Articles Posted in Department of Labor & Independent Contractors

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Audit.Magnifying.Glass.Dollar.Photo.Club.jpgCompanies who use freelancers, contractors, consultants, day laborers or any other workers who are not categorized as employees must exercise extreme caution. The NYS Labor Department and other agencies have stepped up their enforcement efforts to investigate companies’ practices and whether workers are properly classified in all industries. An innocent error can lead to a multitude of problems for businesses including but not limited to a class action lawsuit and monetary damages in the form of unpaid payroll-related taxes, unpaid overtime wages, and failure to provide employee benefits (vacation pay, health insurance, etc.) Companies should carefully examine a worker’s duties and determine the proper employment characterization before work is commenced. There are different rules that apply to employees and contractors. In general, employees are issued a W-2 tax form, provided with Wage Theft Prevention Act Notices and paid accordingly to applicable federal and state labor laws. Conversely, in general, contractors are issued a 1099 tax form, have some expertise, and are not supervised or controlled by the business.
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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?
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Employee.Freelancer.DOL.Misclassification.Lawyer.Notepad.DPC.3.10.16.jpgOur NY Employment Law Defense Attorney represents businesses and misclassified workers and has been asked to discuss a recent involving misclassification of workers. A former telecom field technician also called a field engineer (“Technician”) of Endeavor (the “Company”) filed for unemployment insurance benefits after he stopped working for the Company. The Company disputed his claim by arguing he was an independent contractor and therefore ineligible for benefits. The Technician was initially approved for benefits and the Company requested a hearing. After a hearing, an Administrative Law Judge agreed with the Company and denied the Technician’s benefit claim. The Technician filed an appeal to the Appeal Board and that decision is generally discussed herein.
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Female.Freelancer.Employee.Checkbox.DPC.2.28.16.jpgHave you checked off the correct box for your workers? Are they employees or independent contractors (i.e., freelancers)? Today’s post discusses a rising problem for small businesses – misclassification of workers – and a recent case. Ivy League Tutoring Connection Inc. (the “Company”), a tutoring referral and billing service, provided in-home tutors to clients to help with test preparation and school work. The Company had treated its tutors as independent contractors and issued them 1099 tax forms. The Company’s practices came under review in 2012 and, after a hearing, the Department of Labor ruled that tutors were employees and unemployment insurance contributions were due regarding tutors from 2009-2012. A determination like that can have a significant impact on any business. The Company’s appeal to the Unemployment Insurance Appeal Board was denied as the initial determination was upheld. The Company then appealed to the Appellate Division, Third Department and we discuss the court’s decision generally today. We previously discussed another decision involving tutors before and it can be found here.
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Photographer.Dollar.Photo.Club.2.24.16.jpgThe New York Post used the photojournalistic services of Catherine Nance for approximately five years. When the newspaper no longer needed her services, Ms. Nance filed for unemployment insurance benefits and that’s when a Pandora’s Box was opened for the NY Post. The Department of Labor initially determined that Ms. Nance was eligible for unemployment insurance benefits because she was misclassified as an independent contractor and was, indeed, an employee. The New York Post was found to be liable for unemployment insurance contributions for Ms. Nance and all other similarly situated employees. The Appeal Board agreed with this determination and the New York Post appealed to the courts – Third Department Appellate Division. This blog post generally discusses the reasons why Ms. Nance was determined to be an employee and offers some lessons for companies who use contractors.
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Tutor.Dollar.Photo.Club.2.23.16.jpgIn an Appeal Board decision, certain tutors for The Learning Shop, Inc. (the “Company”) were found to be employees and not independent contractors. As a result, the Company was liable for unemployment insurance related tax contributions for years covering the audit period. Each misclassification case depends on the facts and the nature of the parties’ working relationship. This blog post generally discusses the Learning Shop decision issued in 2013 but the lessons can be valuable for other industries.
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Defense.Puzzle.Dollar.Photo.Club.1.24.16.jpgOur Award Winning New York Wage and Hour Attorney has talked extensively on requirements and violations of the Fair Labor Standards Act (“FLSA”) and has been asked to comment on a recent case that was investigated by the U.S. Department of Labor (“DOL”). Here’s a tip: Don’t steal from your employees. Sounds simple doesn’t it.

PEREZ v. SOPHIA’S KALAMAZOO, LLC

Based on press reports, an investigation was conducted by the DOL and it was discovered that the restaurant was requiring its wait staff to pay it, the employer, in order to continue to working. The investigation also reportedly revealed that the employer took retaliatory action against an employee that brought the issue to the attention of the DOL.
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Investigation.Magnifying.Glass.2.16.16.jpgOur Award Winning New York Department of Labor Defense Attorney has discussed frauds allegedly perpetuated by employers. For example, we have discussed the issues and consequences of paying employees off the books and misclassification of workers. Both of these deprive New York State of payroll-related taxes. This blog post will discuss a third type of fraud – SUTA (State Unemployment Tax Act) Dumping. On August 2, 2005, Governor Pataki enacted legislation to mirror the federal SUTA Dumping Prevention Act of 2004.

As you can see, it is a relatively new law. It may be investigated by the Department of Labor. It can be investigated by other agencies but this blog post focuses on enforcement under New York Law and by the NYS Department of Labor. It occurs when a business intentionally manipulates its unemployment insurance contribution rate. An employer’s unemployment insurance tax rate and liability to New York State is partially based on the number of unemployment insurance claims against it; if the employer transfers all of its employees to a new company with no history of claims it will obtain a lower rate and save substantially on its tax obligations.
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Audit.Rip.Through.Newspaper.Dollar.Photo.Club.9.11.15.jpgHave you received a Notice of Audit or Investigation from the Department of Labor? If so, this is a serious notice. The worst thing you can do is to ignore the notice because the Department may take action without any input from you. Typically, the notice requests that you schedule a time to meet with an investigator and produce certain books and records. If you are not prepared by that date, the audit can lead to substantial penalties and additional governmental investigations. Since this is a legal inquiry, it is best to obtain an experienced employment law attorney to guide you through this process. Our Award Winning New York Employment Lawyer successfully has represented companies who are being audited by the Dept of Labor.
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I Was Misclassified by New York State and Denied Retirement Benefits

Freelancer.Image.Dollar.Photo.Club.3.9.15.jpgIn recent years, there has been a significant increase in the number of employees who have been misclassified as independent contractors. A misclassified worker can lose rights to overtime pay and participation in employee benefits, including service in the retirement system. The effects of misclassification can be significant to employers and workers. This blog post discusses the one major effect suffered by misclassified New York State workers – denial of the right to participate in the state’s retirement plan. This loss of retirement benefits can be substantial for long-term public workers. Our Award Winning New York Employment Law Attorney has advised workers and companies on misclassification issues and can help you. Contact our office to learn your options and rights.
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