It seems like the government’s crackdown on employers who misclassify W-2 Employees as Independent Contractors is getting more serious by the day. The newest sign that the focus on misclassification is not just a passing fancy appeared in a recent article in Human Resources Executive Online. According to the article, Congress is now considering amending the Fair Labor Standards Act with new provisions on misclassification.
If it passes, the amendment, known as The Employee Misclassification Prevention Act, would require your clients to post a notice containing the following wording:
“Your rights to wage, hour, and other protections depend upon your proper classification as an employee or non-employee. If you have questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.”
Employers who fail to comply could face penalties ranging from $1,100 to $5,000 per employee.
To further ensure that employees are aware of their rights, the Act would also require the Department of Labor to create a Web site that would provide additional information to employees regarding their rights under state and federal laws.
The Act would also help the government with their enforcement efforts by requiring the DOL to audit employers in industries where misclassification is prevalent and encouraging government agencies to share information about employers that misclassifying employees.
The Act is expected to pass, so if your clients are not already aware of the dangers of misclassification, now may be the time to clue them in. If they are uncertain whether contractors should be classified as W-2 Employees or Independent Contractors, you may want to refer them to the IRS’ three main criteria for determining correct worker classification. And remember, FoxHire can help you assist clients with any Independent Contractor to W-2 Employee conversions.