S.770 - Payroll Fraud Prevention Act
A bill to amend the Fair Labor Standards Act of 1938 to ensure that employees are not misclassified as non-employees, and for other purposes.
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Mr. BROWN of Ohio (for himself, Mr. HARKIN, and Mr. BLUMENTHAL) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and PensionsCommentsClose CommentsPermalink
SECTION 1. SHORT TITLE.
SEC. 2. CLASSIFICATION OF EMPLOYEES AND NON-EMPLOYEES.
‘(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
‘(III) 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.’.CommentsClose CommentsPermalink
‘(A) IN GENERAL- Every person (including every employer and enterprise), who employs any employee engaged in commerce or in the production of goods for commerce or engages any non-employee engaged in commerce or in the production of goods for commerce, shall--CommentsClose CommentsPermalink
‘(II) includes a statement directing such individual to the Department of Labor Web site established under section 3 of the Payroll Fraud Prevention Act, or other appropriate resources, for the purpose of providing further information about the rights of employees under the law;CommentsClose CommentsPermalink
‘(IV) includes for each covered individual classified as a non-employee by the person providing 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
‘(i) IN GENERAL- The notice described in subparagraph (A)(ii) shall be provided, at a minimum, not later than 6 months after the date of enactment of the Payroll Fraud Prevention Act, and thereafter--CommentsClose CommentsPermalink
‘(ii) CHANGE IN STATUS- Each person required to provide a notice under subparagraph (A)(ii) to a covered individual shall also provide such notice to such individual upon changing such individual’s status as an employee or non-employee.CommentsClose CommentsPermalink
‘(i) IN GENERAL- For purposes of this Act and the regulations or orders issued under this Act, a covered individual to whom a person is required to provide a notice under subparagraph (A)(ii) shall be presumed to be an employee of the person if the person has not provided the individual with such notice within the time required under subparagraph (B).CommentsClose CommentsPermalink
‘(ii) REBUTTAL- The presumption under clause (i) shall be rebutted only through the presentation of clear and convincing evidence that a covered individual described in such subparagraph is not an employee of the person.’.CommentsClose CommentsPermalink
‘(ii) concerning a covered 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; orCommentsClose 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 (
‘(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
SEC. 3. EMPLOYEE RIGHTS WEB SITE.
Not later than 180 days after the date of enactment of this Act, the Secretary of Labor shall establish, a single Web page on the Department of Labor Web site that summarizes in plain language the rights of employees and non-employees under the Fair Labor Standards Act of 1938, including the rights described in the amendments made by section 2.CommentsClose CommentsPermalink
SEC. 4. MISCLASSIFICATION OF EMPLOYEES FOR UNEMPLOYMENT COMPENSATION PURPOSES.
‘(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
(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
SEC. 5. 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 (
SEC. 6. TARGETED AUDITS.
The audits of employers subject to the Fair Labor Standards Act of 1938 (