Our New York DOL Audit Defense Lawyers have educated, defended and protected many businesses while being audited by the government for alleged violations of the Fair Labor Standards Act and/or NY Labor Law (including non-payment of unemployment insurance benefit taxes). In this downward economy, it is not surprising more and more companies’ payrolls are being scrutinized in an attempt to increase tax revenues and confirm employee eligibility under federal immigration law. We previously wrote about I-9 immigration compliance audits. New York state and the federal government have targeted certain industries. An audit can commence for several reasons. Generally, it starts with a visit from an investigator and a request for your payroll and employee records. It is imperative that you have experienced counsel immediately. If you are being audited or believe you could be at risk for an audit, contact our New York Employment Lawyers to confidentially learn your rights before making any statements that could later hurt you. You should be prepared and know your legal options before an investigation is started against you. Since the federal and state laws are complex and many times against an employer, resolution of these matters can be difficult.
Your recordkeeping practices are critical in an audit. Quite frankly, the absence of payroll records can be damaging. This underscores the reason for preparation – you want to make sure your business practices are in order before an audit. We recommend our clients perform self-audits on a regular basis to ensure that their practices are in compliance with the ever changing field of employment law.
Common Payroll Mistakes Made By Employers
1. Misclassification of an employee as an independent contractor
Recently, in cost cutting maneuvers, many companies have decided to classify many of their workers as independent contractors and issuing them a 1099 tax form instead of treating them like employees and issuing a W-2 tax form. Companies try to designate individuals as independent contractors so that save on payroll taxes and insulate themselves from employment discrimination and other legal liability. Many employers mistakenly believe that simply issuing a 1099 tax form automatically means a worker is an independent contractor. This is wrong. The classification of an employee or contractor is a detailed and fact specific inquiry. One size does not fit all here. You should consult with an experienced attorney to learn the bases for the proper designation before. New York State has increased its efforts to crackdown on misclassification cases as violations can raise tax revenues.
2. Failure to Pay Overtime Compensation
Generally, an employee is entitled to overtime compensation if the employee works over 40 hours in a workweek (or 44 hours in a workweek for a residential employee). Although there are several exemptions to the overtime pay requirement (i.e, executive, administrative, computer professional, learned, etc.), these exemptions are very fact specific and can also change during a worker’s career. Failure to pay overtime is a leading basis for litigation against small employers today. The exemptions are not simple and the administrative exemption is a misnomer. It is important that you obtain counsel from an experienced employment law attorney. A mistake in classification can cause class-wide implications and significant potential damages.
Call our office at (800) 893-9645 to protect your business from an audit or if you have any other employment-law compliance issues.
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.