Excludes the services of the sole employee of an employer that is a corporation, limited liability company or partnership, when such employee is the owner of such employer, from the definition of "employment" for purposes of unemployment insurance provisions.
TITLE OF BILL: An act to amend the labor law, in relation to the definition of "employment" for the purposes of unemployment insurance
To ensure that when the sole employee of an employer (business) which is a corporation, limited liability company or partnership, is also the owner of such employer (business), then such employee (business owner)shall not be required to pay unemployment insurance. The bill also clarifies the law as it relates to the owner of an incorporated business where the owner is the only employee of the business and to provide that such owner (employee) shall be exempt from liability for unemployment insurance contributions and shall not be required to file a quarterly unemployment insurance tax return as outlined in Section 674 (4) of the Tax Law.
SUMMARY OF PROVISIONS:
This bill amends Section 511 of the Labor Law with a new subdivision 23 entitled "Owner-employee" in which the term employment shall no longer include the services of an employee of a corporation, limited liability company or partnership, who is also the owner and is the sole employee of that corporation. The bill requires that the owner who is the sole employee of a corporation, certify, under the penalty of perjury, on its combined tax return, as required in Section 674 of Tax Law (4)(a) that its sole employee is also its owner. The bill also requires pursuant to Article 18 of the Labor Law, that any action, proceeding, fine, penalty payment, and pending interest as of the effective date of this act, arising from the inclusion of the definition of the term "employment" in this bill, shall be dismissed and invalidated.
Under current law, all business corporations, limited liability companies or partnerships are required to pay unemployment insurance which covers employees against the loss of employment, not due to their fault. However, in the case where the only employee is also the owner of a business that fails or closes, and the owner is subsequently unemployed, under current law, the owner is not entitled to receive unemployment insurance benefits.
It is not the intent of the current law to have businesses pay for unemployment insurance coverage for employees who under the current law is ineligible to receive the benefit. However, the current interpretation of the law consistently required the sole owner/employee of small business corporations to expend their scarce financial resources for services to file the required quarterly unemployment insurance tax returns and to pay for unemployment insurance. An additional unfair consequence to small business owners under current law are the penalties that are assessed for failure to file reports due to the misunderstanding of the law.
Enactment of this bill will not only clarify current law and remove the burden to file, it would put an end to any related action,
proceeding, fine, penalty and interest that remain due to violations based on the current law.
FISCAL IMPACT ON THE STATE:
This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7346 IN SENATE May 13, 2014 ___________Introduced by Sens. BOYLE, LARKIN -- read twice and ordered printed, and when printed to be committed to the Committee on Labor AN ACT to amend the labor law, in relation to the definition of "employ- ment" for the purposes of unemployment insurance THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 511 of the labor law is amended by adding a new subdivision 23 to read as follows: 23. OWNER-EMPLOYEE. THE TERM "EMPLOYMENT" SHALL NOT INCLUDE THE SERVICES OF THE SOLE EMPLOYEE OF AN EMPLOYER WHICH IS A CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP, WHEN SUCH EMPLOYEE IS THE OWNER OF SUCH EMPLOYER, AND SUCH EMPLOYER HAS CERTIFIED, UNDER THE PENALTY OF PERJURY, ON ITS COMBINED RETURN REQUIRED BY PARAGRAPH FOUR OF SUBSECTION (A) OF SECTION SIX HUNDRED SEVENTY-FOUR OF THE TAX LAW THAT ITS SOLE EMPLOYEE IS ALSO ITS OWNER. S 2. Notwithstanding any provision of article 18 of the labor law, any action, proceeding, fine, penalty payment, and interest thereon pending on the effective date of this act, arising from the inclusion within the definition of the term of "employment" pursuant to section 511 of the labor law, to a sole employee of an employer that is a corporation, limited liability company or partnership is owned by such employee, shall be dismissed and invalidated. S 3. The commissioner of taxation and finance shall promulgate all rules and regulations and take all other actions necessary to implement the provisions of this act on or before its effective date, including developing any additional tax forms or other materials necessary to effectuate the provisions of this act. S 4. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15038-01-4