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New York Department of Labor Lawyer – UI Tax Division Audit Investigation

Employee.Freelancer.DOL.Misclassification.Lawyer.Notepad.DPC.3.10.16.jpgHave you received a notice from the NY Labor Department regarding an audit confirming your compliance with labor laws? Audits and investigations are on the rise. If you have received a notice, the first steps you take are critical to defending your business and protecting your interests.

1. Understand what the audit is about. Speak with an experienced employment lawyer first. We have represented small businesses and household employers in New York State and can help you understand the process.

2. Start gathering your documents and information together. Are your general ledger and payroll related documents in order for the past three years? Strong contemporaneous documentation can help you and conversely, the lack of records can be problematic for a number of reasons.

3. One of the main inquiries may be whether you used any independent contractors, paid workers off the books or misclassified any of your workforce?

According to the Labor Department, independent contractors are excluded from unemployment insurance coverage. Contractors are generally in business for themselves and offer their services to the general public. Contractors typically have their own corporate name (or LLC) and tax identification number. The statute does not specifically define who is a contractor and a common law test will control. Some critical factors to consider are how much direction and control did the company exert over the worker, did the worker report to work at the company’s office, did the worker use his or her own equipment and importantly, was the type of work that the worker did – integral or ancillary to the company’s business. No one factor is considered dispositive but in general the greater the control and direction the company exerts will be indicative of an employee-employer relationship.

The issue of independent contractors is a hot topic now as many companies’ practices are under the magnifying glass including Uber, Lyft, Grub Hub, and many others. A misclassification case is not limited to just a DOL audit but can include a class action lawsuit or other administrative cases described below.

If a company used misclassified workers, a domino of intended consequences can be triggered. Other governmental agencies may also initiate complaints, investigations or issue penalties. Unfortunately, a bad intent is not required in some cases – so even a well intentioned company who made an honest mistake can be negatively impacted. It is important to take proactive steps and ensure if you are in compliance. If you believe you may not be in compliance with certain parts of the labor law, call our office to learn your potential exposure and defenses.

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 attorney in your state or jurisdiction. From time to time, a blog post may discuss a legal case – please note that the post may not contain the most to update information on the case as developments may have occurred after it was created.