When seeking reparations for catastrophic injuries and wrongful death, victims are often surprised by the red tape in New York. This red tape comes not only from state laws, but companies that learn to game these laws to protect themselves. The primary way companies do this is by outsourcing some functions to independent contractors who then take the fall when accidents occur.
One company that NBC Bay Area outed for doing this is Federal Express. FedEx uses third-party contractors rather than employees to deliver goods all across the United States. While the company claims to use software to ensure all independent contractors operate legally, some reporters question whether or not they act on findings. One company that slipped through the cracks led to a six-car pileup that killed two parents and a toddler and injured seven other people. The driver did not even have a valid driver’s license. FedEx’s defense? Not their employee, not their problem.
According to Forbes, this is not the only obstacle victims now face when seeking compensation. The recent tax reform adds a whole new problem to the mix. Plaintiffs may face higher taxes on the settlements they receive for their injuries. Not only will some victims pay taxes on the full gross amount, but they may no longer be able to take deductions for legal fees. Victims of sexual abuse and sexual harassment are just one of the many people affected by this.
The good news is that there are some exceptions for qualifying causes involving physical injury. These plaintiffs may still receive an above the line deduction. If the lawsuit relates to a plaintiff’s business then they may also deduct the legal fees as a business expense. Finally, for people who cannot deduct fees, it is important to note that this may affect them whether they battle it out in court or choose to settle quietly.