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By James T. Madore, Newsday

Long Island could lose up to 28% of its jobs by Dec. 31 because of the coronavirus and subsequent economic shutdown, according to a report released Thursday.

The estimated net loss of up to 375,000 jobs stems from businesses never reopening, and from many of those that do reopen not being able to recall all the workers who were laid off or furloughed. The state Department of Labor reports that the Island had about 1.3 million nonfarm jobs last year.

About 270,000 people were laid off in Nassau and Suffolk counties in March and April, the height of the pandemic; only 48,000 jobs were recouped in May. The pink slips were most prevalent among low-wage employees, those with a high school diploma or less, and Hispanics — because those groups are heavily represented in the hardest-hit industries: restaurants/hotels, health care/social services and retail, the report states.

The coronavirus employment losses will mean less economic activity on Long Island — down an estimated $61 billion this year, the report projects. That would represent about 38% of the gross domestic product, the sum of all goods and services produced here.

Consumer spending accounted for about 70% of Long Island’s 2018 GDP of $162.4 billion, according to the most recent data from the federal Bureau of Economic Analysis.

“Earnings and spending losses may be even greater in 2021 owing to prolonged recovery within some sectors coupled with expiring unemployment benefits,” said the report’s author, HR & A Advisors, an economic development consulting firm in Manhattan.

The leader of the HIA-LI, one of Long Island’s largest business organizations, agreed, saying business owners are reluctant to invest in buildings, equipment and people until a COVID-19 vaccine becomes available. 

“The report’s numbers are spot on,” said Joe Campolo, a business law attorney and chairman of the group formerly called the Hauppauge Industrial Association. “Right now, businesses don’t know if they’re going to make it. Until there’s a vaccine, we’re going to be hurting,” he said on Thursday.

The counties commissioned the 99-page report in April to bolster their lobbying for additional federal and state aid. HR & A consultants estimated the 2020 revenue loss for Nassau is $360 million and for Suffolk, $325 million. Both are expected to see big drops in sales-tax collections because consumer spending is down. 

“With the fastest rise of unemployment on record leading to a complete fall off of economic activity, this report further outlines the stark reality of our local economy,” Nassau County Executive Laura Curran said in releasing the report at a Melville event with Suffolk County Executive Steve Bellone. “We cannot recover from this devastating crisis alone — Washington needs to step in now with support for local governments, so we can continue to provide vital services for our residents,” she said.

Curran and others pointed to the report’s finding that Hispanics experienced a disproportionate share of layoffs because of their strong representation on the payrolls of tourism and hospitality businesses, which were shut down for more than three months.

For example, restaurants, hotels and other hospitality businesses shed about 65,000 jobs in the pandemic’s first two months, or two thirds of the sector’s total work force. And Hispanics make up 27% of the sector’s work force, the report states.

“This pandemic has caused hundreds of thousands of Long Islanders to lose their jobs, shuttered businesses, and turned our local economy upside down,” Bellone said. “This economic devastation will be extended for more than a decade if the federal government doesn’t provide disaster aid to our region.”

The report predicts it will take two years for restaurants, hotels, tourist attractions, warehouses, recreation businesses and arts organizations to rebound, and even then they will have 25% fewer employees than before the virus struck. 

Faring somewhat better, with a recovery period of one year, is a group that includes real estate agents, retail stores, farms, construction, utilities, health care, education, manufacturing and trade companies. Still, 15% of those jobs will be permanently lost, the report states.

The quickest recovery — six months — will occur in the sector that includes finance, insurance, information, professional and technical services, and government, with only a 5% reduction in total employment.

“Recovery will occur in waves, with the starting point and duration differing by industry depending on public policy interventions, industry adaptivity, firm-worker dynamics and business size,” the report states.

The report, costing up to $130,000, was paid for by the counties’ industrial development agencies using fees collected from developers. Among those contributing research were Hofstra University, the developers’ group Association for a Better Long Island, and the HIA-LI.

The report provides further evidence for economists’ predictions that the recession won’t end quickly, said Steven Kent, an economics professor at Molloy College and former analyst at the investment bank Goldman Sachs in Manhattan.

“This analysis suggests a rapid v-shaped recovery is unlikely on Long Island; it’s going to take a couple of years and resemble the Nike Swoosh logo,” he said on Thursday. “We’ve had a dramatic dip in economic activity, faster than any other economic downturn. So, the recovery is going to take some time.”

Read it on Newsday’s website.

As prudent business owners know, the distinction between employees and independent contractors is critical to ensure that employers are handling unemployment insurance, taxes, health insurance, workers’ compensation insurance, and other matters properly. Misclassification of an employee as an independent contractor (rather than as an employee) can lead to years of penalties, fines, back payments being assessed, and other problems against employers. That’s the situation our client, a technology company in the education space, found itself in when an individual the company treated only as an independent contractor alleged in an unemployment insurance filing that she was actually an employee.

Given that this individual had agreed in writing before she performed service that she was an independent contractor and not an employee, our client thought the unemployment claim would be denied outright. Unfortunately for our client, the New York State Department of Labor (“DOL”) agreed with the individual, and found she was an employee entitled to unemployment benefits. The DOL then sought to expand the issue, and attempted to go back nearly five years to retroactively declare that all the company’s independent contractors were really employees and to collect employer taxes on all payments to them from 2016 to the present (and going forward). That’s when the company turned to CMM to challenge that decision.  

Determining whether an employer-employee relationship exists involves an assessment of the extent to which the supposed “employer” exercised control over the results of the individual’s work and, more importantly, the means by which those results are produced. CMM’s Christine Malafi and David Green defended the company’s position, and the resulting hearing spanned numerous days, where CMM adduced testimony and evidence demonstrating that this individual was in total control of her own schedule, had the freedom to accept or decline all or any assignments, and that she worked independently, with the company only ensuring proper services and compliance with regulations and laws in the performance of those services – all of which, CMM argued, pointed to an independent contractor relationship.

CMM’s efforts paid off. In a major victory for our client, the Administrative Law Judge found “insufficient indicia demonstrating the requisite level of supervision, direction, and control to be an employer” – essentially, that the individual (as well as the hundreds of other individuals in the same position) was an independent contractor, not an employee.

“Thank you so much for your direction and guidance throughout this process,” the client wrote to CMM upon learning of the result. “We are elated with the outcome.”

If your business is facing an investigation by the Department of Labor (DOL) or other government agency, please reach out to our Labor & Employment team for guidance. We have helped countless businesses move forward. Learn more here.

CMM’s Labor & Employment team has secured the dismissal of a complaint filed against its client, a Suffolk County technology manufacturer.

Months after quitting his job with the company, a former employee filed a complaint with the New York State Division of Human Rights, charging the employer with discriminatory practices. The manufacturing company, a longtime CMM client, turned to us for guidance. After reviewing the facts, CMM’s Christine Malafi and Vincent Costa submitted a position statement strongly denying the allegations, based on significant evidence that disproved all claims of discrimination.

In a major win for our client, the Regional Director of the State Division of Human Rights agreed with CMM, stating: “After investigation, and following opportunity for review of related information and evidence, the Division has determined that there is no probable cause to believe that the employer has engaged in or is engaging in the unlawful discriminatory practice complained of.” CMM’s review of the facts and strong position statement based on the evidence ultimately convinced the Division of Human Rights to dismiss the complaint.

If your business is facing an investigation by the Department of Labor (DOL), Division of Human Rights, or other government agency, please reach out to our Labor & Employment team for guidance. We have helped countless businesses move forward. Learn more here.