Zoe Baird watch out. If you employ a Nanny, even one who is here illegally, a new proposed New York Law is in the works that will place new burdens on their employers. The State Senate passed a bill last week that would protect Nannies. According the New York Times, this law is likely to be passed into law.
The new law will require the following:
- Paid holidays, sick days and vacation days for domestic workers, along with overtime wages.
- It would require 14 days’ notice, or termination pay, before firing a domestic worker.
The law would cover citizens, legal immigrants and those here illegally as well. It seems highly unlikely that those who are here illegally would make complaints to the Department of Labor for workplace violations.
This bill is a bad idea. The reality is that many working parents cannot afford a Nanny and pay her(always a women) taxes, workers compensation and overtime wages. My estimate is that the cost of Nanny would skyrocket to the $35,000.00 a year. Many families may decide to lay off their Nannies and let the parent who makes less money stay at home. Other families may decide to let their homes go into foreclosure.
There is a whole underground economy when it comes to domestic workers that benefits the workers as well. A brief sample of acquaintances who currently employee Nannies in the New York metropolitan area revealed that the average wage for a Nanny who is in the United States illegally is about $500.00 a week. Since they don’t pay taxes their earning power is up to a third more. Nannies are not regulated. There is no certification process and a criminal check is often impossible.
For this bill to work, the legislature should increase the child care tax credit to $10,000.00 a year per child. In addition, Nannies who have been here for 2 years should be given a path to citizenship. What do you think?
FYI, my kids are in daycare.
If you have a question about labor and employment law, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.
Misclassifying an an employee as an independent contractor is one of the most expensive mistakes that a business owner can make. It does not matter whether you intentionally made the mistake. You can be subject to large penalties, fines and even subject the criminal liability. I have recently reported that the IRS has been targeting employers with independent contract workers.
The problems don’t end with the employer. Misclassified workers can lose:
- Worker’s Compensation Insurance
- Unemployment benefits
- Wage protection such as minimum wage and overtime.
Employers who hire independent contractors have an unfair advantage because labor costs less and they could charge less for their goods and services. If you are in the construction industry, a competitor who improperly misclassifies their workers as independent contractors can underbid you.
The employer who gets caught with improperly classifying workers as independent contractors can be subject to liabilities for:
- Unpaid Federal, State and Local Income Tax withholdings
- Social Security and Medicare contributions
- Workers’ Compensation Premiums
- Overtime
- Unemployment compensation
- State-mandated benefit programs
Audits
The New York Department of Labor conducts two types of audits, general and specific. The general audits are conducted randomly with nothing specific as its subject. It is interesting to note that these audits are not statistically random as specific industries, such as construction are heavily targeted. Specific groups are the subject to targeted audits as well, which are based on a variety of factors, including prior issue with improper classification. The Cornell Law Institute performed an excellent report about the misclassification of independent contractors in New York and is a great resource.
Prevailing Wage Duties
On publicly funded construction projects, some companies use missclassification as a way to avoid paying prevailing wage rates. A company that is caught can be subject to paying restitution to affected employees, fines for failing to maintain payroll and general records and submit valid and certified records.
Conclusion
Due to the increased scrutiny on the use of independent contractors, employers, especially those in the construction industry need to focus on how they classify their workers. You should conduct audits internally with legal counsel to determine if their are any issues.
If you have any questions regarding the classification of independent contractors, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.
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