On December 12. 2012, Rep. Erik Paulsen (R. Minn.) introduced a bill that bears many similarities to a bill introduced earlier this year by 33 Democrats. The Independent Contractor Tax Fairness and Simplification Act (H.R. 6653) would, like the Fair Playing Field Act (H.R. 4123) introduced
Federal IC Laws and Bills
The Fair Playing Field Act of 2012: Congress Is Trying Once Again to End ‘Safe Harbor’ for Businesses that May Have Misclassified Employees as Independent Contractors
Congress Reintroduces the “Employee Misclassification Prevention Act,” Which Would Create a Federal Offense for Misclassification of Employees as Independent Contractors
Following on the heels of aggressive new measures announced by the U.S. Department of Labor and IRS in the past month and the recent enactment of a new California law to crack down on willful misclassification of employees as independent contractors, Rep. Lynn Woolsey (D. Calif.) reintroduced, as H.R. 3178…
Senate Re-Loads on Independent Contractor Misclassification: New Bill Characterizes Misclassification as “Payroll Fraud”
On Friday, April 8, 2011, Senators Sherrod Brown (D-Ohio), Tom Harkin (D-Iowa), and Richard Blumenthal (D-Conn.) introduced the Payroll Fraud Prevention Act (S. 770), a trimmed-down version of the Employee Misclassification Prevention Act bill that was introduced into both houses of Congress a year ago. Taking a cue…
President Obama’s State of the Union Speech Highlights Federal Focus on Independent Contractor Misclassification Issue and 1099’s
Listening to President Obama address issues of national importance during his 2011 State of the Union address last night, anyone familiar with independent contractor compliance and 1099 issues could not help but notice two meaningful references to these two related matters, both of which gained widespread attention in 2010.
1. …
Congress Misfires with Double-Barreled Approach to Misclassification of Employees as Independent Contractors
Commentary:
As noted previously in prior articles and postings on this blog, Congress is poised to pass a labor and a tax bill that will discourage businesses from misclassifying employees as independent contractors and end the issuance of Form 1099s to workers who are not legitimate independent contractors. Both bills…
Congressional Passage of Misclassification Legislation Is Likely to End the Flood of State Laws Governing Independent Contractors
In the absence of federal legislation addressing the issue of misclassification of employees as independent contractors, no less than 16 states have passed their own laws seeking to curtail misclassification of employees as independent contractors, including five states so far in 2010: Connecticut, Nebraska, New York, Vermont, and Wisconsin.
While Federal Bills Would Crack Down on Misclassification, They Would Not Curtail the Use of Legitimate Independent Contractors For Those Who Make Timely Use of Compliance Alternatives
As noted in the preceding blog post on this site (see below), Congress has now introduced in this session of Congress two bills seeking to crack down on misclassification of employees as independent contractors: the Employee Misclassification Prevention Act (EMPA) and the Fair Playing Field Act of 2010. Although those two bills, if enacted, would dramatically change the landscape of federal IC legislation, neither should end the use of legitimate independent contractors. Rather, businesses would be able to continue to use ICs provided that the legal tests are satisfied for independent contractor status under federal and state laws. This blog post discusses the ways by which businesses can enhance their compliance with existing and proposed IC laws, including two alternatives to the costly and often unacceptable alternative of reclassifying independent contractors as employees.
Fair Playing Field Act of 2010: The End of ‘Safe Harbor’ for Businesses Misclassifying Employees as Independent Contractors
In the past three years, 16 states have passed legislation seeking to curtail the misuse of the independent contractor classification. Yet, despite congressional studies finding that misclassification contributes to the federal and state tax gaps and deprives misclassified employees of workplace protections, Congress has not made independent contractor legislation a national priority until this year.
Now, the second of two bills has been introduced in Congress this year that will not only discourage businesses from continuing to issue Form 1099s to workers who are not legitimate independent contractors, but also will impose obligations on businesses to inform individuals they treat as independent contractors how to challenge their classification.
While the other shoe may be about to drop on companies that may be misclassifying employees as independent contractors, Congress has tempered this latter bill by including a limited form of amnesty for businesses that have had a reasonable basis for past misclassifications.
Neither of the two federal bills, if enacted, would legislate an end to the use of independent contractors; rather, businesses may continue to use independent contractors if they satisfy the legal tests for independent contractors under federal and state laws. As set forth in a forthcoming blog post on this site, businesses can avail themselves of timely alternatives to the costly and often unacceptable alternative of reclassifying independent contractors as employees.
Senate Committee Moves Ahead with Federal Bill Outlawing Misclassification of Employees as Independent Contractors
The Senate Committee on Health, Education, Labor and Pensions (HELP) wasted no time in holding a hearing on the “Employee Misclassification Prevention Act” (EMPA), which was introduced jointly on April 22, 2010 by the Senate (S. 3254) and House (H.R. 5107). On June 17, 2010, the Senate HELP Committee, headed by its Chairman, Tom Harkin (D-IA) and the Ranking Member of the Committee, Michael B. Enzi (R-WY), led a hearing by the full Committee where a high-ranking member of the Obama Administration and three other panelists spoke in favor of EMPA, and one panelist spoke in opposition to the bill.