lien Law gives contractors, subcontractors, laborers, and material suppliers the right to file a mechanic’s lien against property where they performed unpaid work with the owner’s consent.10New York State Senate. New York Lien Law LIE 3
Deadlines are strict and property-specific. For most projects, the lien must be filed with the county clerk within eight months of the last work performed or materials furnished. On single-family dwellings, the window is four months. A lien for withheld retainage must be filed within 90 days of the date the retainage was due.11New York State Senate. New York Lien Law Section 10 – Filing of Notice of Lien Four months goes by fast on a residential job if you’re waiting on invoice responses before escalating.
A filed lien clouds title, which blocks or complicates any sale or refinance until the debt clears. It stays in effect for one year. To extend it, you must either start a foreclosure lawsuit and file a notice of pendency, or file a one-year extension with the county clerk. Liens on single-family dwellings can only be extended by court order.12New York State Senate. New York Lien Law LIE 17 Let the lien expire without action and the claim is gone.
Contract clauses that require waiving lien rights in advance are void. A lien waiver is only enforceable if signed at the same time as, or after, the payment it covers.13New York State Senate. New York Lien Law 34 – Waiver of Lien
Trust Fund Obligations
Under Article 3-A of the Lien Law, money a contractor receives on a project is held in trust for subcontractors, laborers, material suppliers, and others with valid claims for payment on that project. Trust assets must be used first to pay subcontractors, tax withholdings, unemployment insurance contributions, benefit fund obligations, and surety bond premiums.14New York State Senate. New York Lien Law 71 – Purpose of the Trust Using those funds to cover overhead on a different project or personal expenses can expose the contractor to larceny charges. The trust exists from the moment funds are received, whether or not anyone files a lien.
Prompt Payment Deadlines
The Prompt Payment Act, in General Business Law Article 35-E, sets payment timelines for private construction projects. Owners must approve or reject invoices within 12 business days of receipt, unless the contract sets a different timeline. After approving an invoice, the owner has 30 calendar days to pay, excluding legal holidays. A contractor who receives payment must pass along each subcontractor’s share within seven days. Late payments accrue interest at one percent per month on the unpaid balance, including on retainage. That rate can be raised by agreement but not lowered.
Wages, Overtime, and Prevailing Wages
Construction wages are governed by both New York Labor Law and the federal Fair Labor Standards Act. As of January 1, 2026, the minimum wage is $17.00 per hour in New York City, Long Island, and Westchester County, and $16.00 per hour in the rest of the state.15The State of New York. New York State’s Minimum Wage Most construction workers earn well above that, but the rate still drives overtime math and compliance audits.p>
Non-exempt workers get one and a half times their regular rate for hours beyond 40 in a workweek. New York also requires spread-of-hours pay: an extra hour at minimum wage any workday that spans more than 10 hours, including meal breaks and gaps between shifts. Under the Wage Theft Prevention Act, every new hire must receive a written notice of pay rate, pay frequency, and overtime rate, and every paycheck must include a detailed wage statement.
Public projects add another layer. Contractors must pay prevailing wages, which the New York State Department of Labor sets annually and which generally track local union scales.16Department of Labor. Bureau of Public Work and Prevailing Wage Enforcement Schedules publish each July and update monthly, and rate changes apply retroactively to July 1.17Department of Labor. Prevailing Wage Schedules
Independent Contractor Classification
The Construction Industry Fair Play Act uses a three-part test for classifying construction workers as independent contractors. All three must be true: the worker is free from the hiring party’s direction and control, the work is not part of the hiring party’s usual business, and the worker has an independently established business.18Department of Labor. Construction Industry Fair Play Act
The second prong catches most contractors. A framing company that hires framers and calls them independent contractors fails the test because framing is the company’s usual business. Misclassification triggers liability for unpaid workers’ comp premiums, unemployment insurance, payroll taxes, and possibly wage theft penalties.
Building Codes, Permits, and Lead-Safe Work
New York enforces building standards through two parallel systems. The State Uniform Fire Prevention and Building Code sets minimum construction standards everywhere outside New York City.19Department of State. Uniform Fire Prevention and Building Code New York City has its own Construction Codes administered by the Department of Buildings. Cities, towns, and villages outside NYC handle code enforcement in their own jurisdictions.20Department of State. Building Standards and Codes
Most construction in New York City requires a permit, and a licensed professional engineer or registered architect typically files plans before work begins. Permit categories run from New Building through the three Alteration types, from major work down to minor single-trade jobs.21NYC.gov. Obtaining a Permit – Buildings Inspections happen at multiple stages, from foundation and framing through electrical, plumbing, and final occupancy. Structural steel, energy efficiency, and other high-risk elements may require special inspections by third-party professionals. Proceeding without required inspections risks fines, permit revocations, and stop-work orders.
Lead-Safe Work on Pre-1978 Housing
Federal law requires any contractor working on housing built before 1978 to hold EPA Renovation, Repair, and Painting (RRP) firm certification. New York is not authorized to run its own RRP program, so the federal EPA program applies directly. Certification costs $300, lasts five years, and must be renewed at least 90 days before it expires.22U.S. Environmental Protection Agency. Renovation, Repair and Painting Program – Firm Certification A certified renovator must be on-site whenever lead-disturbing work is performed. Given the amount of pre-1978 housing in New York, this rule touches a large share of renovation projects.
Sales Tax on Construction Work
Whether the contractor collects sales tax depends on the nature of the job. Capital improvements to real property are not taxable. Repair and maintenance work is taxable. Replacing a broken step is a taxable repair; adding a new deck is a capital improvement. On capital improvement work, the contractor should obtain a completed Form ST-124 (Certificate of Capital Improvement) from the customer and should not charge sales tax on the project.23Department of Taxation and Finance. Capital Improvements – Tax Bulletin ST-104 Failing to collect tax on taxable repairs, or incorrectly treating repairs as capital improvements, leads to back-tax assessments plus interest and penalties. A signed ST-124 on file for each capital improvement project is the simplest audit defense.
What Happens When You Get It Wrong
New York enforces construction laws through several agencies, and the penalties are heavy. The Department of Buildings can issue stop-work orders, fines, and demolition orders for code violations. Licensees who commit fraud, act negligently, or disregard building codes face suspension, revocation, or criminal referral.24NYC.gov. Industry Code of Conduct
Prevailing wage violations on public projects can result in debarment, which blocks the contractor from bidding on any public work contract for five years.25Department of Labor. Article 8 Frequently Asked Questions Beyond repayment of underpaid wages, the Department of Labor can assess interest and additional penalties.16Department of Labor. Bureau of Public Work and Prevailing Wage Enforcement
OSHA handles workplace safety at the federal level. As of 2025, a serious violation costs up to $16,550 per occurrence. Willful or repeated violations rise to $165,514 per violation.26Occupational Safety and Health Administration. OSHA Penalties New York’s Industrial Code Rule Part 23, which governs safety in construction, demolition, and excavation, provides an independent basis for enforcement and is often cited in Scaffold Law lawsuits.27Department of Labor. Safety and Health Code Rules
Negligence that causes worker injury or death can bring criminal charges, including manslaughter or reckless endangerment. The state’s Construction Fraud Task Force targets falsified safety records, misclassified workers, and payroll tax evasion. A single serious incident can trigger simultaneous investigations from the Department of Buildings, the Department of Labor, OSHA, and the district attorney’s office.