Requires employers to report certain employees' wages for the purposes of unemployment benefits; relates to the payment of unemployment benefits, and employer penalties for non-compliance.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9355
SPONSOR: Bronson TITLE OF BILL:
An act to amend the labor law, in relation to employers' obligations to
report wages for the purposes of unemployment benefits, the payment of
unemployment benefits, and employer penalties for non-compliance
PURPOSE:
The purpose of this bill is to ensure that all employers that have been
ruled covered by New York's unemployment insurance laws report their
employees' wages and contribute to the UI Trust Fund.
SUMMARY OF PROVISIONS:
Section One. Amends section 570 of the Labor Law to include those
employers presumed liable, pursuant to the definition set out in
Section two of the bill, who are required to pay contributions to the
New York Unemployment Insurance Trust Fund (UI Trust Fund).
Section Two. States that the Department of Labor determines that any
person is an employee under the UI law, there shall be a presumption
that such determination applies to all others performing similar
services for the employer and such employer is required to report the
wages of all such employees and make contributions based on the wages of
all such employees.
Section Three. States that in any determination by the Department of
Labor or by the UI Appeal Board that a claimant is an employee under the
UI law, the employer of such claimant shall be considered an employer of
all those performing similar services for the employer. The obligations
of such employer to report their employees' earnings shall continue
unless and until reversed by administrative or judicial review and all
further appeals have been exhausted.
Section Four. States that lack of knowledge and/or a misunderstanding
regarding the presumption of liability shall not constitute good cause
for failure to comply with the wage reporting laws. This Section also
increases the penalties for employers who provide complete and correct
wage reporting. Further, the Section also requires the DOL to apply to
the state Supreme Court for an order requiring the employer to report
their employees' wages. In addition, the Section provides a private
right of action allowing workers to require employers to report their
employees' wages. Increases the penalty for those employers who fraudu-
lently avoid contributions to the UI Trust Fund and expands the defi-
nition of fraud to include an employer who knew or should have known
that its employees were covered under the UI law.
Section Five. Amendments to Section 570 Sub-Section 4 of LL: If an
employer continues to pay employees as independent contractors after
being determined employees, it is considered fraud. This makes the defi-
nition of fraud clearer and increases the fraud fees from 50 to 100
percent.
Section Six. Amendments to Section 597 pf LL: Amends to ensure the
commissioner issued a monetary benefit determination with an explana-
tion. Suggested adding language access here.
Section Seven. Amendments to Section 620 pf LL: Amends for consistency
to include that once employee status is determined, it is established
for all similar services.
Section Eight. Effective Date
JUSTIFICATION:
Many NY employers have refused to pay the ordinary Unemployment Insur-
ance (UI) taxes that all other NY employers must pay. They have also
been failing to report their employees' wages to the NYS Department of
Labor (DOL), which slows down the delivery of crucial Unemployment
Insurance (UI) benefits by months. This is all despite the fact that
state courts and agencies have repeatedly ruled, for years, that many of
these corporations are covered by NY's UI law and their workers are
entitled to receive benefits. These employers' failure to pay into the
UI Trust Fund has added millions to the UI Trust Fund debt. The large UI
Trust Fund debt, currently 6:8 billion dollars, has triggered higher UI
tax rates for the rest of NY employers and has hurt workers by forcing
NY's maximum weekly benefit rate, the lowest in the Northeast Region, to
remain frozen at $504 per week since 2019. Not only is the failure of
employers to report wages bad for workers, it also creates an unequal
playing field with employers who do the right thing and pay into the
Trust Fund while others skirt the system, gaining an unfair advantage by
paying nothing.
The majority of these employers fail to make contributions because they
misclassify their workers as independent contractors instead of employ-
ees. When employers fail to report a worker's wages to New York State,
the worker is unable to collect UI if they lose their job because the
DOL does not have a record of earnings upon which to determine monetary
eligibility. The burden is then put on the unemployed worker to prove
not only the amount of their earnings but also that they are an employee
and not an independent contractor. Misclassified workers are forced to
request a reconsideration to the DOL, answer numerous questionnaires and
provide extensive documentation of wages - a process that takes at least
3 months and often more than 6 months to complete. Most misclassified
workers either don't apply for UI because they don't know they are
eligible or give up after they have applied because of the excessive
bureaucracy.
New York UI law requires employers to make contributions to the UI Trust
Fund based on the amount of wages that they pay their employees. The DOL
uses audits of employers to determine if their workers are employees
under the NY UI law and then assesses contributions and penalties.
Audits are backward-looking, which means they determine liability for
failure to contribute in the past, but do not then require the employers
to report their current workers' wages. The current audit process is
ineffective because the DOL does not require companies that have been
determined to be employers to start reporting wages and making contrib-
utions for its similarly situated employees going forward. In addition,
penalties for failing to report wages and make contributions are
extremely low, which provides little incentive for employers to follow
the law. This bill addresses the inadequaties of the current enforcement
mechanisms by requiring employers to report their workers' earnings and
contribute to the UI Trust Fund. It creates a presumption that DOL
determinations finding individual workers to be employees apply to all
of the employer's workers who provide similar services and makes clear
that employers must report all of their employees' earnings and make
contributions on those earnings. The bill also substantially increases
penalties for failure to report earnings and make contributions and
creates a new tool beyond audits to deal with non-complying employers by
requiring the DOL to apply to the state Supreme Court for an order
requiring the non-complying employer to report their employees' wages.
In addition, the bill provides a private right of action to allow work-
ers to require employers to report their employees' wages. Finally, the
bill makes it easier and faster to establish UI monetary eligibility for
workers of employers who fail to report their wages.
LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9355
IN ASSEMBLY
March 6, 2024
___________
Introduced by M. of A. BRONSON -- read once and referred to the Commit-
tee on Labor
AN ACT to amend the labor law, in relation to employers' obligations to
report wages for the purposes of unemployment benefits, the payment of
unemployment benefits, and employer penalties for non-compliance
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 1 of section 570 of the labor law, as amended
2 by chapter 7 of the laws of 1985, is amended to read as follows:
3 1. Rate. Each employer liable under this article, including those
4 employers liable pursuant to the presumption in subdivision one of
5 section five hundred seventy-two of this title, shall pay contributions
6 on all wages paid by him at the rate of five and four-tenths per centum
7 or, if applicable to the employer, at the rate provided by the
8 provisions of sections five hundred seventy-seven and five hundred
9 eighty-one of this title. However, if contributions so established
10 exceed five and four-tenths per centum of wages paid by him which are
11 subject to the federal unemployment tax act, they shall be reduced by
12 that part of such excess, if any, which is caused by the provisions of
13 paragraph (b) of subdivision one of section five hundred eighteen of
14 this article.
15 § 2. Section 572 of the labor law, as amended by chapter 726 of the
16 laws of 1953, is amended to read as follows:
17 § 572. [Notice] Presumption of liability. 1. Notwithstanding any other
18 provision of law, upon the initial determination of a claim for bene-
19 fits, if the department determines that any person is or was an employee
20 within the meaning of this article, there shall be a presumption that
21 such determination applies to all others performing similar services for
22 the employer and such employer has become liable for contributions for
23 all such employees under section five hundred seventy of this title
24 and/or section six hundred seventy-four of the tax law. Upon final adju-
25 dication of any initial determination finding a claimant to be an
26 employee, the reporting and contributions required under this title
27 shall be made on all wages paid to such claimant and all others perform-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13671-01-3
A. 9355 2
1 ing similar services for the employer. The employer's obligation to
2 contribute for such employees shall continue until the employer success-
3 fully rebuts the presumption in a final adjudication of a future claim
4 involving a claimant performing similar services for the employer. The
5 presumption and obligations in this subdivision shall apply to all
6 determinations already rendered and all future determinations.
7 2. Any employer who has become liable for contributions shall notify
8 the commissioner of [such] the fact [immediately] and shall give infor-
9 mation concerning [his] their operations and persons employed by [him]
10 them to the commissioner no later then five business days after they
11 become liable.
12 § 3. Subdivision 4 of section 575 of the labor law, as renumbered by
13 chapter 639 of the laws of 1954, is renumbered subdivision 3 and a new
14 subdivision 2 is added to read as follows:
15 2. Upon any determination by the department, a referee of the unem-
16 ployment insurance appeal board, or the board that a claimant is an
17 employee under this article, the employer shall be considered an employ-
18 er of such claimant and all those performing similar services for the
19 employer. The employer's obligation to report earnings pursuant to this
20 article and regulations of the commissioner shall continue unless and
21 until reversed by administrative or judicial review and all further
22 appeals have been exhausted.
23 § 4. Section 575-a of the labor law, as added by chapter 5 of the laws
24 of 2000, is amended to read as follows:
25 § 575-a. Penalties relating to wage information. In the case of a
26 failure by an employer to provide complete and correct wage reporting
27 information on a quarterly combined withholding, wage reporting and
28 unemployment insurance return required by paragraph four of subsection
29 (a) of section six hundred seventy-four of the tax law, such employer
30 shall, unless it is shown to the commissioner's satisfaction that there
31 was good cause for such failure to comply, be liable as provided for in
32 subdivisions one and two of this section. Lack of knowledge or a misun-
33 derstanding regarding the presumption established in subdivision one of
34 section five hundred seventy-two of this title shall not constitute good
35 cause for failure to comply with the provisions of this section.
36 1. [When the non-compliance is discovered through an examination of an
37 employer's records, the] The employer shall be liable for a penalty in
38 the following amount for each employee who is not included in the return
39 or for whom the required information is not reported accurately:
40 (a) for the first failure for any calendar quarter in any eight
41 consecutive calendar quarters[, one dollar for each employee, not to
42 exceed one thousand dollars]:
43 (i) for employers with ten employees or less, twenty-five dollars for
44 each employee;
45 (ii) for employers with more than ten but less than fifty employees,
46 fifty dollars for each employee; and
47 (iii) for employers with fifty or more employees, one hundred dollars
48 for each employee;
49 (b) for the second failure for any calendar quarter in any eight
50 consecutive calendar quarters[, five dollars for each employee, not to
51 exceed two thousand dollars]:
52 (i) for employers with ten employees or less, fifty dollars for each
53 employee;
54 (ii) for employers with more than ten but less than fifty employees,
55 one hundred dollars for each employee; and
A. 9355 3
1 (iii) for employers with fifty or more employees, two hundred dollars
2 for each employee;
3 (c) for any subsequent failure in any calendar quarter in any eight
4 consecutive calendar quarters[, twenty-five dollars for each employee,
5 not to exceed five thousand dollars.
6 2. In those instances where a failure to comply is discovered in
7 relation to a specific claimant's claim for benefits, the penalty shall
8 be twenty-five dollars for each such occurrence.
9 3. If]:
10 (i) for employers with ten employees or less, one hundred dollars for
11 each employee;
12 (ii) for employers with more than ten but less than fifty employees,
13 two hundred dollars for each employee; and
14 (iii) for employers with fifty or more employees, four hundred dollars
15 per employee.
16 2. Upon an employer's first violation of this section, if such employ-
17 er provides complete and correct wage reporting information within thir-
18 ty days after the department sends notice of such failure to the employ-
19 er, then the penalty provided for by subdivision one of this section
20 shall be abated.
21 [4.]3. The penalties imposed and collected pursuant to this section
22 shall be credited to the special fund established pursuant to section
23 five hundred fifty-two of this article.
24 4. Upon an employer's failure to report complete and correct wages of
25 their employees, the commissioner shall provide written notice to the
26 employer as provided in section five hundred seventy-one of this title.
27 After providing such notice, if the employer does not file a correct and
28 sufficient report within thirty days, the commissioner shall apply to
29 the supreme court of the state of New York for an order requiring the
30 employer to provide such wage reporting information.
31 5. Any of the following parties may seek an order in any court of
32 competent jurisdiction requiring an employer to provide complete and
33 correct wage reporting information to the commissioner for all of their
34 employees:
35 (a) Any claimant, for whom the presumption established in subdivision
36 one of section five hundred seventy-two of this title applies, who
37 receives a monetary benefit determination which indicates that one or
38 more of their employers has failed to report their wages; and
39 (b) Any employee who fails to receive a notice or wage statement
40 pursuant to section one hundred ninety-five of this chapter, for whom
41 the presumption established in subdivision one of section five hundred
42 seventy-two of this title applies.
43 Any claimant or employee who prevails on such a claim shall be enti-
44 tled to attorney's fees and costs, but no other damages.
45 § 5. Subdivision 4 of section 570 of the labor law, as amended by
46 chapter 726 of the laws of 1953, is amended to read as follows:
47 4. Fraud. If any part of any deficiency is due to fraud with intent to
48 avoid payment of contributions to the fund, [fifty] one hundred per
49 centum of the total amount of the deficiency, in addition to such defi-
50 ciency, shall be assessed, collected, and paid in the same manner as if
51 it were a deficiency. As used in this section, the term "fraud" shall
52 include any instance where an employer failed to pay contributions and
53 the employer knew or should have known that its employees were covered
54 by the unemployment insurance law. Instances where an employer shall be
55 deemed to have known its employees were covered by the unemployment
56 insurance law shall include, but not be limited to, any situation where:
A. 9355 4
1 (a) an employer or any of its related entities have been found by the
2 unemployment insurance appeal board to be the employer of employees
3 providing similar services;
4 (b) an employer or any of its related entities have been found by the
5 department to be the employer of employees providing any of the same
6 services; and
7 (c) an employer has failed to cooperate with the department during an
8 audit or investigation regarding its obligations under this article.
9 § 6. Subdivision 2 of section 597 of the labor law, as amended by
10 chapter 589 of the laws of 1998, paragraph (b) as amended by chapter 413
11 of the laws of 2003, and paragraph (d) as added by section 18 of part O
12 of chapter 57 of the laws of 2013, is amended to read as follows:
13 2. Obtaining information necessary for determinations. (a) When filing
14 an original claim, each claimant shall furnish to the commissioner all
15 information which the commissioner shall require concerning his or her
16 prior employment.
17 (b) Whenever a claimant's base period includes a completed calendar
18 quarter for which a wage data report is not due or has not been received
19 and the claimant provides information as required by the commissioner,
20 the commissioner shall determine such claimant's entitlement and benefit
21 rate using the information the claimant provided for such quarter.
22 However, in those instances where the claimant is unable to provide such
23 information to the commissioner's satisfaction, the commissioner may
24 request the employer to provide the amount of remuneration paid to such
25 individual. The commissioner shall notify each base period employer upon
26 the establishment of a valid original claim, of such claim. If an
27 employer provides new or corrected information in response to the
28 initial notice of monetary entitlement, adjustments to the claimant's
29 benefit rate and adjustments to the employer's experience rating account
30 shall be prospective as of the date such information was received by the
31 department.
32 (c) The commissioner shall issue a monetary benefit determination to
33 the claimant within one week of an application for benefits. The mone-
34 tary benefit determination shall include notice to the claimant that, if
35 the determined amount of benefits payable to the claimant does not
36 reflect the claimant's full earnings, such different amount may have
37 occurred because the employer did not report or did not fully report
38 their wages. The monetary benefit determination shall also notify the
39 claimant that they should provide proof of earnings for the relevant
40 period in order to properly determine the claimant's monetary eligibil-
41 ity. Anytime a claimant provides proof of earnings from a party previ-
42 ously determined to be an employer under this article, the commissioner
43 shall issue a revised determination within three business days of
44 receipt of the claimant's proof of earnings. In all other cases, the
45 commissioner shall complete an investigation regarding whether the
46 claimant's earnings are wages earned in covered employment and issue a
47 determination regarding the additional earnings within forty-five days.
48 In the event of an investigation, the commissioner shall provide the
49 claimant with no less than fourteen days' notice of any deadlines to
50 respond pursuant to such investigation.
51 (d) Notwithstanding paragraph (b) of this subdivision, adjustments to
52 the claimant's benefit rate and adjustment to the experience rating
53 charges to the employers' accounts will be retroactive to the beginning
54 of the benefit claim in the following circumstances:
55 (i) the new or corrected information results in a higher benefit rate,
56 or
A. 9355 5
1 (ii) the new or corrected information results in the claimant's fail-
2 ure to establish a valid original claim, or
3 (iii) the amount of the previously established benefit rate was based
4 upon the claimant's willful false statement or representation.
5 [(d)] (e) Notwithstanding any provisions of this article, unless a
6 commissioner's error is shown or the failure is the direct result of a
7 disaster emergency declared by the governor or president, an employer's
8 account shall not be relieved of charges resulting in an overpayment of
9 benefits when the commissioner determines that the overpayment was made
10 because the employer or the agent of the employer failed to timely or
11 adequately respond to a request for information in the notice of poten-
12 tial charges or other such notice requesting information in relation to
13 a claim under this article, provided, however, that the commissioner
14 shall relieve the employer of charges the first time that the employer
15 fails to provide timely or adequate information, if the employer
16 provides good cause for such failure as determined by the commissioner.
17 "Timely" shall mean a response is provided in the time period speci-
18 fied in the notice as prescribed by the commissioner.
19 The term "adequately" shall mean that the employer or its agent
20 submitted information sufficient to render a correct determination.
21 This prohibition for relief of charges shall apply to all employers
22 under this article including employers electing payment in lieu of
23 contributions.
24 § 7. Paragraph (b) of subdivision 1 of section 620 of the labor law,
25 as amended by chapter 554 of the laws of 2010, is amended to read as
26 follows:
27 (b) When the initial determination of a claim for benefits, upon which
28 a hearing has been requested, involves the question whether any person
29 is or was an employer within the meaning of this article and is or was
30 liable for the payment of contributions under this article, or the ques-
31 tion whether an employer has fully complied with the obligations imposed
32 by this article, written notice of the hearing shall be given to such
33 persons or employer, either personally or by mail, and thereupon he, she
34 or such employer shall be deemed a party to the proceeding, entitled to
35 be heard. Upon such notice having been given, the referee may then
36 decide such question or questions and any other issue related thereto,
37 and his or her decision shall not be deemed limited in its effect to the
38 immediate claimant making the claim for benefits but shall be deemed a
39 general determination of such questions with respect to all [those
40 employed by] others performing similar services for such person or
41 employer for all the purposes of this article, and such decision shall
42 be conclusive and binding upon the claimant and such person or employer,
43 subject, however, to the right to appeal hereinafter provided.
44 § 8. This act shall take effect immediately.
