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Misclassification, UIB Tax and Overtime Pay Lawyer Update: Fight Your Notice of Audit or Investigation by New York Department of Labor (NYS DOL)

Thumbnail image for Thumbnail image for top.lawyers.arrive.mag.2011.jpgOur Employment Law Attorneys have defended and protected many small businesses before the New York State Department of Labor (DOL) in Audits and Investigations. Your company could face government scrutiny and significant monetary penalties from several divisions within the DOL. Specifically, the Division of Labor Standards enforces unpaid wage claims including issues involving minimum wage and overtime pay and the Unemployment Insurance Tax Division enforces non-payment of required payroll taxes which may apply in situations where a worker was misclassified (innocently or intentionally) as an independent contractor instead of as an employee. Many of these issues are complex and technical in nature. These are serious issues and can include the imposition of personal and criminal liability. If you have received a notice from the Department of Labor, contact our office immediately at (800) 893-9645 to learn how to protect your business and its assets from costly penalties and fines.

Unemployment Insurance Benefits Tax Division – Overview

In recent years, the Unemployment Insurance Benefits Tax Division (UIB) has increased the number of audits it conducts. In fact, it is one of the few areas where government staffing has increased presumably because it generates significant revenue for New York State at a time when it is cash strapped. The UIB division may randomly audit your business or an audit may be initiated based upon a complaint or another triggering event. During such an audit, you will be asked to meet with the auditor and provide the following documents: General Ledger, Journals, Cash Book, Corporate Minute Book, Payroll Records, Copies of Social Security Returns, Copies of Unemployment Insurance Tax Returns (state and federal), Check Stubs and Annual Tax Returns. In addition, the auditor may make several surprise visits to your company’s offices which can cause a disruption in your productivity and operation. The audit process can be daunting and expensive as the DOL will be looking for any errors (innocent or intentional) on your part and reasons to issue a penalty. The DOL may consider the non-payment of taxes fraud and a method to avoid providing required protections to workers. Employers must be careful as their actions before the DOL may have implications (and additional monetary penalties) with other government agencies. Our Employment Law Lawyers are experienced in protecting individual owners, businesses and minimizing their exposure during the audit process. Contact us at (800) 894-9645 to discuss your Notice or audit.

The Labor Standards Enforcement Division – Overview

Generally, this division will investigate complaints of unpaid wages made by an individual via phone, mail or in person. Upon receiving a complaint, the DOL will determine whether it has jurisdiction to adequately consider the matter. For example, if the complaint is not about unpaid wages but is limited to employment discrimination or sexual harassment, the complainant may be referred to the New York State Division on Human Rights or a similar government agency. If the agency does have jurisdiction over the complaint, the complainant will complete a Claim Form and a case number will be then issued. After such point, the DOL will contact you to advise you of the complaint and continue its investigation. The investigation may include interviews of witnesses and a review of your documentation and time records. Generally, you may be asked to provide the following documents: payroll records, quarterly tax filings, and annual tax returns. Under the NY Labor Law, you are required to keep accurate payroll and time records and if you fail to do so, it could have a negative impact on your defense and the DOL could penalize you. If you fail to respond to the Investigator, the investigator may come to your office. The Complaint is not something that should be ignored. During the investigation, a compliance conference may be scheduled with you and the complainant at the DOL’s offices to reach a resolution. Many employers complain that the DOL process is slanted in the employee’s favor. Indeed, in recent years, the penalty amounts that can be issued against employers have increased. If you do not have a strong experienced advocate, this process can be a difficult one.

If the DOL finds that you have violated the New York State Labor Law and you fail to make restitution (i.e., pay back wages and any assessed fines and penalties), an Order to Comply may be issued by the Commissioner of Labor. If you do not appeal the Order and do not pay, a criminal prosecution by the New York State Attorney General may be initiated.

Contact our NY Employment Lawyers to discuss your Notice of Audit or Investigation at (800) 893-9645. If you have not received a notice, you should review your business operations and ensure that you have created and implemented best business practices before you are audited.


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.

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