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New Legislation to Reduce Employee Misclassification

May 4, 2010

In yesterday's blog, our employment attorneys based in Orange County, California, discussed Senator Sherrod Brown's introduction of the Employee Misclassification Prevention Act (EMPA) into the Senate last month.

According to Iowa Senator Tom Harkin (D-IA), who is also Chairman of the Senate Health, Education, Labor and Pensions Committee, employee misclassification is a problem that not only cheats workers out of important labor protections like wage and hour rights, the right to overtime pay, and the right to workman's' compensation, it cheats the state and federal government out of tax revenues.

Harkin claims that when employers misclassify employees, state and local governments are undermined, which increases costs for taxpayers or reduced services for the public. Attorney General for Ohio, Rich Cordray claims Ohio was documented in a study as losing nearly $160 million per year for employee misclassification. President Obama's Administration claims that if employers kept better records on classification over the next ten years, $7 billion could be potentially raised.

Senator Brown states that the EMPA would significantly reduce the prevalence of employee misclassification by:

  • Ensuring that employers keep accurate records reflecting the status of each worker as an "employee" or a "non-employee."
  • Requiring that employers notify workers of their employment classification, as an "employee" or "non-employee."
  • Creating a website for employees that would inform workers about their state and federal wage and hour rights.
  • Providing protection to workers who experience discrimination because they seek accurate classification from their employers.
  • Making employers aware that misclassifying workers violates the Fair Labor Standards Act.
  • Increasing employer penalties when employees are misclassified, or when employers are found to have violated employee's minimum wage and overtime rights.

Brown also states that the EMPA would improve federal and state efforts to track and put an end to employee misclassification by:

  • Conducting mandatory state audits to identify employers who are routinely misclassifying workers.
  • Requiring that the Department of Labor (DOL) monitor each state's effort to identity misclassification.
  • Encouraging and directing states to harden their stance and penalties for employee misclassification.
  • Permitting the DOL and the IRS to work together to refer misclassification incidents to one another.
  • Having the DOL perform audits that are focused on employers in industries where employees are frequently misclassified.

Howard Law, PC represents employees who have been misclassified and who have experienced violations of wage and hour laws. Our team of experienced California Labor & Employment Attorneys will aggressively represent you and protect your rights. Call us today at 1-800-872-5925.

Heads Up: Bill Brings New Heat on Employee Classifications, HR Morning, May 3, 2010

Sen. Brown Joins Colleague in Announcing Bill to Ensure that Workers Receive Protection and Benefits They Have Earned, Sherrod Brown Press Release, April 22, 2010

Related Web Resources:

California Department of Industrial Relations (DIR): The Division of Labor Standards Enforcement