Mistakenly classifying employees as independent contractors not only violates the Fair Labor Standards Act (FLSA), but it also deprives workers of certain rights.
The Payroll Fraud Prevention Act recently introduced in the Senate would take a firm stance against employers who misclassify workers. The bill would require employers to:
• Keep records clearly indicating the status of each worker as an employee or non-employee
• Notify workers of their classification as an employee or non-employee
• Pay steeper penalties for misclassifying workers and violating their overtime and minimum wage rights
The bill would also provide protections to workers who are fired or otherwise discriminated against for trying to be reclassified as employees. Further, the DOL’s Wage and Hour Division (WHD) will conduct audits on industries that frequently misclassify workers.
In a press release, Ohio Senator Sherrod Brown stated,
“Intentionally treating workers as subcontractors when they really are employees is payroll fraud: it cheats workers, taxpayers and other businesses that play by the rules.”
Need help determining whether a worker is an employee or an independent contractor? Check out easy-to-use software for guidance.