Employers who use workers they classify as contract laborers, freelancers, casual workers, contract employees — or independent contractors by any other name — will want to monitor the progress of a new bill in the U.S. Senate.
Dubbed the Payroll Fraud Prevention Act of 2013, Senate bill 1687’s aim is to take another jab at employers that may be improperly classifying employees as non-employees.
This has become something of a crusade over at the U.S. Department of Labor, where suspicious minds are on the lookout for workers who are being underpaid due to misclassification.
Writing for his law firm’s blog, John E. Thompson, partner at Fisher & Phillips, warns that this bill, if enacted, would require employers to send a somewhat detailed notification to workers who are non-employees.
Failure to follow through would lead to substantial penalties, he writes. “S. 1687 would among other things make it a freestanding violation of the federal Fair Labor Standards Act ‘to wrongly classify an employee … as a non-employee,’” he writes, taking language from the bill.
The bill “would require that an employer or other person subject to the FLSA both ‘accurately classify’ a worker as being either an employee or a ‘non-employee’ and give the individual written notice of this classification. Absent the notice, a worker would be presumed to be an employee; the presumption could be rebutted only ‘through the presentation of clear and convincing evidence,’” Thompson says.
Penalties for violations will be double the amount that had been assessed for similar Fair Labor Standards Act misclassification violations in the past, Thompson advises.
If an employer is found to be in violation under Senate bill 1687 of minimum-wage and/or overtime underpayments, “then the additional, equal amount normally imposed as FLSA liquidated damages for those violations would itself be doubled. Moreover, the bill provides for a civil money penalty of up to $1,100 as to each affected individual; the per-person maximum would rise to $5,000 in the case of a repeated or willful violation,” he says.
He notes that the DOL will be targeting “certain industries” where the classification issue has come up before.
About the Author
Will has enjoyed a 20-year career in leadership positions in the hospitality and travel industry throughout the U.S. with the Hyatt, Sheraton, Hilton, Renaissance and Steamboat Ski and Resort corporations. Will received a Bachelor of Science degree from the University of Massachusetts at Amherst. From 2000-2007, he served as President and CEO of the Greater Colorado Springs Chamber of Commerce. He also served as Vice President-Special Projects for the University of Colorado Foundation from 2007 to 2009. Will is a past Chair of the Board of Directors of the National Homeland Defense Foundation and former member of the United States Chamber of Commerce Committee of 100. He is married to Nan, has five wonderful children, and enjoys coaching, traveling, hiking, golfing and skiing.