Beware – many employers receive a bill from the NY Department of Labor for unpaid unemployment insurance benefit taxes and because of the relatively small size of the bill, they simply pay the bill. This is a tremendous mistake and can set off a chain of unintended and very expensive consequences. Our Workers Comp Penalty Defense Attorneys have discovered that a greater number of employers are being audited for non-payment of taxes relating to unemployment insurance benefits. In general, employers are required to pay a percentage (ranging from 4.1% to 10%) of each employee’s first $8,500 in wages for unemployment insurance benefits taxes. There is a real risk in paying a nominal bill if you disagree with the underlying basis (i.e., that you did not have any employees and as such should not be required to pay this tax). The typical nightmare scenario occurs when a business has treated individuals as independent contractors and not as employees and the Department of Labor opens an investigation regarding this practice. Now, while it is possible that this classification was proper and legal but many companies are not savvy enough to fight the audit. In some cases, employers decide to simply pay the alleged back taxes owed for unemployment insurance benefits because it could be cheaper than paying legal fees and so that they can get back to focusing on operating their business. This seemingly innocuous decision can present disastrous results as the New York State Department of Labor, Unemployment Insurance Division, shares its information with the New York State Worker’s Compensation Board. Shortly after a business decides to pay the unpaid unemployment insurance benefit taxes, which are generally not significant, they are surprised to learn that they hit with a tremendous bill (many times over $100,000.00) from the New York State Worker’s Compensation Board for failing to carry workers compensation insurance coverage. If a company does not have any employees or covered individuals, it is generally not required to carry workers compensation insurance. However, if it admits it had an employee by paying taxes – this can cause a proverbial pickle. Critically, some of the business’ legal defenses may be compromised from their earlier admission by paying the New York State Department of Labor taxes and thereby admitting that they had employees and were required to have workers compensation insurance coverage. Companies and employers must strategically consider all of its responses to government agencies especially agencies that could issue penalties in excess of $100,000.00.
If your business has received a notice from the NYS Department of Labor or NYS Workers Compensation Board, you should call our office immediately to learn your rights. Call now for a confidential consultation (800) 893-9645.
Disclaimer: Thank you for visiting our Blog. This blog provides general information and thoughts about various employment law issues primarily in the New York Tri-State area and occasionally in other areas. You are welcome to read the posts. However, do not construe any content on this blog as legal advice or the creation of an attorney-client relationship. Again, we provide the content only for informational purposes. You should not make decisions based information on our blog since the application of the law depends on the facts and each situation may be different. In addition, the law in most jurisdictions is different and changes constantly and we make no representations that any information on our blog has been updated. The Blog should not be used as a substitute for competent legal advice from an experienced employment law attorney in your state or jurisdiction.