Have 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.
Prior to the audit period, you should work with counsel to understand whether your current treatment of workers is compliant with the labor law. For example, a potential area of investigation may be whether you have correctly classified your workers as independent contractors or employees. Misclassification issues are on the rise. We have discussed misclassification issues many times before and you can find one prior blog by clicking here. While it may be tempting for a business simply to treat worker as an independent contractor, there are serious risks by doing so. Before the audit, with regard to this issue, you should have any analysis completed as to the worker’s role, duties, and level of supervision so you can determine the proper worker status. Just because you call someone an independent contractor does not carry the day even if the worker agrees to that classification. The auditor will conduct a fact specific review on the circumstances underlying the working relationship. So, if you are controlling and directing the work on your premises, there is a strong likelihood that the worker will be considered an employee and unpaid payroll taxes will be owed if he or she was issued a 1099 tax form. There are many factors to consider and the preceding is just for illustrative purposes. You should consult an attorney for specific advice on your situation.
At the conclusion of the audit, an employer may receive a notice of contributions due which is typically attached to a report of investigation. The notice is an important document and contains the audit’s findings. It can have certain ripple effects leading to additional investigations. Do not simply pay the bill – understand the consequences. You may want to appeal especially if the findings devastate your business model. Contact our office to learn your specific rights and how to best protect your business.
SAMPLE NY DEPARTMENT OF LABOR NOTICE
NOTICE OF DETERMINATION OF CONTRIBUTIONS DUE
Based on an examination of your records, additional contributions of $543.00 are due in accordance with Section 571 of the New York State Unemployment Insurance law. A copy of the Report of Audit or Report of Investigation is attached. If you have questions, call the district office.
This WILL BECOME FINAL AND IRREVOCABLE AFTER THIRTY DAYS from the date of this notice unless you apply for a hearing in writing within such 30 days. The request for a hearing should be sent to the Liability and Determination Section at the address above.
We have applied your prior payment to the contributions due. Interest in your payment is $54.44. We assess interest on late payments at the rate of twelve percent per year from the original due date of the calendar quarter to the actual date of payment.
This letter does not include Failure to File or Benefit Claim penalty assessments. For penalties due, you will receive a separate notice.
Sr. UI Accounts Examiner Employer Accounts Adjustment Section
New York State Dept of Labor Unemployment Insurance Division Governor W. Averell Harriman State Office Building Campus Albany, NY 12240
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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.