If passed, a proposed amendment to the Fair Labor Standards Act (FLSA) will place a much larger burden on employers to properly classify employees for wage and hour law purposes, or face substantial fines. The measure comes at a time when federal and state agencies are taking a closer look at the use – and misuse – of independent contractors, freelancers, and casual employees across a number of industries.
The new bill, known as the Payroll Fraud Prevention Act of 2013, requires employers to classify all employees and give workers notice of their classification. Failure to do so would result in a fine of $1,100 per employee, or $5,000 if the violation is determined to be willful. Additionally, if the misclassification results in the underpayment of minimum wage or overtime required by the FLSA, damages would be doubled.
Employers will be faced with an affirmative duty to classify all employees even if they do not also work with independent contractors; simply forgetting to classify and provide notice of the classification is no excuse. Should the employer fail to do so, the worker will be presumed to be an employee, entitled to various legal protections and requiring the employer to comply with governing FLSA wage and hour provisions.
If you have questions about your employment status or what is required from you as an employer under the proposed legislation, the attorneys at Sommers Schwartz can discuss your situation with you. Give us a call – we’re happy to help.