New York State DOL Audit

NYS Department of Labor Audit Attorney

If you are an employer in New York, you are subject to New York’s Labor laws. New York’s overtime law is enforced by the New York State Department of labor NYS DOL. The audit process can be scary and confusing to many business owners.

New York Overtime Law

New York has it’s own regulation on Breaks, Minimum Wage, Overtime and Wage Rates. If you are not ware of your obligations as an employer in any of these four areas, you are vulnerable to an audit by the NYS DOL. Worst case scenario, you could be sued by a former worker or the NYS DOL.

Common Violations found in NY DOL Audit

Occupational Wages– Many businesses fail to pay the correct minimum wages to employees. There’s something called the Wage Order that sets a detailed industry by industry minimum wage rate.

The other common violation is an employer failure to pay the general minimum wage rate.

The Minimum Wage rates are scheduled to increase each year on 12/31 until they reach $15.00 per hour. Employers must post a Minimum Wage Information poster in their establishment.

Location12/31/1612/31/1712/31/1812/31/1912/31/202021*
NYC – Large Employers (of 11 or more)$11.00$13.00$15.00
NYC – Small Employers (10 or less)$10.50$12.00$13.50$15.00
Long Island & Westchester$10.00$11.00$12.00$13.00$14.00$15.00
Remainder of New York State$9.70$10.40$11.10$11.80$12.50*

* Annual increases for the rest of the state will continue until the rate reaches $15 minimum wage (and $10 tipped wage). Starting 

Why Do NY Businesses Get Audited?

There are three main reasons why businesses get audited by the DOL or the NYS DOL. One of your former independent contractor, freelancer or vendor may file for unemployment or complaint with the New York State DOL. You have a complaint filed against you by an employee. Your business is in an industry that is being targeted for a labor audit. While these factors are not exhaustive, they are common. Some labor audit attorneys think that New York State DOL audits are random but we disagree. There are patterns to who gets audited and it is usually rooted in their workforce and their chosen industry.

Main focus of NY DOL Audit-Overtime Violations

The most common and most costly violation that could result from a NY DOL audit is overtime violations. A business may have misclassified an freelancers, independent contractors, or consultants and failed to pay overtime. Many businesses misclassfied employees as exempted from overtime and fail to pay overtime. Even if a business has properly classified independent contractors as employees and paid them overtime, they may still get audited for underpaying overtime. In New York covered employees are owed one and one-half times their regular, “straight-time” hourly rate of pay for all hours over 40 in a payroll week. New York State follows the U.S. Department of labor’s exemption categories. However, New York State gives workers additional protection of at least one and one-half times the minimum rate for their overtime hours in businesses covered by the Miscellaneous Wage Order.

How to Prepare for a DOL Audit

Businesses that hire a New York State DOL Audit lawyer fare much better than those that don’t. At the end of the day, it takes a balance of finess, labor law knowledge and how the New York State DOL works to workout a successful outcome. Many inexperience people accidentally make admissions to statutory violations and tax violations. For example, some employers inadvertently admit to regulatory violations when they explain the unique financial arrangements they made with their worker/employees. Only an experience employment lawyer who is aware of Federal, State, and overlapping local laws can identify the potential legal exposures.

Things that a business must gather and review with their attorney.

  1. General Ledger, supporting ledgers and journals]
  2. Payroll records such as Individual Earnings Records, Payroll Journals, Payroll Books and Summaries
  3. Copies of Federal and state payroll returns (i.e. Forms 941 s, 940s, NYS-45, NYS-4SATT, W-2s, W-3s)
  4. Bank statements
  5. Records of payments to independent contractors, free lancers
  6. Time records

This list is not exhaustive but it is reflective of what the New York State DOL Auditor will ask for and inspect. The payroll, financial and time records will play an important role in your defense.

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