Employee Misclassification Prevention Act - Amends the Fair Labor Standards Act of 1938 (FLSA) to require every person to: (1) keep records of non-employees (contractors) who perform labor or services (except substitute work), including through an entity such as a trust, estate, partnership, association, company, or corporation, for remuneration; and (2) provide certain notice to each new employee and new non-employee, including classification as an employee or non-employee and information concerning their rights under the law.
Makes it unlawful for any person to: (1) discharge or otherwise discriminate against an individual (including an employee) who has opposed any practice, or filed a complaint or instituted any proceeding related to this Act, including with respect to an individual's status as an employee or non-employee; and (2) fail to classify accurately an employee or non-employee.
Doubles the amount of liquidated damages for maximum hours, minimum wage, and notice of classification violations by an employer. Subjects a person who: (1) violates such requirements (including recordkeeping requirements) to a civil penalty of up to $1,100; or (2) repeatedly or willfully violates such requirements to a civil penalty of up to $5,000 for each violation.
Directs the Secretary of Labor to establish a webpage on the Department of Labor website that summarizes the rights of employees under this Act and other appropriate information.
Amends the Social Security Act to require, as a condition for a federal grant for the administration of state unemployment compensation, for the state's unemployment compensation law to include a provision for: (1) auditing programs that identify employers that have not registered under the state law or that are paying unreported compensation where the effect is to exclude employees from unemployment compensation coverage; and (2) establishing administrative penalties for misclassifying employees or paying unreported unemployment compensation to employees.
Requires any office, administration, or division of the Department of Labor to report any misclassification of an employee by a person subject to the FLSA that it discovers to the Department's Wage and Hour Division (WHD). Authorizes the WHD to report such information to the Internal Revenue Service (IRS).
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5107 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5107
To amend the Fair Labor Standards Act of 1938 to require persons to
keep records of non-employees who perform labor or services for
remuneration and to provide a special penalty for persons who
misclassify employees as non-employees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 22, 2010
Ms. Woolsey (for herself, Mr. Andrews, and Mr. George Miller of
California) introduced the following bill; which was referred to the
Committee on Education and Labor, and in addition to the Committee on
Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Fair Labor Standards Act of 1938 to require persons to
keep records of non-employees who perform labor or services for
remuneration and to provide a special penalty for persons who
misclassify employees as non-employees, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Employee Misclassification
Prevention Act''.
SEC. 2. CLASSIFICATION OF EMPLOYEES AND NON-EMPLOYEES.
(a) Recordkeeping and Notice Requirements.--Section 11(c) of the
Fair Labor Standards Act of 1938 (29 U.S.C. 211(c)) is amended--
(1) by striking ``(c) Every employer subject to any
provision of this Act or of any order issued under this Act''
and inserting the following:
``(c) Recordkeeping and Notice Requirements.--
``(1) In general.--Every person subject to any provision of
this Act or of any order issued under this Act'';
(2) by striking ``of the persons employed by him'' and
inserting the following: ``of--
``(A) each individual employed by such person'';
(3) by striking ``employment maintained by him, and shall''
and inserting the following: ``employment;
``(B) subject to paragraph (2), each individual--
``(i) who is not an employee within the
meaning given the term in section 3(e)
(referred to in this subsection as a `non-
employee');
``(ii) whom the person has engaged, in the
course of the person's trade or business, for
the performance of labor or services; and
``(iii)(I) with respect to whom the person
is required to file an information return under
section 6041A(a) of the Internal Revenue Code
of 1986; or
``(II) who is providing labor or services
to the person through an entity that is a
trust, estate, partnership, association,
company, or corporation (as such terms are used
in section 7701(a)(1) of the Internal Revenue
Code of 1986) if--
``(aa) such individual has an
ownership interest in the entity;
``(bb) creation or maintenance of
such entity is a condition for the
provision of such labor or services to
the person; and
``(cc) the person would be required
to file an information return for the
entity under section 6041A(a) of the
Internal Revenue Code of 1986 if the
entity were an individual; and
``(C) the remuneration and hours relating to the
performance of labor or services by each individual
described in subparagraph (B); and
``(D) the notices required under paragraph (5),
and shall''; and
(4) by adding at the end the following:
``(2) Recordkeeping limitation.--A person otherwise subject
to the requirements of paragraph (1) shall have no
responsibility for making, keeping, or preserving records,
including the records described in such paragraph and paragraph
(4), concerning the employees of any individual described in
paragraph (1)(B) or the non-employees with whom such individual
has engaged for the performance of labor or services for such
person, unless such records are provided during the course of
the trade or business to the person.
``(3) Presumption.--
``(A) In general.--For purposes of this Act and the
regulations or orders issued under this Act, an
individual who is employed, or who is remunerated for
the performance of labor or services, by a person,
shall be presumed to be an employee of the person if--
``(i) the person has not made, kept, and
preserved records in accordance with
subparagraphs (B) and (C) of paragraph (1)
regarding the individual; or
``(ii) the person has not provided the
individual with the notice required under
paragraph (5).
``(B) Rebuttal.--The presumption under subparagraph
(A) shall be rebutted only through the presentation of
clear and convincing evidence that an individual
described in such subparagraph is not an employee
(within the meaning of section 3(e)) of the person.
``(4) Accurate classification.--An accurate classification
of the status of each individual described in paragraph (1) as
either an employee (within the meaning of section 3(e)) of the
person maintaining the records or a non-employee of such person
shall be included within the records under this subsection.
``(5) Notice.--
``(A) In general.--Every person subject to any
provision of this Act or of any order issued under this
Act shall provide the notice described in subparagraph
(C) to each employee of the person and each individual
classified by the person as a non-employee under
paragraph (1)(B).
``(B) Timing of notice.--
``(i) In general.--Such notice shall be
provided, at a minimum, not later than 6 months
after the date of enactment of the Employee
Misclassification Prevention Act, and
thereafter--
``(I) for new employees, upon
employment; and
``(II) for new non-employees who
are classified under paragraph (1)(B),
upon commencement of the labor or
services described in such paragraph.
``(ii) Change in status.--Each person
required to provide notice under subparagraph
(A) to an individual shall also provide such
notice to such individual upon changing such
individual's status as an employee or non-
employee under paragraph (1).
``(C) Contents of notice.--The notice required
under this paragraph shall be in writing and shall--
``(i) inform the individual of the
individual's classification, by the person
submitting the notice, as an employee or a non-
employee under paragraph (1);
``(ii) include a statement directing such
individual to a Department of Labor website
established for the purpose of providing
further information about the rights of
employees under the law;
``(iii) include the address and telephone
number for the applicable local office of the
United States Department of Labor;
``(iv) include for each individual
classified as a non-employee under paragraph
(1)(B) by the person submitting the notice, the
following statement: `Your rights to wage,
hour, and other labor protections depend upon
your proper classification as an employee or
non-employee. If you have any questions or
concerns about how you have been classified or
suspect that you may have been misclassified,
contact the U.S. Department of Labor.'; and
``(v) include such additional information
as the Secretary shall prescribe by
regulation.''.
(b) Special Prohibited Acts.--Section 15(a) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 215(a)) is amended--
(1) by striking paragraph (3) and inserting the following:
``(3) to discharge or in any other manner discriminate
against any individual (including an employee) because such
individual has--
``(A) opposed any practice, or filed a petition or
complaint or instituted or caused to be instituted any
proceeding--
``(i) under or related to this Act
(including concerning an individual's status as
an employee or non-employee for purposes of
this Act); or
``(ii) concerning an individual's status as
an employee or non-employee for employment tax
purposes within the meaning of subtitle C of
the Internal Revenue Code of 1986;
``(B) testified or is about to testify in any
proceeding described in subparagraph (A); or
``(C) served, or is about to serve, on an industry
committee;'';
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(6) to fail to accurately classify an individual as an
employee.''.
(c) Special Penalty for Certain Misclassification, Recordkeeping,
and Notice Violations.--Section 16 of the Fair Labor Standards Act of
1938 (29 U.S.C. 216) is amended--
(1) in subsection (b)--
(A) in the sixth sentence, by striking ``any
employee'' each place the term occurs and inserting
``any employee or individual'';
(B) in the fourth sentence, by striking
``employee'' and inserting ``employee or individual'';
(C) in the third sentence--
(i) by striking ``either of the preceding
sentences'' and inserting ``any of the
preceding sentences'';
(ii) by striking ``one or more employees''
and inserting ``one or more employees or
individuals''; and
(iii) by striking ``other employees'' and
inserting ``other employees or individuals,
respectively,''; and
(D) by inserting after the first sentence the
following: ``Such liquidated damages are doubled
(subject to section 11 of the Portal-to-Portal Pay Act
of 1947 (29 U.S.C. 260)) where, in addition to
violating the provisions of section 6 or 7, the
employer has violated the provisions of section
15(a)(6) with respect to such employee or employees.'';
and
(2) in subsection (e), by striking paragraph (2) and
inserting the following:
``(2) Any person who violates section 6, 7, 11(c), or 15(a)(6)
shall be subject to a civil penalty, for each employee or other
individual who was the subject of such a violation, in an amount--
``(A) not to exceed $1,100; or
``(B) in the case of a person who has repeatedly or
willfully committed such violation, not to exceed $5,000.''.
(d) Employee Rights Website.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Secretary of Labor shall establish,
for purposes of section 11(c)(5)(C)(ii) of the Fair Labor
Standards Act of 1938 (as added by this Act), a single webpage
on the Department of Labor website that summarizes in plain
language the rights of employees as described in the amendments
made by subsection (a) and other information considered
appropriate by the Secretary, including appropriate links to
additional information on the Department of Labor website or
other Federal agency websites. In addition, such webpage--
(A) shall include a statement explaining that
employees may have additional or greater rights under
State or local laws and how employees may obtain
additional information about their rights under State
or local laws;
(B) shall be made available in English and any
other languages that the Secretary determines to be
prevalent among individuals likely to access the
webpage; and
(C) may provide a link to permit individuals to
file complaints online.
(2) Coordination with other federal websites.--The
Secretary shall coordinate with other relevant Federal agencies
in order to provide information similar to the information
described in paragraph (1) (or a link to the Department of
Labor webpage required by this subsection) on the websites of
such other agencies.
SEC. 3. MISCLASSIFICATION OF EMPLOYEES FOR UNEMPLOYMENT COMPENSATION
PURPOSES.
(a) In General.--Section 303(a) of the Social Security Act (42
U.S.C. 503(a)) is amended--
(1) in paragraph (10), by striking the period and inserting
``; and''; and
(2) by adding after paragraph (10) the following:
``(11)(A) Such auditing and investigative procedures as may
be necessary to identify employers that have not registered
under the State law or that are paying unreported wages, where
these actions or omissions by the employers have the effect of
excluding employees from unemployment compensation coverage;
and
``(B) The making of quarterly reports to the Secretary of
Labor (in such form as the Secretary of Labor may require)
describing the results of the procedures under subparagraph
(A); and
``(12) The establishment of administrative penalties for
misclassifying employees, or paying unreported wages to
employees without proper recordkeeping, for unemployment
compensation purposes.''.
(b) Review of Auditing Programs.--The Secretary of Labor shall
include, in the Department of Labor's system for measuring States'
performance in conducting unemployment compensation tax audits, a
specific measure of their effectiveness in identifying the
underreporting of wages and the underpayment of unemployment
compensation contributions (including their effectiveness in
identifying instances of such underreporting or underpayments despite
the absence of cancelled checks, original time sheets, or other similar
documentation).
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by subsection (a) shall take effect 12 months
after the date of the enactment of this Act.
(2) Exception.--If the Secretary of Labor finds that
legislation is necessary in order for the unemployment
compensation law of a State to comply with the amendments made
by subsection (a), such amendments shall not apply with respect
to such law until the later of--
(A) the day after the close of the first regular
session of the legislature of such State which begins
after the date of the enactment of this Act; or
(B) 12 months after the date of the enactment of
this Act.
(d) Definition of State.--For purposes of this section, the term
``State'' has the meaning given such term by section 3306(j) of the
Internal Revenue Code of 1986.
SEC. 4. DEPARTMENT OF LABOR COORDINATION, REFERRAL, AND REGULATIONS.
(a) Coordination and Referral.--Notwithstanding any other provision
of law, any office, administration, or division of the Department of
Labor that, while in the performance of its official duties, obtains
information regarding the misclassification by a person subject to the
provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et
seq.) or any order issued under such Act of any individual regarding
whether such individual is an employee or a non-employee contracted for
the performance of labor or services for purposes of section 6 or 7 of
such Act (29 U.S.C. 206, 207) or in records required under section
11(c) of such Act (29 U.S.C. 211(c)), shall report such information to
the Wage and Hour Division of the Department. The Wage and Hour
Division may report such information to the Internal Revenue Service as
the Division considers appropriate.
(b) Regulations.--The Secretary of Labor shall promulgate
regulations to carry out this Act and the amendments made by this Act.
SEC. 5. TARGETED AUDITS.
The audits of employers subject to the Fair Labor Standards Act of
1938 (29 U.S.C. 201 et seq.) that are conducted by the Wage and Hour
Division of the Department of Labor shall include certain industries
with frequent incidence of misclassifying employees as non-employees,
as determined by the Secretary of Labor.
<all>
Introduced in House
Introduced in House
Referred to House Education and Labor
Referred to the Committee on Education and Labor, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to House Ways and Means
Referred to the Subcommittee on Income Security and Family Support.
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