Courtney Introduces Bill to Prevent Misclassification of Workers

Today Congressman Joe Courtney (CT-2), Ranking Member of the Education and Workforce Subcommittee on Workforce Protections, introduced the Payroll Fraud Prevention Act. The bill is companion legislation to a Senate bill sponsored by Senators Robert Casey (D-PA), Sherrod Brown (D-OH), and Tom Harkin (D-IA).

“American workers should never be denied the fair labor standards and benefits that they are rightfully owed. However, some workers are misclassified by employers, denying them these rights.” Courtney said. “This bill would help ensure that workers are properly classified so that they receive adequate protections and employers fulfill their legal responsibilities,”

Original co-sponsors of Courtney’s bill include Reps. George Miller (CA-11); Donald Payne, Jr. (NJ-10); John Tierney (MA-06); and Tim Bishop (NY-1).

Provisions of the Payroll Fraud Prevention Act include:

Proper Classification and Notice to Employees

• Requires that records kept pursuant to the FLSA include an accurate classification of the worker as either an employee or a non-employee.
• Requires that all workers be accurately classified as employees or non-employees. They must be provided with written notice of their classification and directed to DOL employee rights resources.
• Creates a rebuttable presumption that, when an employer fails to provide a written notice of classification (with requisite reference to DOL website and/or resources) to any employee or non-employee, the worker will be considered an employee.

Prohibitions and Penalties

• Makes it a violation of the Fair Labor Standards Act to discharge or discriminate against a worker because he or she has opposed any practice concerning his or her classification.
• Makes it a violation of the Fair Labor Standards Act to misclassify an employee.
• Extends a private right of action to misclassified employees to recover lost wages and, when an employer also violates minimum wage or maximum hour standards, double liquidated damages.
• Subjects employers to a civil penalty up to $1,100 for misclassification violations or violations of minimum wage or overtime standards and up to $5,000 when such violations are repeated or willful.
• Employee Rights Website – Directs DOL to establish a website summarizing the rights of workers under this Act.

State Directives –

· Makes unemployment compensation grants contingent on a state having auditing and investigative procedures in place to identify employers that exclude employees from unemployment compensation;

• filing quarterly reports describing the findings of such procedures; and
• establishing administrative penalties for misclassifying employees or paying unreported compensation. DOL is also required to audit states’ performance in conducting unemployment compensation tax audits.

Departmental Coordination

• Directs all divisions of DOL to report information obtained concerning misclassification to DOL’s Wage and Hour Division, which may report such information to the IRS, as appropriate.

Directed Audits

• Directs the DOL’s Wage and Hour Division to conduct audits of industries with frequent incidence of misclassification.