Employee Misclassification Protection Act Introduced in Congress
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Senator Sherrod Brown (D-Ohio) and Rep. Lynn Woolsey (D-Calif.) introduced a bill that would make worker misclassification a violation of federal labor laws, increasing penalties for companies found to improperly classify workers as independent contractors.

By misclassifying workers as independent contractors, companies avoid withholding income taxes and paying Social Security and Medicare taxes. Each year, more than $4.7 billion in federal income and employment tax revenue is lost due to misclassification, and billions more are lost at the state level. Companies that misclassify workers save up to an estimated 30 percent on payroll costs, gaining an unfair advantage over their more responsible competitors.

The bill would require employers to classify workers as employees, using a well-defined test that has existed since 1947, and establishes a penalty for failing to do so. It requires that employers tell workers if they have been classified as independent contractors and how they can challenge that classification. The bill also protects workers who do challenge misclassification from retaliation.

The bill is another step forward in the ongoing efforts to protect workers, uphold labor standards, and level playing field for responsible contractors.