HR 3178 IHCommentsClose CommentsPermalink

112th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

H. R. 3178CommentsClose CommentsPermalink

To amend the Fair Labor Standards Act of 1938 to require persons to keep records of non-employees who perform labor or services for remuneration and to provide a special penalty for persons who misclassify employees as non-employees, and for other purposes.CommentsClose CommentsPermalink

IN THE HOUSE OF REPRESENTATIVESCommentsClose CommentsPermalink

October 13, 2011CommentsClose CommentsPermalink

Ms. WOOLSEY (for herself, Mr. ANDREWS, and Mr. GEORGE MILLER of California) introduced the following bill; which was referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concernedCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Fair Labor Standards Act of 1938 to require persons to keep records of non-employees who perform labor or services for remuneration and to provide a special penalty for persons who misclassify employees as non-employees, and for other purposes.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Employee Misclassification Prevention Act’.CommentsClose CommentsPermalink

SEC. 2. CLASSIFICATION OF EMPLOYEES AND NON-EMPLOYEES.

(a) Recordkeeping and Notice Requirements- Section 11(c) of the Fair Labor Standards Act of 1938 (29 U.S.C. 211(c)) is amended--CommentsClose CommentsPermalink





(1) by striking ‘(c) Every employer subject to any provision of this Act or of any order issued under this Act’ and inserting the following:CommentsClose CommentsPermalink





‘(c) Recordkeeping and Notice Requirements-CommentsClose CommentsPermalink





‘(1) IN GENERAL- Every person subject to any provision of this Act or of any order issued under this Act’;CommentsClose CommentsPermalink





(2) by striking ‘of the persons employed by him’ and inserting the following: ‘of--CommentsClose CommentsPermalink





‘(A) each individual employed by such person’;CommentsClose CommentsPermalink





(3) by striking ‘employment maintained by him, and shall’ and inserting the following: ‘employment;CommentsClose CommentsPermalink





‘(B) subject to paragraph (2), each individual--CommentsClose CommentsPermalink





‘(i) who is not an employee within the meaning given the term in section 3(e) (referred to in this subsection as a ‘non-employee’);CommentsClose CommentsPermalink





‘(ii) whom the person has engaged, in the course of the person’s trade or business, for the performance of labor or services; andCommentsClose CommentsPermalink





‘(iii)(I) with respect to whom the person is required to file an information return under section 6041A(a) of the Internal Revenue Code of 1986; orCommentsClose CommentsPermalink





‘(II) who is providing labor or services to the person through an entity that is a trust, estate, partnership, association, company, or corporation (as such terms are used in section 7701(a)(1) of the Internal Revenue Code of 1986) if--CommentsClose CommentsPermalink





‘(aa) such individual has an ownership interest in the entity;CommentsClose CommentsPermalink





‘(bb) creation or maintenance of such entity is a condition for the provision of such labor or services to the person; andCommentsClose CommentsPermalink





‘(cc) the person would be required to file an information return for the entity under section 6041A(a) of the Internal Revenue Code of 1986 if the entity were an individual; andCommentsClose CommentsPermalink





‘(C) the remuneration and hours relating to the performance of labor or services by each individual described in subparagraph (B); andCommentsClose CommentsPermalink





‘(D) the notices required under paragraph (5),CommentsClose CommentsPermalink





and shall’; andCommentsClose CommentsPermalink





(4) by adding at the end the following:CommentsClose CommentsPermalink





‘(2) RECORDKEEPING LIMITATION- A person otherwise subject to the requirements of paragraph (1) shall have no responsibility for making, keeping, or preserving records, including the records described in such paragraph and paragraph (4), concerning the employees of any individual described in paragraph (1)(B) or the non-employees with whom such individual has engaged for the performance of labor or services for such person, unless such records are provided during the course of the trade or business to the person.CommentsClose CommentsPermalink





‘(3) PRESUMPTION-CommentsClose CommentsPermalink





‘(A) IN GENERAL- For purposes of this Act and the regulations or orders issued under this Act, an individual who is employed, or who is remunerated for the performance of labor or services, by a person, shall be presumed to be an employee of the person if--CommentsClose CommentsPermalink





‘(i) the person has not made, kept, and preserved records in accordance with subparagraphs (B) and (C) of paragraph (1) regarding the individual; orCommentsClose CommentsPermalink





‘(ii) the person has not provided the individual with the notice required under paragraph (5).CommentsClose CommentsPermalink





‘(B) REBUTTAL- The presumption under subparagraph (A) shall be rebutted only through the presentation of clear and convincing evidence that an individual described in such subparagraph is not an employee (within the meaning of section 3(e)) of the person.CommentsClose CommentsPermalink





‘(4) ACCURATE CLASSIFICATION- An accurate classification of the status of each individual described in paragraph (1) as either an employee (within the meaning of section 3(e)) of the person maintaining the records or a non-employee of such person shall be included within the records under this subsection.CommentsClose CommentsPermalink





‘(5) NOTICE-CommentsClose CommentsPermalink





‘(A) IN GENERAL- Every person subject to any provision of this Act or of any order issued under this Act shall provide the notice described in subparagraph (C) to each employee of the person and each individual classified by the person as a non-employee under paragraph (1)(B).CommentsClose CommentsPermalink





‘(B) TIMING OF NOTICE-CommentsClose CommentsPermalink





‘(i) IN GENERAL- Such notice shall be provided, at a minimum, not later than 6 months after the date of enactment of the Employee Misclassification Prevention Act, and thereafter--CommentsClose CommentsPermalink





‘(I) for new employees, upon employment; andCommentsClose CommentsPermalink





‘(II) for new non-employees who are classified under paragraph (1)(B), upon commencement of the labor or services described in such paragraph.CommentsClose CommentsPermalink





‘(ii) CHANGE IN STATUS- Each person required to provide notice under subparagraph (A) to an individual shall also provide such notice to such individual upon changing such individual’s status as an employee or non-employee under paragraph (1).CommentsClose CommentsPermalink





‘(C) CONTENTS OF NOTICE- The notice required under this paragraph shall be in writing and shall--CommentsClose CommentsPermalink





‘(i) inform the individual of the individual’s classification, by the person submitting the notice, as an employee or a non-employee under paragraph (1);CommentsClose CommentsPermalink





‘(ii) include a statement directing such individual to a Department of Labor website established for the purpose of providing further information about the rights of employees under the law;CommentsClose CommentsPermalink





‘(iii) include the address and telephone number for the applicable local office of the United States Department of Labor;CommentsClose CommentsPermalink





‘(iv) include for each individual classified as a non-employee under paragraph (1)(B) by the person submitting the notice, the following statement: ‘Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.’; andCommentsClose CommentsPermalink





‘(v) include such additional information as the Secretary shall prescribe by regulation.’.CommentsClose CommentsPermalink





(b) Special Prohibited Acts- Section 15(a) of the Fair Labor Standards Act of 1938 (29 U.S.C. 215(a)) is amended--CommentsClose CommentsPermalink





(1) by striking paragraph (3) and inserting the following:CommentsClose CommentsPermalink





‘(3) to discharge or in any other manner discriminate against any individual (including an employee) because such individual has--CommentsClose CommentsPermalink





‘(A) opposed any practice, or filed a petition or complaint or instituted or caused to be instituted any proceeding--CommentsClose CommentsPermalink





‘(i) under or related to this Act (including concerning an individual’s status as an employee or non-employee for purposes of this Act); orCommentsClose CommentsPermalink





‘(ii) concerning an individual’s status as an employee or non-employee for employment tax purposes within the meaning of subtitle C of the Internal Revenue Code of 1986;CommentsClose CommentsPermalink





‘(B) testified or is about to testify in any proceeding described in subparagraph (A); orCommentsClose CommentsPermalink





‘(C) served, or is about to serve, on an industry committee;’;CommentsClose CommentsPermalink





(2) in paragraph (5), by striking the period at the end and inserting ‘; and’; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





‘(6) to fail to accurately classify an individual as an employee.’.CommentsClose CommentsPermalink





(c) Special Penalty for Certain Misclassification, Recordkeeping, and Notice Violations- Section 16 of the Fair Labor Standards Act of 1938 (29 U.S.C. 216) is amended--CommentsClose CommentsPermalink





(1) in subsection (b)--CommentsClose CommentsPermalink





(A) in the sixth sentence, by striking ‘any employee’ each place the term occurs and inserting ‘any employee or individual’;CommentsClose CommentsPermalink





(B) in the fourth sentence, by striking ‘employee’ and inserting ‘employee or individual’;CommentsClose CommentsPermalink





(C) in the third sentence--CommentsClose CommentsPermalink





(i) by striking ‘either of the preceding sentences’ and inserting ‘any of the preceding sentences’;CommentsClose CommentsPermalink





(ii) by striking ‘one or more employees’ and inserting ‘one or more employees or individuals’; andCommentsClose CommentsPermalink





(iii) by striking ‘other employees’ and inserting ‘other employees or individuals, respectively,’; andCommentsClose CommentsPermalink





(D) by inserting after the first sentence the following: ‘Such liquidated damages are doubled (subject to section 11 of the Portal-to-Portal Pay Act of 1947 (29 U.S.C. 260)) where, in addition to violating the provisions of section 6 or 7, the employer has violated the provisions of section 15(a)(6) with respect to such employee or employees.’; andCommentsClose CommentsPermalink





(2) in subsection (e), by striking paragraph (2) and inserting the following:CommentsClose CommentsPermalink





‘(2) Any person who violates section 6, 7, 11(c), or 15(a)(6) shall be subject to a civil penalty, for each employee or other individual who was the subject of such a violation, in an amount--CommentsClose CommentsPermalink





‘(A) not to exceed $1,100; orCommentsClose CommentsPermalink





‘(B) in the case of a person who has repeatedly or willfully committed such violation, not to exceed $5,000.’.CommentsClose CommentsPermalink





(d) Employee Rights Website-CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 180 days after the date of enactment of this Act, the Secretary of Labor shall establish, for purposes of section 11(c)(5)(C)(ii) of the Fair Labor Standards Act of 1938 (as added by this Act), a single webpage on the Department of Labor website that summarizes in plain language the rights of employees as described in the amendments made by subsection (a) and other information considered appropriate by the Secretary, including appropriate links to additional information on the Department of Labor website or other Federal agency websites. In addition, such webpage--CommentsClose CommentsPermalink





(A) shall include a statement explaining that employees may have additional or greater rights under State or local laws and how employees may obtain additional information about their rights under State or local laws;CommentsClose CommentsPermalink





(B) shall be made available in English and any other languages that the Secretary determines to be prevalent among individuals likely to access the webpage; andCommentsClose CommentsPermalink





(C) may provide a link to permit individuals to file complaints online.CommentsClose CommentsPermalink





(2) COORDINATION WITH OTHER FEDERAL WEBSITES- The Secretary shall coordinate with other relevant Federal agencies in order to provide information similar to the information described in paragraph (1) (or a link to the Department of Labor webpage required by this subsection) on the websites of such other agencies.CommentsClose CommentsPermalink

SEC. 3. MISCLASSIFICATION OF EMPLOYEES FOR UNEMPLOYMENT COMPENSATION PURPOSES.

(a) In General- Section 303(a) of the Social Security Act (42 U.S.C. 503(a)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (10), by striking the period and inserting ‘; and’; andCommentsClose CommentsPermalink





(2) by adding after paragraph (10) the following:CommentsClose CommentsPermalink





‘(11)(A) Such auditing and investigative procedures as may be necessary to identify employers that have not registered under the State law or that are paying unreported wages, where these actions or omissions by the employers have the effect of excluding employees from unemployment compensation coverage; andCommentsClose CommentsPermalink





‘(B) The making of quarterly reports to the Secretary of Labor (in such form as the Secretary of Labor may require) describing the results of the procedures under subparagraph (A); andCommentsClose CommentsPermalink





‘(12) The establishment of administrative penalties for misclassifying employees, or paying unreported wages to employees without proper recordkeeping, for unemployment compensation purposes.’.CommentsClose CommentsPermalink





(b) Review of Auditing Programs- The Secretary of Labor shall include, in the Department of Labor’s system for measuring States’ performance in conducting unemployment compensation tax audits, a specific measure of their effectiveness in identifying the underreporting of wages and the underpayment of unemployment compensation contributions (including their effectiveness in identifying instances of such underreporting or underpayments despite the absence of cancelled checks, original time sheets, or other similar documentation).CommentsClose CommentsPermalink





(c) Effective Date-CommentsClose CommentsPermalink





(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by subsection (a) shall take effect 12 months after the date of the enactment of this Act.CommentsClose CommentsPermalink





(2) EXCEPTION- If the Secretary of Labor finds that legislation is necessary in order for the unemployment compensation law of a State to comply with the amendments made by subsection (a), such amendments shall not apply with respect to such law until the later of--CommentsClose CommentsPermalink





(A) the day after the close of the first regular session of the legislature of such State which begins after the date of the enactment of this Act; orCommentsClose CommentsPermalink





(B) 12 months after the date of the enactment of this Act.CommentsClose CommentsPermalink





(d) Definition of State- For purposes of this section, the term ‘State’ has the meaning given such term by section 3306(j) of the Internal Revenue Code of 1986.CommentsClose CommentsPermalink

SEC. 4. DEPARTMENT OF LABOR COORDINATION, REFERRAL, AND REGULATIONS.

(a) Coordination and Referral- Notwithstanding any other provision of law, any office, administration, or division of the Department of Labor that, while in the performance of its official duties, obtains information regarding the misclassification by a person subject to the provisions of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.) or any order issued under such Act of any individual regarding whether such individual is an employee or a non-employee contracted for the performance of labor or services for purposes of section 6 or 7 of such Act (29 U.S.C. 206, 207) or in records required under section 11(c) of such Act (29 U.S.C. 211(c)), shall report such information to the Wage and Hour Division of the Department. The Wage and Hour Division may report such information to the Internal Revenue Service as the Division considers appropriate.CommentsClose CommentsPermalink





(b) Regulations- The Secretary of Labor shall promulgate regulations to carry out this Act and the amendments made by this Act.CommentsClose CommentsPermalink

SEC. 5. TARGETED AUDITS.

The audits of employers subject to the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.) that are conducted by the Wage and Hour Division of the Department of Labor shall include certain industries with frequent incidence of misclassifying employees as non-employees, as determined by the Secretary of Labor.CommentsClose CommentsPermalink