Over the past few years, many employers have intentionally misclassified their workers as independent contractors instead of employees in order to reduce costs. By doing so, employers cheat their workers out of basic safeguards and benefits such as overtime, workers’ compensation, and unemployment insurance. They also deprive the government of tax revenue, and create an uneven playing field for those businesses that properly classify their workers as employees.
In an effort to curb this practice, Senators Robert P. Casey, Sherrod Brown, and Tom Harkin recently introduced the Payroll Fraud Protection Act of 2013. If passed, the bill would amend the Fair Labor Standards Act to require employers to notify all employees and non-employees of their status, and would create a presumption that an individual is an employee. The bill would also amend the Social Security Act to require state unemployment insurance agencies to implement investigative procedures and establish penalties for misclassification. Moreover, the bill includes anti-retaliation provisions that would provide individuals who question or oppose their classification with a cause of action.