Compensation Solutions Blog
Human Resources Outsourcing (HRO – PEO – ASO – Payroll – Agency)

Federal Employee Misclassification Protection Legislation Introduced

Late last week, Ohio Senator Sherrod Brown introduced the Employee Misclassification Protection Act (EMPA), which would prevent and penalize workers from misclassifying workers as independent contractors, and provide those workers with the protections and benefits they would have earned.  The legislation would amend the Fair Labor Standards Act and the Social Security Act.

Employers would be required to provide written notice to those employees they have identified as independent contractors, which includes 1) their classification; 2) the Department of Labor (DOL)’s website established for providing additional information about employees’ rights; 3) address and telephone of their local DOL office; and 4) any additional information as required.

The EMPA would ensure that employers keep accurate records classifying each worker accordingly, and would increase penalties for noncompliance.  It would also provide protections to workers who are discriminated against because they have asked to be accurately classified.  For any infraction, employers could be fined up to $1,100 per day per employee, up to $5,000 per employee per day for repeated violations, and liquidated damages.

Lastly, the EMPA would enhance state and federal efforts to combat misclassification by mandating DOL-monitored state audits, increasing state penalties, providing a mechanism for the DOL and Internal Revenue Service to refer incidents between each other, and directing the DOL to perform audits on “frequent offender” industries.

In addition to the federal proposed legislation, many states, including New York, New Jersey, Connecticut, Nebraska and Ohio are strengthening state legislation on their own.