Federal lawmakers have proposed legislation that would impose stiffer civil penalties on employers who misclassify employees as independent contractors. Under the Employee Misclassification Prevention Act (S 3254, HR 5107), the penalties would increase to up to $1,100 per worker and up to $5,000 per worker for willful repeat violations.
Among other things, the law would require companies to keep accurate records of non-employees, notify workers whether they are classified as an employee or nonemployee, and prohibit retaliation against those who speak out about misclassification practices.
In addition, the law would require states to conduct audits to identify employers who misclassify workers, allow DOL and the IRS to refer incidents of misclassification to one another, and direct DOL to perform targeted audits focusing on employers in industries that frequently misclassify employees, according to Sen. Sherrod Brown (D-Ohio), sponsor of the Senate bill, which was referred to the Committee on Health, Education, Labor, and Pensions. The House bill was referred to the Committee on Education and Labor and the Committee on Ways and Means.
Read more about the proposed Employee Misclassification Prevention Act.