State unemployment tax remains one of many misclassification battlefronts for motor carriers and other transportation companies utilizing equipment or services provided by independent contractors (IC). In addition to routine unemployment tax audits by state agencies, investigations often arise as a result of “obstructed” unemployment benefit claims filed by ICs. Because just one obstructed benefit claim can prompt a broader unemployment tax audit, which may result in a costly assessment for several years in arrears (plus interest and potential penalties), such claims should be aggressively challenged.

A timely and thorough initial response, relying on the state’s applicable IC favorable law, may increase the likelihood of receiving a determination affirming the claimant’s IC status. This may serve to both avoid a broader audit, and, depending on the determinations, help support a successful resolution of future similar misclassification inquiries in that state.

Scopelitis attorneys assist clients in defending unemployment worker reclassification challenges at various stages, including:

• Review and preparation of benefit claim responses;
• Claim determination appeals;
• Unemployment tax audit facilitation and responses;
• Assessment appeals;
• Preparation and appearance for administrative appeal hearings;
• Review board appeals; and
• Judicial level appeals.

The Firm can assist directly or behind the scenes according to a client’s preferred approach and strategy considerations. Our unemployment tax team also provides proactive guidance concerning unemployment tax reporting. This includes identifying state agencies that may be able to exercise jurisdiction over interstate services and options for establishing jurisdiction in a more IC favorable state.

Scopelitis Partner Steve Pletcher directs the Firm’s federal and state employment tax section. He regularly defends against IRS and state revenue department employment and unemployment tax controversies, including worker classification challenges and accountable plan employee expense reimbursement matters. Steve also directs the Firm’s employee benefits section. Along with Pletcher, Partner Becky Trenner’s practice primarily centers on state and federal employment and unemployment tax controversies, with a focus on defending the classification of transportation owner-operators as ICs. Attorney Brandon Wiseman assists with unemployment matters.