NYS Department of Labor Audit Assistance for New York Employers

Why the Department of Labor Is Auditing Your Business

A NYS Department of Labor audit is an unemployment insurance audit. It reviews whether your wages were reported correctly and whether you paid the right unemployment insurance contributions for the period under review.

Getting the letter does not mean you did something wrong. The Department of Labor is required under federal unemployment insurance standards to audit a share of employers every year, and it describes most of these audits as routine and randomly selected.

Other common starting points for a DOL audit include:

• A worker you paid as an independent contractor filed for unemployment benefits.
• A prior audit led to changes in your reporting.
• One or more quarterly returns were not filed.

Whatever started it, the audit asks the same thing: do your books line up with what you reported to New York State?

A DOL Audit and a Workers' Comp Audit Are Two Different Reviews

Many owners go through a carrier premium audit in the spring and receive a Department of Labor letter in the fall, and reasonably assume it is the same process again. It is not.

The NYS Department of Labor audit reviews unemployment insurance wage reporting and the contributions you paid to the state.

A carrier workers' comp premium audit compares your actual payroll by class code against the estimate used to set your workers' comp premium.

Each audit asks for overlapping records but reads them for a different purpose, so figures that satisfied one auditor still need a fresh look for the other.

Our audit assistance covers both, which means the records we organize for one review are already in order when the other one arrives.

If your carrier audit is also underway, see how we handle it on our workers' comp audit assistance page.

The Department of Labor sends a letter that sets out the audit date, time and location, the period under review, and the records the auditor wants to see. That letter is the first thing we ask for, because it defines the scope of everything that follows.

Records can be submitted electronically through the Department of Labor's E-Audit Portal, and auditors can conduct the audit remotely. We support online, paper and in-person audits, so your preparation fits whichever format your auditor sets. Our virtual audit prep walks through how we get records ready for portal uploads and video meetings.

Records the Auditor Will Ask You to Produce

The records requested in a NYS Department of Labor audit usually include:

In an NYS-45 audit, the auditor compares the payments recorded in your books against the wages you reported on your quarterly returns. That is why payments made outside of payroll, such as checks to 1099 workers or cash disbursements coded as expenses, draw the closest attention.

We review your NYS-45 filings, payroll records, 1099s and ledger side by side before anything goes to the auditor, and we flag the payments that will need an explanation. The same payroll and classification work sits at the center of our class code and payroll review.

Paying Someone on a 1099 Does Not Settle How the State Classifies Them

A worker misclassification audit in New York turns on how the work is actually done. The Department of Labor looks at supervision, direction and control over when, where and how each person performs the work. A 1099 or a signed contractor agreement does not decide the question on its own.

What the auditor typically weighs:

For construction contractors, this usually centers on subcontractors and crew members paid outside payroll. For staffing agencies, it centers on workers whose duties and supervision vary from one client site to the next. In both cases, we help you gather the documentation that shows how each working relationship actually operates, so the auditor sees the full picture instead of a stack of 1099s.

How We Take Your DOL Audit From Letter to Final Results

What Happens After the Auditor Finishes

When the audit is complete, the auditor reviews the results with you. If no changes are needed, the audit closes. If the Department of Labor finds unreported wages or misclassified workers, it can issue an assessment for additional contributions.

If you disagree with an assessment, you have 30 days from the date of the notice to request a hearing before an administrative law judge. That deadline moves quickly, which is why we work to have your records organized and your figures reviewed well before the audit results arrive.

New York Audit Guidance From Someone Who Has Read These Records for Decades

Karen Catalano has worked in insurance since 1998, across personal lines, underwriting and commercial insurance, and has spent years reviewing payroll and classification records the way auditors review them. Her service on local and state insurance boards, regional advisory boards and Project InVEST initiatives keeps her work grounded in New York employers' real questions. Learn more about Karen and our background.

What you can count on with our NYS DOL audit help:

We are based in Williamsville and serve employers across Western New York, including Buffalo and Erie and Niagara counties, along with Rochester, Syracuse and Albany. We support NYS Department of Labor audits in person or remotely anywhere in New York State.

Send Us Your Department of Labor Audit Letter

A DOL audit is routine, and your preparation should be organized well before the audit date. Email us the Department of Labor's letter and we will review the audit period, the records requested and the next steps with you.