Apparently increased enforcement of the Fair Labor Standards Act’s employee classification rules wasn’t enough. Now Congress is considering the Employee Misclassification Prevention Act — and it could be a real bear for companies of all sizes.
In recent months, the Department of Labor’s been making a lot of noise about its efforts to crack down on employers who violate employee classification rules. But EMPA raises the stakes considerably, both in terms of administrative requirements and penalties.
The proposal calls for:
- a requirement that employers provide each of their employees a written notice defining their classification
- a new DOL “employee rights Web site,” which would explain how workers might have additional rights under state statutes and offer a link to file a complaint with the DOL’s Wage and Hour Division
- specific retaliation protection for employees who file wage-and-hour complaints with the feds
- a new program under which the DOL and the IRS could trade evidence on misclassification allegations
- increased penalties on employers who misclassify workers or violate minimum wage or overtime regs. Penalties would be up to $1,100 per worker for first-time violators and up to $5,000 per employee for repeat offenders, and
- triple penalties for “willful” violations of FLSA rules.
The bill takes special aim at companies’ use of independent contractors. The rationale: Re-classifying independent contractors as employees would allow those workers minimum-wage and overtime protections — and dump more payroll taxes into federal coffers.
The bill’s been introduced in both houses of Congress. We’ll keep you posted.
