when applicants use the Web to dodge background checks

Another day, another crack at cutting down on the improper classification of employees as independent contractors by making life tougher on every employer — including those abiding by the law.  

The latest attempt by Congress, and the ninth since 2007, to stymie “intentional misclassification” is called the Payroll Fraud and Prevention Act.

Introduced by Senator Bob Casey (D-PA), the bill would make the misclassification of employees as independent contractors a new federal labor offense under the FLSA, which doesn’t currently address the issue of misclassification.

The bill would also create a new category of worker: the “non-employee.”

Casey said the bill’s designed specifically to prohibit the willful misclassification of an employee as a non-employee and is in no way intended to punish those who legally use independent contractors. However, it won’t just punish those intentionally misclassifying workers; even unintentional misclassification would violate the law.

More paperwork for every employer

Many business groups are not happy with the legislation. They feel it would create additional, onerous mandates on companies that already have to deal with the complexities of the FLSA, FMLA, ADA, ERISA, as well as numerous other federal, state and local laws.

The mandate that has most dissenting businesses up in arms is the requirement for every employer to provide a classification notice to both employees and non-employees (i.e., independent contractors) performing labor or services for their organizations.

The notices must state:

  • a worker’s classification as either an employee or non-employee for whom no insurance contributions, taxes or overtime wages are paid
  • the DOL has created a website for all workers explaining their rights under federal law, and
  • workers should contact the DOL if they suspect they have been misclassified.

The notices would be due to all existing workers — even contractors — within six months following the passage of the law and to new workers upon hire.

In addition, the bill would impose additional record-keeping requirements on businesses that use contractors and subject them to more targeted government audits to ensure compliance — even in businesses where no violations have been reported.

Failure to abide by the bill’s requirements could result in some pretty steep penalties.

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