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Obama
Introduces Independent Contractor Legislation
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September 28, 2007
Sen. Barack Obama (D-IL) has introduced the "Independent Contractor Proper
Classification Act of 2007 (S. 2044)," which addresses the issue
of classifying employees v. independent contractors.
Behind the introduction of the legislation is Obama's belief that
employers misclassify workers as independent contractors rather than as
employees to avoid compensating for minimum wage, overtime pay and
benefits.
His legislation closes a perceived loophole in the tax code that occurs
if an employer has been consistently reporting workers as independent
contractors to the IRS and if the employer can verify its
decision-making based on reasonableness in that the employer relied on
the advice of an attorney or accountant's interpretation of the
statute.
Sponors include Senators Durbin, Kennedy, and Murray. The bill
introduced on September 12, 2007 addresses what the sponsors view as
weaknesses in the current laws regarding independent contractors. The
bill would:
- allow the IRS to require employers to reclassify
workers misclassified as independent contractors;
- authorize the IRS to issue regulations and revenue
rulings establishing standards for properly classifying workers as
independent contractors;
- eliminate the ability of employers to rely on
industry practices as a reasonable basis for classifying workers as
independent contractors;
- require the IRS to develop a procedure by which
employees could challenge their classification as independent
contractors;
- provide protections against retaliation for
workers who take advantage of the challenge procedure;
- require IRS audit of employers that have
misclassified workers and require misclassifications to be reported to
the Department of Labor;
- require DOL to investigate industries that are
revealed by IRS data to have high rates of misclassifications;
- require the DOL's FLSA poster to inform workers
of their right to challenge their classification as independent
contractors;
- require employers to notify independent contractors
of their federal tax obligations, of their right to obtain a
determination of their independent contractor status from the IRS, and
of the labor and employment law protections that apply only to
employees; and
- require employers to keep certain records
relating to independent contractors for three years.
Text of the bill:
http://thomas.loc.gov/cgi-bin/query/z?c110:S.2044:
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