A white paper by SHG's Frederic Buse regarding managing a non-employee workforce. SHG website: http://www.shggroup.com/ Frederic Buse on SHG: http://www.shggroup.com/FJBprofile.html Frederic Buse on LinkedIn: http://www.linkedin.com/pub/frederic-j-buse/7/762/91a

1. Managing the Non-Employee – Free Lance Workforce
Schwartz Heslin Group, Inc.
Managing Director Frederic J. Buse
Beginning in 1985, the New York State Dept. of Labor began issuing occupation-
specific guidelines to clarify who should be classified an employee and who is an
independent contractor.
From 1985 to 2005, guidelines covering 10 industries were issued but and none since.
Chart 1
Existing NYS Dept. of Labor Guidelines Cover the Following 10 Occupations:
Form
Number Description
IA318.11 Agricultural Employment
IA318.16 Organized Camps
IA318.17 Performing Artists
IA318.18 Insurance Sales Industry
IA318.19 Newspaper and Shopping Guide Publishers
IA318.20 Translating and Interpreting Industry
IA318.21 Tour Guide Industry
IA318.22 Van Operators In The Moving Industry
IA318.23 Magazine Publishing Industry
IA318.24 Messenger Courier Industry
Source: (See http://www.labor.state.ny.us/formsdocs/ui/formsandpublications.shtm ).
By contrast, California’s Employment Development Department has issued “Information
Sheets” covering 22 occupations or industry segments.
(See http://www.edd.ca.gov/Payroll_Taxes/Forms_and_Publications.htm)
It is difficult to determine what constitutes employment to establish employer liability for
UI taxes and claimant coverage for unemployment insurance purposes. With the
exception of certain specific exclusions and inclusions, the term “employee” is not
defined and there is no statutory basis for distinguishing between and employee and an
independent contractor.

2. Page 2
In most instances, this issue is raised when a worker applies for unemployment
benefits. The last employer is contacted by the Dept. of Labor and asked for the
circumstances of job loss. If the employer indicates that the worker was an independent
contractor and not an employee, information regarding the facts and circumstances of
the claimant’s work status will be requested by the Liability & Determination Section of
the Dept. of Labor (“L&D”) -- typically from both the claimant and the employer. After
completing its fact finding, L&D will issue a determination letter. If they find that the
claimant was an employee, the Labor Dept. will notify the office which processed the
claim that the claimant is eligible for UI benefits. L&D also will send a determination
letter to the employer citing the factors which led to the decision regarding employment,
instructing the employer to file amended UI tax returns to include the taxable wages of
the claimant and all other similarly situated individuals. The employer has 30 days to
appeal the decision to an Administrative Law Judge. The next level of appeal is the UI
Appeal Board.
If the employer fails to respond with revised tax returns and does not appeal the
decision, he should expect a visit from a Dept. of Labor auditor. The auditor will review
payroll information concerning the applicant for unemployment insurance and all other
workers with similar work responsibilities. Approximately 10,000 such audits are
completed annually. As a result of such an audit, requests/demands for additional UI
tax payments plus penalties of $50,000 or more are not unusual.
The NYS Dept. of Labor adjudicates many more employee vs. independent contractor
cases than any other state agency. It is increasingly clear that it has targeted
considerable audit resources to indentify employers who misclassify employees as
independent contractors. At the request of the Labor Commissioner, the Governor on
September 9. 2007 issued Executive Order No. 17, establishing a Joint Enforcement
Task Force on Employee Misclassification.
(See http://www.ny.gov/governor/press/0907071.html).
The Task Force was directed to strengthen enforcement, avoid duplication by sharing
relevant information among various state agencies, and coordinate both investigation
and enforcement actions.
The NYS Dept. of Labor has two sections which review decisions of the Administrative
Law Judge, the UI Appeal Board and ultimately the Third Department Appellate Division
of the Supreme Court (the appellate court to which all disagreements with the rulings of
UI Appeal Board must be brought.) Both maintain indexes of precedent cases to assist
the local offices in their determinations.
the Adjudication Services Office (“ASO”) focuses on decisions related to a
claimant’s eligibility for UI benefits.
the Liability & Determination Section concentrates on employer issues.

3. Page 3
Summaries of previous decisions by the UI Appeal Board and the Courts relating to
claimants are available online. The summaries are indexed by topic and include precise
descriptions of the actual decisions.
Chart 2
Online Claimant Eligibility Topics Covered by ASO
Index # Topic
700 Availability and Capability
800 Registration, Reporting and Certification
900 Determination of Benefits
1000 Hearings and Appeals
1100 Misconduct
1200 Refusal of Employment
1300 Industrial Controversy
1400 Total or Partial Unemployment
1500 Misrepresentation and Redeterminations
1600 Voluntary Separation
2000 Section 599 (shared work program)
Source: http://www.labor.state.ny.us/ui/aso/interpservice.shtm
Summaries of previous decisions by the UI Appeal Board and the Courts relating to
employers are not online and are only available in paper form in Albany. The detailed
summaries are indexed by occupation and listed by statutory inclusions and statutory
exclusions which are further broken down by all employers, non-profits and government
employers.

4. Page 4
Examples of the summaries (the entire list is much longer) related to occupations
specifically covered by statute include:
Index # Occupation
3150 Statutory inclusions
3150A Agent-driver or commission driver
3150B Professional musician
3150C Traveling salesman
3150D Professional model
3200 Statutory exclusions (all employers)
3200A Spouse or minor child
3200B Employment subject to federal railroad U.I. Act
3200C Student and student’s spouse
3200D Licensed real estate brokers
3250 Statutory exclusions (non-profits & government)
3250A Golf caddy
3250C Baby sitter
3300 Statutory exclusions (non-profit employers)
3300A Minister
3300D Rehab services or work at rehab facility
3350 Statutory exclusions (governmental employers)
3350A Elected officials
3350B Member of legislature or judiciary
3350C State National Guard
3350G Inmates of penal institutions

5. Page 5
Examples of the summaries of decisions related to occupations not covered
specifically by statute include:
Index # Occupation
3800 .005 Accountant/tax preparer
3800 .001 Artist
3800 .025 Attorney/Paralegal
3800 .005 Professional model
3800 .035 Bookkeeper
3800 .045 Cleaner/Maintenance Worker/Janitor
3800 .05 Coach
3800 .06 Construction worker
3800 .065 Consultant
3800 .07 Delivery person
3800 .080A Limousine driver
3800 .085 Editor/Proofreader
3800 .09 Engineer/Draftsman
3800 .120B Nurse
3800 .120D Physician
3800 .013 Interviewer/Research Interviewer
3800 .075 Officer/Director/Board Member
3800 .215G Securities Salespersons
3800 .22 Secretary/Stenographer/Typist
3800 .2255 Teacher/Tutor
3800 .23 Telephone solicitor/Telemarketer
3800 .24 Waiter/Waitress/Service Personnel
3800 .245 Writer/Editor
There are a large number of summarized employer cases indexed by L&D. For
example, precedent cases involving medical occupations (#3800.120A to #3800.120G)
number more than 80.
If you receive a determination letter from the Liability and Determination Section, you
should request a meeting with them. Prior to the meeting, you are well advised to obtain
the case summaries covering the occupation(s) in dispute. You should also review
other occupations in the same industry. After reviewing the summaries, you can
request copies of the specific UI Appeal Board and NYS Supreme Court decisions
identified in each summary relevant to your issues.

6. Page 6
If, after exchanging correspondence or meeting with L&D, you are not satisfied with the
Dept. of Labor conclusion, on behalf of your client you can request an informal hearing
with L&D. If you still dispute the L&D conclusions, you can request a formal hearing
before an Administrative Law Judge.
The formal hearing request must be received on a timely basis. These hearing are
usually conducted in Albany by ALJ’s with experience in employer liability issues.
Remember, you must establish a complete record at an ALJ hearing. Typically, no new
information will be accepted at the next level if you decide to appeal an ALJ decision to
the UI Appeal Board. Similarly, the Third Department of the NYS Supreme Court,
Appellate Division relies on the record established before the ALJ. The standard
followed by the court is whether or not there is “substantial evidence” to support the
Appeal Board’s decision.
One final note – not-for-profit organizations classified 501 C (3) by the Internal Revenue
Service may request to become “reimbursable” employers and avoid both U.I. taxes and
most U. I. audits in exchange for agreeing to reimburse any UI benefits paid to former
workers.
SHG can assist employers faced with independent contract questions
to minimize the impact on their UI taxes and penalties.
Contact: Managing Director Fred Buse -- fbuse@shggroup.com