Mitigating risk is key, however there is no silver bullet to avoid an unemployment claim, workers’ compensation claim, or a wage and hour complaint from INDEPENDENT CONTRACTORS. Additionally, audits can be conducted (by various state or federal agencies) for any company, at any time, whether it is targeted or random. YOU MUST BE PREPARED FOR THE INEVITABLE. One state unemployment insurance claim is a trigger to several audits from the various applicable government agencies. Each company has the risk of facing at least four different bureaucratic foes; State Department of Labor-Unemployment Tax/or Wage and Hour Divisions, Workers’ Compensation Board, IRS, and the U.S. Department of Labor. Many of these Agencies has signed memorandums of understanding to share data bases.
IN THIS Newsletter we focus on a unique situation in New York. The purpose for focusing on New York is that New York is a “bell weather state” so other states will look to states like New York on how they peruse Independent Contractor re-classification. While some states have unique regulatory or statutory provisions, most states rely on common law which is very ambiguous in determining a worker’s status. The regulatory agencies involved like the New York State Department of Labor, have specifically targeted certain industries such as courier, trucking, cable installers, and musicians. The New York State DOL Unemployment Insurance Appeal Board (who, by the way, is politically appointed) has effectively “legislated through case law.” What does that mean? Over the course of 5 years, the Appeal Board has recklessly decided countless cases in favor of the Commissioner of Labor. The Commissioner of Labor is hell-bent on reclassifying as many independent business people as they can. The result is more money for the unemployment fund along with shifting much of the socio-economic cost to employers, like Obama Care.
How did this happen?
Due to ambiguous language in Common Law used by New York and the legislature’s inability to pass a clear and concise set of rules for companies to follow, the Appeal Board, through the Commissioner of Labor, has decided dozens of cases in which almost all of the decisions went against the company that utilized one or more independent contractors in spite of winning several of these cases before the lower Administrative Law Judge level. These ALJ Decisions were based on overwhelming evidence in support of IC status. These Administrative Law Judges are lawyers so could it be that all of these lawyers are incompetent? Well we know that is not the case so there is no doubt that a political agenda has entered into the equation. Few factors or other factors that should be considered irrelevant factors were used to overturn nearly every one of the employer’s favorable Administrative Law Judge Decisions. Now the Department of Labor has a cache of decisions to site in making determinations. For example, if company “A” has an Appeal Board loss, any subsequent contractor that files for unemployment will likely be deemed an employee.
The burden of proof to show that this “new” claimant is, in fact, an independent business falls on the company. This is a daunting task. How does this affect your company? The Appeal Board’s abuse of power resulted in “case law.” This case law applies to each and every company that conducts a similar business model in New York. For example, company “A” has an appeal board loss that cites 5 main factors which they contend constitute “direction and control.” If your company is found to use a similar business model in which some of those same factors are present, then you are also bound by company “A’s” decision.
Your company has a constitutional right to use INDEPENDENT CONTRACTORS! How do you avoid a re-classification issue? BE PRO-ACTIVE AND KNOW THE PITFALLS. There are ways to significantly reduce the risk of an unemployment or workers’ compensation claim. Once we are able to significantly mitigate your RISK, we will handle any challenge to your INDEPENDENT CONTRACTOR BUSINESS MODEL. Save the cost of costly litigation. With nearly 25 years of knowledge, there are few that can match our expertise and our win track record. Complete the contact information on our website and someone will get back to you with no cost or obligation.
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