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THE PURCHASE OF A CHECK CASHING BUSINESS DID NOT TRANSFER THE UNEMPLOYMENT INSURANCE OBLIGATIONS OF THE SELLER TO THE PURCHASER; THE LABOR LAW 581 CRITERIA FOR THE TRANSFER OF UNEMPLOYMENT INSURANCE OBLIGATIONS WERE NOT MET (THIRD DEPT).

The Third Department, reversing the Unemployment Insurance Appeal Board, determined the unemployment insurance obligations of PTL Check Cashing Corp. were not transferred to PLS Check Cashiers of New York Inc. when PLS entered an asset purchase agreement with PTL in order to acquire PTL’s license to operate at PTL’s former location in the Bronx:

“Labor Law § 581 establishes an experience-rating system that allows for variations in the unemployment insurance contribution rates from the standard rate of qualified employers in certain situations” … . Under the statute, when a business is transferred either whole or in part from one employer to another, the transferee shall take over and continue the unemployment insurance experience account of the transferor … . A transfer, however, will not be deemed to have occurred if (1) the transferee has not assumed any of the transferor’s obligations, (2) the transferee has not acquired any of the transferor’s goodwill, (3) the transferee has not continued or resumed the transferor’s business either in the same establishment or elsewhere, and (4) the transferee has not employed substantially the same employees as those of the transferor … . …

It is undisputed that PLS did not assume any of PTL’s financial obligations and did not hire any of its employees. Moreover, while PLS operated from the same Bronx location, its business included a variety of financial services and was not limited to check cashing, which was PTL’s sole business. Significantly, the ability to operate from the Bronx location was necessary in order for PLS to obtain a license from the Department of Financial Services given the geographic limitations applicable to businesses that offer check cashing services. Although the asset purchase agreement listed other property included in the sale, PLS’s president testified that the tangible assets were disposed of and the only asset that was of value was the opportunity to acquire the license to operate from the Bronx location. Notwithstanding the fact that goodwill was generally referenced as property included in the sale, PLS did not use PTL’s brand, logo or phone number and had its own customer base, negating any expectation that it would be patronized by PTL’s customers. In view of the foregoing, substantial evidence does not support the Board’s finding that a transfer of business occurred under Labor Law § 581 (4) such that PLS acquired the unemployment insurance experience rating of PTL … . Matter of PLS Check Cashiers of N.Y. Inc. (Commissioner of Labor), 2021 NY Slip Op 05142, Third Dept 9-30-29

 

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