Legislative Update: Worker Misclassification Legislation Re-Introduced in U.S. Senate

As expected, Congress has introduced new legislation designed to deter and crack down on the misclassification of workers as independent contractors.  The Payroll Fraud Prevention Act (S. 770) was introduced on April 8, 2011 in the U.S. Senate and, similar to last term’s Employee Misclassification Prevention Act, would do the following:

• increase penalties (double liquidated damages and $5,000 per violation for repeat violators);
• impose new reporting and recordkeeping requirements;
• require employers to provide workers with notice of their classification and instructions for contacting the Department of Labor with concerns about misclassification (and create a presumption that the worker is an employee where timely notice has not been provided); and
• create a retaliation claim for workers who allege they have been discharged or discriminated against because they complained about misclassification.

As reported previously in our blog, two misclassification bills were introduced in Congress last session — the Employee Misclassification Prevention Act and the Fair Playing Field Act of 2010.  Congress held hearings on these bills, but there was no vote before the end of the session.  As worker misclassification continues to be a hot-button issue for Congress and it seems inevitable that legislation will be passed at some point, companies should continue to pay close attention to the classification of their workers and seek advice, where needed, to ensure proper classification.