July 2010
By: Walter J. Liszka, Esq.
At one time there was an old adage - "I'm from the Government, I'm here to help you." With the rapid expansion of employee protective legislation at both the federal and state level, that adage has obviously gone by the wayside with regard to most businesses. This article provides you another example of how our brethren at the federal level of the U. S. Government are again attempting to "stick it" to employers.
On April 22, 2010, two (2) identical bills (HR-5107 and S-3254) entitled the Employee Misclassification Prevention Act were presented in both Houses of Congress. The aim of these bills is to amend certain portions of the Fair Labor Standards Act to allegedly combat employers' misclassification of workers as independent contractors rather than employees and thereby circumvent certain protections and benefits that are only granted to employees, such as minimum wage laws, overtime compensation, coverage under employment discrimination laws, unemployment insurance and workers' compensation. These bills were presented by Lynn Woolsey (CA) in the House and Sherrod Brown (OH) in the Senate.
If passed, the Employee Misclassification Prevention Act would impose the following changes with regard to the Fair Labor Standards Act:
- Employers will be penalized for misclassification of workers as independent contractors when they should have been classified as employees;
- Employers will be responsible for keeping records on whether each worker has been classified as an employee or a non-employee/independent contractor. Employers were only required previously to keep and maintain records pertaining to employees;
- Employers must give actual notice to each worker of his/her classification and provide that worker with access to information about the rights only granted to employees and, furthermore, advise the worker that he/she can procure more information about employee rights from the Department of Labor; and
- If the employer fails to keep accurate records on the workers' classification or, in the alternative, fails to give that worker proper notice of his/her classification, the worker is presumed to be an employee and therefore entitled to all the protections and benefits granted to employees. This presumption can only be overcome by clear and convincing evidence that the worker is not an employee.
The proposed Act also adds certain anti-retaliation provisions prohibiting employers from discharging or discriminating against individuals (employee and/or independent contractor) for opposing any alleged illegal practice; instituting proceedings concerning the worker's status as an employee or non-employee; testifying in any proceeding concerning the worker's status as an employee or non-employee or for serving on any industrial committee.
If an employer is found to have (1) misclassified a worker; (2) failed to give notice to the worker of his/her classification; or (3) failed to keep accurate records, the employer may face a fine of up to $1,100.00 for each individual who is the subject of the violation. In the event of repeated or willful violations, the employer can face a fine of up to $5,000.00.
While similar bills to the one just set forth were "run up the flag pole" in 2008 and did not even survive committee perusal, there seems to be a greater emphasis on these bills at this time and, if passed, they may pose various serious problems for employers.
