This educational seminar will review and discuss the types of contractors that funeral directors might engage, help identify essential credentials these contractors must or should possess, and guide attendees through the process of verifying credentials and correcting common errors to mitigate legal and financial risks. Emphasis will be placed on understanding worker classification, imputed liability, and insurance requirements in New York State.
Contact hours: 1 Law
Course Goals
By the end of this seminar, participating funeral directors will be better equipped to:
- Distinguish between an independent contractor and an employee under New York State Labor Law.
- Recognize the potential legal and financial consequences of worker misclassification.
- Confidently interview and vet potential vendors, requesting and verifying appropriate licenses, insurance, and other credentials.
- Implement best practices for written agreements with independent contractors.
- Understand the concept of imputed liability and how it applies to vendor errors and omissions.
- Minimize the risks and costs associated with a contractor’s failures, errors, or non-compliance.
Course Outline
Worker Classification
- Employee vs. Independent Contractor in New York State
- Why assumptions about worker status are risky
- New York State Department of Labor (NYSDOL) Guidelines
Consequences of Misclassification
- Unpaid overtime and minimum wage violations.
- Liability for payroll taxes (Social Security, Medicare, unemployment insurance).
- Workers’ compensation and disability insurance penalties.
- Employee benefits (health insurance, paid leave) if applicable.
- Potential for NYSDOL audits, fines, and private lawsuits (including double damages for willful violations).
Red Flags for Misclassification in Funeral Homes
- Treating long-term, regularly scheduled individuals as contractors.
- Providing significant direction, tools, or materials.
- Contractors performing core functions of the funeral home.
Identifying Your Contractors
- Musicians
- Ministers, rabbis, and other spiritual advisors
- Occasional Embalmers
- Tradespeople
- Pall Bearers
- Beauticians
- Drivers
- Bookkeepers
- Marketing, website, or social media experts
- IT and website consultants
Essential Credentials
Business and Professional Licenses
- Funeral Director’s License
- Esthetician’s License
- Commercial Driver’s License (CDL)
- General Business License or Registration
Insurance Coverage
- Workers’ Compensation (WC) Insurance
- Disability and Paid Family Leave (PFL) Insurance
- General Liability Insurance
- Professional Liability Insurance (Errors & Omissions)
- Commercial Auto Insurance
- Cybersecurity Insurance
Tax Information
- Form W-9
- Tax Identification Number (TIN)
- Employer Identification Number (EIN)
Written Agreements or Contracts
- Clearly define scope of work, payment terms, indemnification, and insurance requirements
- Freelance Isn’t Free Act (FIFA)
The Cost of Assuming
Imputation of Liability for Vendor Errors
- Businesses are typically not liable for the negligence of true independent contractors.
- Exceptions that can leading to client liability:
- Hiring an incompetent or unqualified contractor
- Failure to properly vet (check licenses, insurance)
- Retaining a contractor known to be negligent or non-compliant
- Exerting significant control over the contractor’s work
- Subcontracting duty of care in handling remains or providing funeral services
Regulatory Scrutiny and Penalties
- Violations of state health or funeral directing laws can lead to fines, disciplinary actions, and license jeopardy.
- Failure to ensure contractors act professionally and ethically reflects poorly on the funeral home.
Financial Burdens
- Covering damages if a vendor is uninsured or underinsured
- Legal defense costs
- Increased insurance premiums for the funeral home
- Back taxes, wages, and penalties for misclassification
Review and Resources
The “Don’t ASS-U-ME” Checklist:
- Regularly audit all contractor relationships.
- Develop a standardized vetting process for all new contractors.
- Maintain a file for each contractor with all credentials and agreements.
- Calendar renewal dates for licenses and insurance policies.
Strengthening Written Agreements:
- Clearly state independent contractor relationship.
- Specify contractor is responsible for their own taxes, insurance, and business expenses.
- Include indemnification and hold-harmless clauses in contracts.
- Mandate specific insurance coverages and require COIs.
- If a contractor seems more like an employee, consult with legal counsel to re-evaluate classification.
- If a contractor’s license or insurance lapses, suspend engagement until rectified.