As an alternative to a molotov cocktail....
June 18, 2011 7:30 AM   Subscribe

Asking this for my dog's groomer. Her boss failed to pay the groomer's unemployment tax all this time. Now the business is going under and my groomer can't file for unemployment.

This is in the state of Michigan. "Unemployment tax" is the phrase used by the groomer, though she may have meant "unemployment insurance" if that makes a difference.
How do I report her boss? Will the fact that the business is going under make a difference to the State? I sure hope not! The boss needs to be nailed for this failure. How would this nailing best be accomplished; i.e., what entities should be contacted? I don't particularly care to report anonymously, though I will if the MeFites think it best.
posted by BostonTerrier to Work & Money (6 answers total) 1 user marked this as a favorite
Michigan's Unemployment Insurance Agency Problem Resolution Offices might be one place to start.
posted by jon1270 at 8:03 AM on June 18, 2011 [1 favorite]

Did the employer provide the worker with W2 forms annually? Or did she receive 1099s?

If 1099s, it means that the employer classified the worker as an independent contractor (which makes her liable for self-employment tax as well). The worker will have to try to prove she was an employee and not a contractor, which may be a complicated process. (In other words, regardless of how the worker may feel about it, it could have been a legitimate classification, depending on how much control the "boss" exercised over the work performed.)

If the employer provided W2s, they should have been paying SUTA (unemployment tax), and the worker should file a fraud claim with the unemployment agency. Some info here, including how to report suspected misclassification.
posted by beagle at 8:39 AM on June 18, 2011

A groomer is likely to be a contractor rather than a salaried employee. If the former, absent significant independence as part job responsibilities, it could be difficult to claim that a salaried employee was the correct classification.
posted by zippy at 10:23 AM on June 18, 2011

If the former, absent significant independence as part job responsibilities, it could be difficult to claim that a salaried employee was the correct classification.

That sentence is confusing enough that I'm half thinking you got it backwards, Zippy. A lack of independence in her work would strengthen her case that she was an employee rather than a contractor. Not necessarily salaried, but an employee nonetheless.
posted by jon1270 at 10:49 AM on June 18, 2011

If she got a W-2 she can claim unemployment insurance even if her boss wasn't paying in. The fact that the taxes were withheld, but not paid in, is an issue between the state and her employer. full stop.

If she got a 1099, she's probably SOL. Regardless of whether the 1099 classification was correct or incorrect.

(I have to say I wouldn't blow the guy in for this, but rather remind him somehow that financing your cashflow issues by not paying payroll taxes is an incredibly fucking bad idea. When he gets caught, and he will get caught, the penalties will be enough to put him out of business if business is as dire as he says. Better he fesses up, calls the state and works out a deal. They will make sure the deal is reasonable enough so that his business survives, but if you blow him in they'll drop the hammer on him. That said, if he refuses to straighten things up, fuck'em, rat him out.)

A well intentioned family member of mine was more scared of the banks than the state. Trust me, the banks are who you hold off on paying - they know they've got the most to lose. The plus side was that we found out that if you are honest, respectful and proactive the state will go out of their way to solve things as painlessly as possible. The even showed her how to appeal penalties and what not based solely on the basis of the businesses precarious financials.
posted by JPD at 11:35 AM on June 18, 2011

The employer pays a tax to provide unemployment insurance for employees.

Unless she was a bonafide 1099 employee, she *should* be eligible for UI, regardless of what the employer did or did not do with the taxes.

Where the trouble lies is that since the employer wasn't paying the insurance, they probably also weren't reporting the earnings. So when the UI person looks up their file, they have no earnings with which to qualify. I believe this can be corrected with an appeal and some paystubs.

("I have to say I wouldn't blow the guy in for this"

That's a construction I've never heard before.)
posted by gjc at 7:46 PM on June 18, 2011

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