Misclassification of Independent Contractors May Become New Federal Labor Offense
Since July 2007, about half the states have passed laws addressing the misclassification of independent contractors by employers. Similar legislation has yet to be passed by Congress.
On November 12, 2013, Senator Bob Casey introduced a bill called the Payroll Fraud Prevention Act of 2013 at a hearing of the Senate Subcommittee on Employment and Workplace Safety. While recognizing that independent contractors serve a valuable role in our economy, Senator Casey focused on the need for federal legislation outlawing the intentional misclassification of employees as independent contractors.
Under this proposed legislation, the misclassification of employees as independent contractors would become a new federal labor offense and would carry with it civil penalties for failure to comply. If passed, employers would be required to provide a classification notice to both employees and non-employees. The proposed legislation would apply to both businesses that use independent contractors and those that do not.
We will need to wait to see if Congress moves forward with this legislation. Either way, businesses need to be aware of the import of non-employee versus employee classifications as it evaluates its workforce and makes hiring and contracting decisions.
Loren Speziale represents corporations and small businesses in employment-related actions. Contact her at firstname.lastname@example.org for more information on employee classification matters or any other business law matter.