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New State Legislation Holds Employers Accountable for Employee Misclassification

October 25, 2010

In a recent blog, our Anaheim-based employment lawyers reported on employee misclassication, a nationwide problem affecting workers who are misclassified as "exempt" instead of "non-exempt" by employers, often to avoid complying with state and federal wage and hour laws, like paying overtime, providing minimum wage, rest breaks or meal periods, and workers' compensation, among other benefits.

Earlier this year, as our Irvine, California labor attorneys also discussed in a blog, the Employee Misclassification Prevention Act (EMPA), was introduced into the Senate by Senator Sherrod Brown (D-OH), with a companion legislation introduced into the House of Representatives by U.S. Representative Lynn Woolsey (D-CA). The EMPA, would amend the Fair Labor Standards Act of 1938, and ensure that misclassified workers have access to these fair labor standards, worker safeguards, and worker's compensation benefits, by penalizing employers who attempt to incorrectly classify employees as independent contractors.

According to Iowa Senator Tom Harkin, who is also the Senate Health, Education, Labor and Pensions Committee Chairman, employee misclassification robs employees of important labor protections, and cheats the federal and state governments out of tax revenues. The list of states fighting the practice of employee misclassification is rapidly growing, with state legislation being passed to eliminate the misclassification of workers by imposing criminal penalties on employers who intentionally classify their employees as "independent contractors, or "exempt."

In May of this year, Connecticut Governor Jodi Rell signed into law the Public Act No. 10-12, implementing EMPA recommendations. The act increases criminal and civil penalties on employers for misclassifying employers as independent contractors, and became effective on October 1, 2010. Other states imposing criminal penalties for employee misclassification include New York, Pennsylvania, Nebraska, Delaware, New Jersey and Maryland, and Illinois, among others.

Earlier this month, Governor Edward G. Rendell of Pennsylvania, signed the Construction Workplace Misclassification Act (H.B. 400) to make it a criminal offense, a third degree felony, for a construction industry contractor to willfully and knowingly engage in employee misclassification.

In August of this year, New York's Governor David Paterson signed in legislature that also targets the construction industry--the Construction Industry Fair Play Act. The law, which becomes effective this month, provides that any person working for a contractor will be classified as an employee, unless the person is a separate business entity, or unless they meet a specific set of criteria. Any contractor who willfully fails to classify a worker properly will be subject to civil and criminal penalties.

If you, or someone you know in Orange County, California has suffered employee misclassification in the workplace, contact Howard Law, PC today for a free consultation

Pennsylvania Clamping Down on Worker Misclassification, The Philadelphia Business Journal, October 14, 2010

Governor Rendell Signs Legislation Establishing the Construction Workplace Misclassification Act, PR Newswire, October 13, 2010

Governor Paterson Signs the Construction Industry Fair Play Act, New York State Department of Labor, September 03, 2010

CT Increases Penalties for Misclassifying Workers, Vision Payroll, June 7, 2010

An Act Implementing the Recommendations of the Joint Enforcement Commission on Employee Misclassification, State of Connecticut House of Representatives File No. 547, April 14, 2010

Senator Harkin Aims to "Level the Playing Field" to Protect Workers And Businesses from Employee Misclassification, California Employment Lawyers Blog, June 23, 2010

Related Web Resources:

Department of Labor (DOL): Wage and Hour Division (WHD)

Connecticut Department of Labor

New York Department of Labor

Pennsylvania Department of Labor & Industry