Relates to establishing the employer in situations involving multiple entities

BILL NUMBER:S4850

Title of bill

An act to amend the labor law, in relation to establishing the employer in situations involving multiple entities

Purpose:

The bill would amend the Labor Law to establish the employer among multiple entities as the entity that pays an individual for services performed that constitute employment.

Summary of Provisions:

A new subsection (4) is added to Labor Law § 512 establishing the employer among multiple entities with the entity that pays an individual for services performed that constitute employment. The bill provides for an exception based upon written contractual agreements establishing the employer. The bill provides that among the multiple entities, if one entity only provides payment the experience rating of that payment entity will transfer to a new payment entity.

Existing Law:

Labor Law § 512 provides definitions of "employer" and Labor Law § 560 provides conditions for "terms of coverage" but both do not address situations where an individual is paid by one entity but the individual performs the services for another entity. Among multiple entities, each entity may successfully argue it is not an employer, and hence not responsible under Article 18 of the Labor Law governing Unemployment Insurance.

Prior Legislative History:

None. This is a new bill.

Statement in Support:

Under current law each entity among multiple entities when each entity addresses a portion of what, in totality, is found to be the employment of an individual are able to avoid payment of Unemployment Insurance contributions. One entity may argue an absence of direction, supervision, and control over an individual that, for example, the entity has placed with another entity. Alternatively another entity, may argue that it is not the entity that paid the individual for the services that constitute employment.

This bill would close this gap in the law and clarify that where an individual is found to be performing services that constitute employment among multiple entities the entity having responsibility as the employer under Article 18 of the Labor Law will be entity that pays the individual. A provision is made for written contractual agreements establishing the employer.

For example, see In the Matter of John Lack Associates, LLC, Memorandum and Order 516638 (3rd Dept. 2013). In this case, an agency John Lack Associates, LLC provides waiters to restaurants. The agency explains the duties and requirements of a particular job to

individuals on a list, the individual provides the uniform and equipment, the job site provides the place where services are performed, and the agency pays the individual. Under current law, the Appellate Division was unable to find that the agency is an employer. The job sites may be multiple in a situation such as this and holding the job sites responsible is equally challenging.

This bill not only addresses these problems but clarifies the definition of "employer" and more generally comports with general expectations of agencies determining "employer" status. The bill clarifies the employer entity among multiple entities each having a potential employer relationship and ensures compliance with Article 18 of the Labor Law - Unemployment Insurance; prevents misclassification of employees and loss of Trust Fund revenues; ensures claimants have wages available when claims are filed; and provides administrative savings in locating clients and litigating cases. Budget implications:

None.

Local impact:

None.

Effective Date:

This act shall take effect on the first of January next succeeding the date on which it shall have become law.