2.05 Profit Calculations Activity
Natasha Mulhearn
The Department of Labor is rolling out a brand new and improved unemployment insurance (UI) system in 2024! It will enhance services to claimants, employers, and third-party representatives. You will enjoy new self-service features to make it faster and easier for you to view account activity, including balance information and payment history, send and receive correspondence, and make updates to your account. This will allow you to respond more quickly to any charges to your account and potentially prevent cost increases and time spent protesting charges. For up-to-date information, be on the lookout for special announcements in the mail or visit dol.ny.gov.
Note: Employees should be encouraged to provide Form IT-2104 to their employers. Failure to provide Form IT-2104 may result in the wrong amount of tax withheld for New York State, New York City, and Yonkers.
In 2019, Governor Cuomo signed the Farm Laborers Fair Labor Practices Act. Effective January 1, 2020, agricultural employers, and farm crew leaders under certain conditions, are required to provide unemployment insurance coverage for their employees. H-2A Foreign Guest Workers are excluded from unemployment insurance coverage. For more information, visit dol.ny.gov/immigrant-policies-and-affairs-0 or call 1-833-NY-FARMS.
For tax years beginning on or after January 1, 2019, withholding is required from any gambling winnings from a wagering transaction within New York State if the proceeds from such wager are subject to federal withholding.
Effective January 1, 2019, all employers required to file Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, or Form NYS-45-ATT, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return-Attachment, must provide complete wage and withholding information (Part C, columns a through e), each calendar quarter, for all employees. Prior to this change, employers were only required to complete Part C, columns d and e, annually or on the last return filed for the calendar year.
Employers must keep all records of employment taxes for at least four years. In addition, every employer or withholding agent required to withhold state and city taxes, and every person required to file information returns must keep all records of these taxes and information returns available for review by the Tax Department. For more information, see section 3, part Z, Records to be kept.
Employee misclassification occurs when an employer either (1) fails to report its employees to the state and pays them off-the-books or (2) improperly classifies its workers as independent contractors when they meet the legal standards for classification as employees. Misclassifying workers can have a severe impact on workers and employers in industries where the practice prevails. For employers, it creates an unfair economic advantage and imposes higher costs on responsible employers. This makes them less competitive and more likely to be underbid by businesses that intentionally misclassify workers. For workers, it affects working conditions by encouraging unscrupulous employers to ignore labor protections, such as wage and hour requirements and safety and health regulations. We need your help to keep the system fair and equitable for everyone. If you are aware of any employer committing fraud, you may report it anonymously by contacting the New York State Department of Labor, Liability and Determination, Fraud Unit, by any of these methods:
New business, agricultural, and household employers can register for UI, wage reporting, and withholding tax through NYBE at www.businessexpress.ny.gov. To register a non-profit entity, governmental entity, or Indian tribe, go to dol.ny.gov.
Certain employers that have payroll expense within the Metropolitan Commuter Transportation District (MCTD) are liable for the MCTMT for a calendar quarter if they are required to withhold New York State income tax from wages paid to employees and their payroll expense for all covered employees is more than $312,500 for that calendar quarter.
The New York State Unemployment Insurance Program, administered by the New York State Department of Labor and financed by employers, provides immediate, short-term financial protection for people who are out of work through no fault of their own. This section is designed to provide general information on the program and your role in ensuring that it functions efficiently. Here you will find information on:
Statements in this section are intended for general information and do not cover all provisions of the UI Law, and do not have the effect of law or regulation. Refer to the Need help? for website and mailing addresses, telephone, and fax numbers to contact for additional information.
Officers of all corporations, including professional, subchapter S and other closely held corporations, who perform services for the corporation are employees of that corporation. Their compensation for these services is reportable and subject to contributions. However, members of a Limited Liability Company (LLC), Limited Liability Investment Company (LLIC), or Limited Liability Trust Company (LLTC) are not considered employees and their earnings are not reportable or subject to contributions. Also, earnings of individual proprietors are not reportable or subject to contributions.
Maritime service on vessels of American registry which operate in more than one jurisdiction, regardless of where the service is performed, is covered employment in New York State, provided the vessels are normally managed and controlled from an office in this state.
The services of certain workers are not covered under the UI Law. Their earnings are not subject to contributions, and they do not accrue rights to unemployment benefits. The following is a list of specific exclusions for various types of employers.
While the statute does not define an independent contractor, UI case law has held that common law tests of master and servant must be applied in making a determination of whether services rendered by an individual are in the capacity of an employee or an independent contractor.
Under these tests, all factors concerning the relationship between the two parties must be taken into consideration to determine if the party contracting for the services exercises, or has the right to exercise, supervision, direction, or control over the party performing the services. If the circumstances demonstrate either the exercise of, or the right to exercise, such supervision, direction, and control, it must be held that the services rendered are employment.
The New York State Construction Industry Fair Play Act (Chapter 418 of the Laws of 2010) became effective on October 26, 2010. This law created a new standard for determining whether a worker is an employee or independent contractor in the construction industry and provides penalties for employers who fail to properly classify their employees.
Penalties: An employer that willfully violates the Fair Play Act by failing to properly classify its employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee for a first violation and up to $5,000 per misclassified employee for a second violation within a five-year period.
Employers may also be subject to criminal prosecution (a misdemeanor) for violations of the Fair Play Act, with a penalty of up to 30 days in jail, up to a $25,000 fine, and debarment from Public Work for up to one year for a first offense. Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000 fine, and debarment from performing Public Work for up to five years.
The New York State Commercial Goods Transportation Industry Fair Play Act became effective on April 10, 2014. The law creates a new standard for determining whether a driver of commercial vehicles who transports goods is an employee or independent contractor.
Standard: Individuals working for an employer in the commercial goods transportation industry will be presumed to be employees unless they meet all three criteria below. The individual must be:
Separate business entity: The law also contains 11 criteria for determining when a sole proprietor, partnership, corporation, or other entity will be considered a separate business entity from the employer for whom it is providing a service. If an entity meets all of the 11 criteria, it will not be considered an employee of the employer but will instead be a separate business that is itself subject to the law regarding its own employees.
Penalties: An employer that willfully violates the Fair Play Act by failing to properly classify its employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee for a first violation and up to $5,000 per misclassified employee for a second violation within a five-year period. Employers may also be subject to criminal prosecution (a misdemeanor) for violations of the Fair Play Act, with a penalty of up to 30 days in jail, up to a $25,000 fine, and debarment from Public Work for up to one year for a first offense. Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000 fine, and debarment from performing Public Work for up to five years.
Posting: Commercial goods transportation employers must post a notice about the Fair Play Act in a prominent and accessible place on the job site. Failure to post the notice can result in penalties of up to $1,500 for a first offense and up to $5,000 for a second offense. A poster may be downloaded at dol.ny.gov or can be ordered by calling the Employer Hotline toll-free at 1-888-899-8810.
Daytime students in elementary and secondary schools who perform services for employers other than nonprofit organizations, governmental entities, and Indian tribes are not covered for UI, even if they work only during summer or other vacation periods or on weekends. However, their earnings are subject to contributions if the employer is subject to the Federal Unemployment Tax Act (FUTA). Such students who perform services for certain camps (see the Covered and excluded employment chart), including those operated by nonprofit organizations, governmental entities, and Indian tribes are not covered and their earnings are not subject to contributions.
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