That Union Thing

Senator Barack Obama (D-IL) has introduced the Independent Contractor Proper Classification Act of 2007 to address misclassification of employees as self-employed independent contractors. The bill would close tax loopholes and would give the government new enforcement powers against employers. Employers that misclassify employees often have an advantage over other employers in industries such as the construction industry because they can save money by avoiding paying workers compensation and other taxes and put the burden of paying payroll taxes on the individual.

Provisions of the bill include:

• Elimination of the ability of employers to rely on industry practice to justify misclassification
• Status determinations to be made within 90 days of filing
• Expenses of the individual in presenting the case for employee status (attorney and witness fees, etc.) to be reimbursed if successful in reclassification, and to be assessed by the government on the employer
  
• Prohibition against retaliation
• Notification by employer to each independent contractor hired of the following:
• Federal tax obligations of independent contractors
• Lack of labor and employment law protections for independent contractors
• Right of independent contractors to seek a status determination from the IRS
  
• Requirement of employers to maintain for three years records of all independent contractors hired

The bill is co-sponsored by Dick Durbin (D-IL), Edward Kennedy (D-MA), and Patty Murray (D-WA). Illinois and New York both have provisions at the state level to crack down on employers that scam the system by misclassifying employees.

• Posted: 10/01/07
Posted by: webmaster
• Category: Newsletter
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