A new bill designed to stop misclassification has landed in Congress. Should it pass, you’ll be hit with much more stringent reporting responsibilities.
The bill is called the Payroll Fraud Prevention Act (PFPA), and it would require employers to keep detailed records that explain whether each employee performing labor or services is an employee or a non-employee (similar to an independent contractor), as well as why.
It would also require employers to notify workers of their classification as an employee or non-employee – and direct them to a Department of Labor (DOL) website that contains info about employees’ rights, and tells them to contact the DOL if they suspect they’ve been misclassified.
The PFPA also includes costly penalties for any employer violations, including:
- Penalties of up to $5,000 per worker for misclassifying an employee as a non-employee or for violating the Act’s notice requirements, and
- Triple damages for any willful violations of minimum wage or overtime rules when a company has misclassified an employee.