Resolve your penalties for failure to provide Workers Compensation, Disability, or Paid Family Leave insurance.
Worker Misclassification Can Be Costly
If you’re a small business that has gotten bad information about building it with independent contractors and unpaid interns, you will probably soon receive a penalty notice from the New York State (NYS) Workers Compensation Board (WCB). Because the penalties accrue at a rate of $2,000.00 for every 10-day period you lack workers compensation insurance, you’ll probably owe at least $12,000.00 before the notices catch up to you.
Domestic Workers Are No Exception
Many overwhelmed family members hire full-time nannies or elder companions, not realizing they are now domestic employers and their homeowner’s insurance policies probably won’t cover injuries to those workers. Regardless, we’ll work together to get you in compliance and settle the penalty issues at the lowest possible amount under the circumstances. I often recommend you hire a payroll company to process payroll taxes, track paid sick leave, and help you maintain compliance. My clients have had success with:
Ensure 1099-MISC Contractors Aren’t Employees
Not even the best-written contract will guarantee that your independent contractors are truly independent business owners, rather than employees. The NYS WCB and Department of Labor (DOL) have broad discretion to determine who is an employee and who must be provided various employee benefits. It doesn’t matter what your accountant told you or that the Internal Revenue Service (IRS) hasn’t penalized you. What matters is a very specific review of a 12-part test. If you misclassify your workers and fail to have WC insurance, you could be penalized $2,000.00 for every 10-day period you don’t have coverage. That’s how Pat’s penalties got to $20,000.00 so quickly, and his penalties were on the lower end of what I have seen. Scroll down to read Pat’s story.
Pat was fearful at first. He had been working for top advertising agencies since he graduated from college, and he had visions of someday owning a portion of the agency that ultimately terminated his employment. Fortunately, a few former clients of that agency liked his work and sent him some projects. He exceeded their expectations, and a new business was formed.
It grew fast, and the projects kept getting bigger. How exciting!
Pat reached out to other colleagues who had lost their jobs during the workforce reduction. He developed the artistic vision for the projects and subcontracted work to those colleagues. Everyone was happy. The clients loved the results. His colleagues were thrilled to be working again and getting paid well. Life was good–until one of his subcontractors filed for unemployment insurance (UI) benefits.
He notified the Department of Labor (DOL) that the contractor was not an employee and was therefore not entitled to UI benefits. While that claim was pending, the New York State Workers Compensation Board (NYS WCB) sent an inquiry notice, asking for information on Pat’s workers’ compensation (WC) insurance policy. He knew he should respond, but he was busy the week the notice came, and he wasn’t sure he really needed WC insurance. The notice went in a pile of mail on his desk, with other topics he needed to research.
Thirty days later, he received a notice of penalties exceeding $20,000.00!
Pat’s story is quite common. I represent a lot of domestic employers, freelancers, small business owners, and out-of-state employers who get the independent contractor classification wrong. If you get a penalty notice, I can usually help you:
- Stay open and get in compliance
- Reduce penalties for not providing disability (DB), Paid Family Leave (PFL), UI, and WC insurance
- Create a more peaceful and productive workplace
[Y]ou are the best in this area!! ~ J.C., CPA, NY
Thank you again for your help – this could have gone a lot differently without your guidance!…You’re magical, Nance. You can quote me on that. ~ S.B., Business Owner, GA (with one employee in NY)
I wish all lawyers [had] the kindness, patience, humility and generosity you do. ~ S.A., Seasonal Business Owner, NY
WOW! [Y]ou are a miracle worker. Thank you so so much. ~ J.G., Business Owner, NY
You have been so easy to work with, I really appreciate it! ~ B.H., Business Owner, WA (with one employee in NY)
[Nance’s] attention to detail and [her] assistance and follow-up throughout this entire process was so welcoming. ~ K.S., Bookkeeper, NY
I am so, so incredibly relieved…Even if they hadn’t lifted the penalties, as I said before, it just feels better fighting for what you believe is right. Which is resonating even more at this time. ~ S.F., Business Owner, NY
We appreciate your help on this matter. No one likes these administrative hurdles in life. You helped us navigate this one with ease. It was great to meet you and thanks so much! ~ J.C., Business Owner, VA (with one employee temporarily living in NY)
Thank you so much Nance. I really appreciate [your follow up] so much…I get SO many emails that [the Settlement Offer] got lost in the bunch. ~ R.B., Business Owner, CA (with one employee in NY)