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Employee Classification

Trucking Co. Hits NJ DOL Pothole Over Employee Status

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Collision with the DOL   A national trucking company operating in NJ had to deliver more than $1 million to the NJ Dept.of Labor after allegedly misclassifying employee drivers as independent contractors for more than a decade.

The Package Deal Eagle Intermodal Inc. agreed to pay $1.25 million in back unemployment and disability contributions, and pledged to come into compliance with the law, the NJ DOL announced on September 12, 2019.

The Dispute began in 2006 when an audit flagged the alleged misclassification, which meant the company had not paid employer payroll contributions, including NJ Unemployment and Temporary Disability Insurance. A special exemption does exist for services performed by certain operators of large trucks. The DOL concluded that Eagle’s operations didn’t qualify for it; and that the company also failed to establish that the drivers were independent contractors, rather than employees, per                 NJ’s ABC Test:

  1. The worker’s performance is not under the control or direction of the firm, and
  2. The services performed are outside of the usual course of the business, and
  3. The worker is customarily engaged in an independently established trade,    occupation, profession or business.

Gov. Phil Murphy has declared a crackdown on employee misclassification, with the NJDOL required to audit 1% of active NJ businesses. Murphy’s Task Force on Employee Misclassification says these audits have uncovered “tens of millions of dollars in employee-related taxes not paid to the state.” The task force report identified trucking, transportation, delivery services, construction, janitorial services, home care, and other labor-intensive, low-wage sectors as “industries where misclassification is widespread.”

The Safer Road Firms who want to avoid fines and penalties should consult with their legal and accounting advisors. Companies should consider issues like employee classification and overtime, and work with their advisors to keep up with the latest developments in state and federal wage and hour regulations. At Urbach & Avraham we work with many qualified employment attorneys who handle these issues. We also represent many companies at US and NJ DOL audits.

Managing NJ Dept. of Labor Audits

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Pamela Avraham, CPA, partner in Urbach & Avraham, CPAs, will be presenting at the 2017 NJ Staffing Alliance (NJSA) Law Day VI which will be held on Feb. 8, 2017. She will discuss NJ Dept. of Labor (DOL) audits; how best to avoid them and to effectively handle them.

The NJ DOL conducts two types of audits: (1) Wage & Hour audits which focus on hourly wage and overtime issues. (2) Independent Contractor vs. Employee audits which determine if a worker is an independent contractor or an employee subject to the state unemployment tax.

Urbach & Avraham has a concentration of clients in the staffing industry. Pamela has successfully handled numerous US and State Dept. of Labor audits for clients in the staffing industry as well as in many other industries.

The 2017 NJSA Law Day VI will be an all-day conference held at the Eisenhower Conference Center in Livingston, NJ.

Sleepy’s Wage and Hour Case Goes to NJ Supreme Court

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This is nothing to snooze about. The New Jersey Supreme Court has agreed to rule on a case that will have a broad impact on NJ businesses and workers. In Hargrove v. Sleepy’s, Plaintiffs Sam Hargrove, Andre Hall and Marco Eusebio accused Sleepy’s of using an “Independent Driver Agreement” as a ruse to avoid paying them employee benefits. The case was initially dismissed by U.S. District Judge Peter Sheridan in March 2012, as he applied the common-law “right to control” test. This test focuses on how much control the employer has of the workers. In this case, the plaintiffs drove for several other companies in addition to Sleepy’s, and maintained their own trucks, paying for gas, tolls, tickets and repairs. This bolstered the argument that they were in fact independent contractors.

On appeal, the National Employment Law Project, a New York non-profit workers advocacy group, contended that the “right to control” test shouldn’t be a determining factor. They reasoned that the New Jersey statutes at issue- the Wage Payment Law and the Wage and Hour Law- define “employee” more broadly than common law. Under the NJ statute a worker is considered an employee unless he meets all of the following three provisions:

  1. The worker has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact
  2. The service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed
  3. The worker is customarily engaged in an independently established trade, occupation, profession or business

Employee Vs. Independent Contractor Status is Focus of New IRS Template

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Should you be classified as an employee or independent contractor? This is an issue that has drawn a lot of attention from the IRS lately, as more employers have been trying to cut costs and classify employees as independent contractors thereby avoiding thepayroll taxes. To clarify how one determines his or her status the IRS has released Publication 1779, which looks at three areas: behavioral control, financial control, and the relationship of the parties to determine worker classification.

To view the template, click here: Employee Vs Independent Contractor Status

 

 

States Conforming to IRS Employee Classification Amnesty

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When the IRS announced its employee classification amnesty, it caused a number of concerns for employers. A primary concern was whether the States would conform, or if they would just consider the IRS application a confession and prosecute taxpayers that take advantage of the program. While it may be too soon to tell in many states, some have conformed already. [Read more…] about States Conforming to IRS Employee Classification Amnesty