New York Employers Beware: Do Not Delay In Returning Unemployment Insurance Forms!

Hodgson Russ LLP

New York employers recently received a letter from Carlton N. Boom, director, Unemployment Insurance Division, New York State Department of Labor, announcing changes in the unemployment insurance law. According to the letter, these changes were necessitated by the fact that New York’s Unemployment Insurance Trust Fund (UITF) is grossly underfunded as a result of the large number of claims paid during the Great Recession. Although NYS 2607-2013 imposes numerous changes, the one that will have a significant impact on employment practices is the requirement that employers “timely” return and “adequately respond” to requests for information from the DOL. A failure to do so may result in the imposition of financial penalties.

Effective October 1, 2013, subdivision 2 of Section 597 of the Labor Law was amended to add a new paragraph (d) that specifies:

“An employer’s account shall not be relieved of charges resulting in an overpayment of benefits when the commissioner determines that the overpayment was made because the employer or the agent of the employer failed to timely or adequately respond to a request for information in the notice of potential charges or other such notice requesting information in relation to a claim under this Article . . .”

Instead overpayments will revert to the UITF rather than being credited to the employer’s account. Exceptions include situations where “a commissioner’s error is shown” or the employer’s failure was the “direct result of a disaster emergency declared by the governor or president.” The law permits the commissioner to “relieve an employer of charges the first time that the employer fails to provide timely or adequate information” but only if the employer provides “good cause” for the failure. Although an employer may file an appeal to contest overpayments, appeals can take several months.

Many employers tell separating employees that they will not contest their eligibility for unemployment benefits. This practice may now result in adverse financial consequences to the employer especially if it is later determined that benefits were erroneously granted. Similarly, the same financial penalties may apply if the employer is aware of information that could disqualify the employee but fails to disclose it.

What steps should an employer take now to prevent adverse financial consequences? Employers should ensure that they or their agent have a mechanism in place so that requests from the DOL are timely and adequately handled. To assist employers, the State Information Data Exchange System (SIDES) has been created to allow employers to respond electronically to the DOL’s request for employee separation information. SIDES is available at

Another significant change that becomes effective January 1, 2014, involves the relationship between separation pay and unemployment insurance benefits. Section 591 of the Labor Law has been amended to add a new subdivision (6) that precludes the payment of benefits for any week in which the claimant receives dismissal pay that is greater than the maximum weekly unemployment benefit (now $405). The amendment, however, will not apply if the dismissal pay commences more than 30 days after termination. Employers may want to review their separation agreements to reflect this change.

Finally New York employers should take note that the state taxable wage limitation will increase on January 1, 2014, from $8,500 to $10,300 with annual increases thereafter through 2026.

The Bottom Line for Employers

• Employers should observe DOL time limits in responding to information requests

• Employers should respond truthfully and completely to information requests

• Employers may want to review when dismissal pay starts under separation pay arrangements

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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