senate Bill S7346

2013-2014 Legislative Session

Excludes services of a sole employee who is the owner of an employer from the definition of "employment" for purposes of unemployment insurance provisions

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
May 13, 2014 referred to labor

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S7346 - Bill Details

See Assembly Version of this Bill:
A9575
Current Committee:
Senate Labor
Law Section:
Labor Law
Laws Affected:
Amd ยง511, Lab L

S7346 - Bill Texts

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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.

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BILL NUMBER:S7346

TITLE OF BILL: An act to amend the labor law, in relation to the
definition of "employment" for the purposes of unemployment insurance

PURPOSE:

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.

JUSTIFICATION:

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.

LEGISLATIVE HISTORY:

New bill.

FISCAL IMPACT ON THE STATE:

None.

EFFECTIVE DATE:

This act shall take effect immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7346

                            I N  S E N A T E

                              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

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