On April 22, both houses of Congress re-introduced legislation designed to crackdown on the misclassification of workers as independent contractors. Entitled The Employee Misclassification Prevention Act, the bill will have a significant impact on employers’ current practices. If enacted, employers will be required to keep records relative to their independent contractors, specifically reflecting their status as such. Employers will also be required to provide written notice to all workers of their status as either an employee or as an independent contractor.
Additionally, the legislation would expand the Fair Labor Standards Act’s anti-retaliation provision to workers who have been discriminated against because they have sought to be accurately classified. The legislation also imposes tougher penalties of $1,100 per violation for the first offense and up to $5,000 for repeat or willful violations. Furthermore, employers who misclassify workers thereby violating minimum wage and/or maximum hour provisions of the FLSA could end up paying double the amount of liquidated damages. To ensure that workers are made aware of their rights, the bill mandates the creation of an official Department of Labor “employee rights website.” The website could make filing a claim as simple as clicking on a link and filling out a form.
Under the legislation, more cooperative efforts and the sharing of information between the Department of Labor and the Internal Revenue Service are strongly encouraged. While this bill has not yet been passed into law, employers must be cognizant of the continued focus on and the possible ramifications of worker misclassification.