New Federal Bill Targets Misclassification

A new federal bill to get tough on companies that misclassify employees as independent contractors was introduced Thursday, April 22, by Sen. Sherrod Brown, D-Ohio, and Rep. Lynn Woolsey, D-California.

The Employee Misclassification and Prevention Act would require employers to keep records on the status of each worker and increase penalties on employers that misclassify workers, according to Sherrod’s office. It would also create an employee rights Web site to inform workers about their rights and would create protections for workers discriminated against because they sought accurate classification.

The bill also would require states to conduct audits to identify misclassification, and to strengthen their own penalties for misclassification. In addition, the bill would allow the Department of Labor and IRS to refer incidents of misclassification to each other and to direct states.

Also, the Department of Labor would be directed to conduct targeted audits of industries that frequently misclassify workers.

Brown cited a study by the Ohio Attorney General’s Office that the state loses at least $160 million a year because of worker misclassification.

Secretary of Labor Hilda Solis lauded the bill, and said her department is already addressing the issue of misclassification.

“The Department of Labor is working with the vice president’s Middle Class Task Force and the Department of Treasury on a multi-agency initiative to develop strategies to address this issue,” Solis said in a release. “The administration’s budget request for fiscal year 2011 includes $25 million for the Department of Labor as part of this initiative, including $12 million for increased enforcement of wage and overtime laws in cases where employees have been misclassified.

“The Wage and Hour Division is currently considering how to best target its FY 2011 enforcement efforts and is emphasizing misclassification in its ongoing FY 2010 enforcement strategy.”  

Filed by Staffing Industry Analysts, a sister company of Workforce Management. To comment, e-mail editors@workforce.com.

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