BILL NUMBER: S6469

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

 
PURPOSE OF THE BILL:

This bill would amend Article 18 of the Labor Law to establish the
"employer" among multiple entities as the entity that pays an individual
for services performed when the supervision, direction, and control is
exercised jointly by the referring entity and by clients of an entity
that refers and pays workers.

 
SUMMARY OF PROVISIONS:

Section 1 of this bill would add a new subsection (4) to Labor Law § 512
establishing the "employer" among multiple entities as the entity that
pays an individual for services performed that constitute employment.
This bill would allow an exception based upon written contractual agree-
ments.
              

Section 1 of this bill would also provide that among the multiple enti-
ties, if one entity provides payment, the experience rating of that
payment entity will transfer to a new payment entity.

Section 2 of this bill would make it effective on the first of January
next succeeding the date on which it shall have become law.

 
JUSTIFICATION:

Labor Law § 512 defines "employer" and Labor Law § 560 provides condi-
tions for "terms of coverage" but both do not address situations where
an individual is paid by one entity but performs services for another
entity. Among multiple entities, each entity may successfully argue it
is not an employer, and hence not responsible for Unemployment Insurance
("UI") obligations under Article 18 of the Labor Law.

This bill would close a loophole in current law that allows employers to
avoid UI contributions in situations involving multiple entities where
an individual is paid by one entity and provides services to another
entity (e.g., employment agencies and their client businesses).

Under current law, one entity may argue an absence of direction, super-
vision, and control over an individual that, for example, the entity has
placed with another entity. Alternatively, another entity, may argue
that it is not the entity that paid the individual for the services that
constitute employment.

For example, in Matter of John Lack Associates, LLC, Memorandum and
Order 516638 (3rd Dept., 2013), an agency called John Lack Associates,
LLC provides waiters to restaurants. The agency explains the duties and
requirements of a particular job to individuals on a list, the individ-
ual provides the uniform and equipment, the job site provides the place
where services are performed, and the agency pays the individual. Under
current law, the Appellate Division was unable to find that the agency
is an employer. The job sites may be multiple in a situation such as
this and holding the job sites responsible is equally challenging.

 
LEGISLATIVE HISTORY:

This bill was introduced in both houses as Departmental Bill  61 in 2015
(A.7504/ S.4850); it passed the Assembly on June 2, 2015, and again on
May 3, 2016, but failed to pass the Senate.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This bill would take effect on the first of January following the date
on which it was enacted.