Federal lawmakers are currently considering the Employee Misclassification Prevention Act (“Act”).  This legislation would impose penalties on employers who improperly classify employees as “independent contractors” to avoid paying benefits to the workers.  Full-time workers who are misclassified as independent contractors miss out on rights such as workers’ compensation coverage, unemployment benefits, overtime protection, and family and medical leave. 

The proposed law would amend the Fair Labor Standards Act to penalize employers up to $10,000.00 for each misclassification.  The law would require an employer to both keep records regarding the status of its workers and to notify “non-employees” of their right to challenge a classification.  If signed into law, the Act would require state unemployment insurance agencies to conduct audits to identify employers who may be misclassifying employees.  It would also require the United States Department of Labor to perform targeted audits, focusing on employers in industries where frequent misclassification occurs.  In addition, the Act would allow the Department of Labor and the Internal Revenue Service to share information on cases involving misclassifications. 

To speak with an employment law attorney regarding the distinctions between independent contractors and employees, contact the employment law attorneys at Clouse Dunn LLP at info@cdklawyers.com.