Articles Posted in Department of Labor & Independent Contractors

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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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Crisis.Business.Man.Umbrella.Dollar.Photo.Club.1.20.16.jpgYou can face a serious crisis if you do not know the difference between an employee and independent contractor and misclassify your workers. Our Award Winning New York Misclassification Lawyer has educated companies and employees on legal issues affecting both sides of the working relationship.

The IRS believes that millions of workers have been misclassified as independent contractors instead of as employees and in doing so, the government has been denied substantial payment of employment-related taxes. The federal and state government have increased their efforts to crackdown on misclassification cases. Today’s blog post will discuss the IRS’ SS-8 Program (i.e., The Determination of Worker Status Program), which enables a company or a worker to request that the agency issue a determination letter stating whether an employee or an independent contractor for federal purposes. This determination can have significant tax implications for the worker and company and can cause a number of other issues for the company. It is important to get experienced employment law counsel from the outset because of the severity of the potential ramifications including class-wide claims in other forums.
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Are you prepared for a Department of Labor Audit or Investigation? Why you need to know the definition of an Independent Contractor Now

DOL.Audit.in.Hand.Dollar.Photo.Club.1.18.16.jpgMore and more employers are being kept up at night because of risks associated with misclassifying their workers as independent contractors instead of employees. In the past, misclassification was not a significant area of litigation or administrative enforcement; however those days are over. Employers must take proactive steps to ensure they are in compliance and have implemented best practices before a lawsuit or Department of Labor audit is commenced. A pressing concern for employers is the lack of intent required in these cases. A well-meaning employer can find itself facing serious legal exposure even if the workers do not complain. For example, even if a company and a worker agree that he or she is a contractor and they sign an agreement to that effect – that is not sufficient. The courts or administrative agency will do a fact specific investigation and determine the worker’s proper status. This is an issue companies need to get in front of now.
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NYS Labor Department Audit, Investigation and Risks

Audit.Rip.Through.Newspaper.Dollar.Photo.Club.9.11.15.jpgIf you receive a notice from the NY Department of Labor (DOL) UI Division, it is important that you take it seriously. An audit is a serious matter that can have a significant impact on your business. Over the past few years, the DOL has increased the number of investigations and audits of businesses to ensure that they are compliant with NYS labor laws. This audit may focus on whether you have properly classified your workers as employees and independent contractors. A misclassification of worker status can lead to penalties, fines and potentially other government review. Our Award Winning Labor Department Attorney has represented businesses in a variety of industries (transportation, delivery companies, photographers, media, entertainment, personnel agencies, medical offices, IT companies and other services related businesses) and helped them understand their obligations under the law, their potential exposure and how to develop best practices to protect their business. We have discussed the misclassification issue and a Labor Department Audit before. This blog will focus on what the potential penalties and consequences if your business is found liable in an audit or related matter. These cases are increasing and affecting companies of all sizes including Uber, Handy, Amazon and Google. It is important to seek counsel from an experienced employment lawyer to understand the process and rights from the outset.

Why Would a Business Try to Misclassify A Worker as an Independent Contractor Instead of an Employee?

Many businesses treat workers as independent contractors and not as employees in a method to avoid paying payroll taxes and to avoid workers from collecting unemployment insurance benefits and gaining coverage under workers compensation law and employment discrimination statutes. These businesses may not realize that just calling a worker an independent contractor is a very risky practice and will not have the intended results. The DOL and courts will examine the working relationship between the worker and the company. While the specific test for worker status varies by agency, our attorney has lectured on some of the key factors. If the worker was misclassified, there could be serious consequences. A well meaning business can face these same consequences as well because intent is not a factor in a misclassification analysis. So, if a worker asks you to treat him or her as a contractor and not an employee – do your own analysis and understand your risks – even if the worker at issue does not complain, your business could be subject to an audit randomly or due to another complaint.
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