Proposed Legislation Targets Misclassification of Workers

In an effort to remedy what is a pervasive problem across the United States, Congress has introduced “The Employee Misclassification Prevention Act” that would amend the Fair Labor Standards Act (the federal law governing overtime and minimum wage) by imposing record keeping and notice requirements designed to identify workers misclassified as “exempt” (i.e. not entitled to overtime and sometimes even minimum wage) or as independent contractors. Specifically, employers would have to provide each hired individual written notification of the following:

• that individual's classification (employee or non-employee);

• a statement directing the individual to the Department of Labor website;

• the contact information for the local Department of Labor office;

• for any person classified as a non-employee, a statement that: “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

• any additional information prescribed by the Secretary.

Additionally, employers would be required to keep records, similar to the work and wage records kept for employees, for each contractor hired. The Act provides employers six months from the bill's effective date to notify current employees/contractors of their classification. Future workers would be informed of their status at the time of hire. Failure to comply with notice requirements would result in a presumption that non-employees, such as independent contractors, are in fact, employees. To rebut this presumption, an employer would have to show clear and convincing evidence establishing otherwise.

Violations of this Act will be subject to civil penalties of at least $1,100 up to $5,000 per violation.