The ongoing work on worker reclassification has yet another added component. In addition to the Memorandum of Understanding that the USDOL has had 23 states and multiple municipalities agree to, and the pronouncement by Presidential candidate Hillary Clinton that independent contractor misclassification is a prime campaign issue for her, we have two senators who have introduced a bill to alter the FLSA to outlaw employee misclassification.
Payroll Fraud Prevention Act of 2015
The Payroll Fraud Prevention Act of 2015 was introduced by Senators Bob Casey (D-PA) and Al Franken (D-MN). It is in reality just a rehash of previous attempts to do the same thing in 2013 and 2014, but this, along with the other things, indicate the gathering inertia of the government to change how independent contractors are defined and used.
The bill seeks to amend the Fair Labor Standards Act (FLSA) to add a new category of worker called the “non-employee.” It would require employers to provide notices to workers about their classification as an employee or a “non-employee”. Failure to provide this notice and the resultant misclassification will result in a $5000 fine per case.
No chance of passing
This bill has no chance of passing in this current Congress just as bills in the past have not passed. It is however, another indication of the gathering steam of the clamp down on the use of independent contractor. This, along with numerous lawsuits against companies like Uber and Lyft and the attention a Presidential campaign will bring, will make this a prime target of discussion in the coming year. Increased awareness tends to breed discontent sometimes and we may see state legislatures taking up the issue as well. With enough pressure even a Republican controlled Congress could be convinced to pass just such a bill.
Get your house in order
Even absent new legislation there is enough current regulation to make it prudent to take the time and effort to insure that your use of independent contractors truly meets the standards required. None of these laws prevent the use of “true” independent contractors, but with potential legislation calling the misclassification “fraud” it is time to make sure you are truly classifying people correctly.
Let’s face it many of you are not. Searching my blog and reading the posts listed below will provide you with guidance on properly classifying independent contractors. You can also search my blog in the search bar on the right by using the term “independent contractor” to learn more. Naturally you can also reach out to me and I will be able to provide some guidance.