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Washington Labor & Employment Wire » Bill Tracker

Fair Playing Field Act of 2010 (H.R. 6128, S. 3786)


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Core Provisions: This legislation would amend the Internal Revenue Code (the Tax Code) to strengthen both guidance regarding classification of workers as independent contractors and the tax penalties faced by employers who misclassify their employees.

The bill ends the current moratorium on Internal Revenue Service (IRS) guidance regarding worker misclassification while also requiring that the Treasury (1) issue prospective guidance clarifying the employment status of individuals for the purpose of federal employment taxes and (2) issue annual reports on worker misclassification. The bill also amends those provisions of the Tax Code providing for reduced penalties for an employer’s failure to deduct and withhold income taxes and the employee’s share of Federal Insurance Contributions Act taxes. Finally, the bill would require that any person who contracts for the services of independent contractors on a “regular and ongoing basis” provide a written statement to each independent contractor notifying them of (1) the federal tax obligations of an independent contractor, (2) the labor and employment law protections that do not apply to independent contractors, and (3) the right of the independent contractor to seek a status determination from the IRS.

The White House has indicated its support for the bill, as Vice President Joe Biden hailed the legislation as “timely” upon its introduction in the House and the Senate.

Status:  H.R. 6128 was introduced by Rep. Jim McDermott (D-WA) on September 15, 2010, and referred to the House Committee on Ways and Means. S. 3786 was introduced by Sen. John Kerry (D-MA) on September 15, 2010 and referred to the Senate Committee on Finance. The Employee Misclassification Prevention Act, H.R. 5107, S. 3254, introduced by Rep. Woolsey (D-CA) and Sen. Brown (D-OH), also seeks to address independent contractor misclassification through an amendment to the Fair Labor Standards Act.


Paycheck Fairness Act (S. 3772)

Core Provisions: This bill would revise the portion of the Fair Labor Standards Act of 1938 (”FLSA”) known as the Equal Pay Act that prohibits differentials in pay between employees of the opposite sex unless those differentials “are based on any other factor other than sex.” The bill would change this language to require that any pay differential be based only on “bona fide factors,” such as education, training or experience. The bill would also revise the portion of the FLSA concerning retaliation to prohibit retaliation against employees for inquiring about, discussing, or disclosing wages in response to a complaint, investigation, or action concerning sex discrimination. The bill would also provide for compensatory or punitive damages in a civil action against an employer for sex discrimination under the FLSA.

Status: On September 13, 2010, Senator Harry Reid (D-NV) reintroduced the Act.  The bill has been placed on the Senate Legislative Calendar under General Orders, which means that the bill could be called to the floor at anytime.  Whether it will be called to the floor in the three weeks before the election is speculative.

The Paycheck Fairness Act was previously introduced in the House during the 110th Congress as H.R. 1338.  That bill passed the House by a vote of 247 to 178.  Following the House vote, the bill was introduced in the Senate by then Senator Clinton (D-N.Y.) as S. 766 and referred to the Senate Committee on Health, Education, Labor, and Pensions.  No further action was taken.


Senate HELP Committee Holds Hearing on Independent Contractor Misclassification


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On Thursday, June 17, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on preventing employers from misclassifying employees as independent contractors. The hearing focused on the Employee Misclassification Prevention Act (EMPA), a recently introduced bill intended to reduce instances of worker misclassification through new record-keeping requirements, notice requirements, and the imposition of civil penalties for employer violations.

Chairman Harkin (D-IA) opened the hearing by arguing that independent contractors are not afforded sufficient protections under the labor law, such as those provided by minimum wage standards, overtime requirements, unemployment compensation, workers’ compensation, safety and health laws and antidiscrimination provisions. Harkin asserted that a few “unscrupulous” employers thus make economic challenges “even more difficult for their workers by intentionally misclassifying them as ‘independent contractors’ to gain an advantage over their law-abiding competitors.” Harkin also argued employee misclassification costs federal and state governments “billions of dollars in unpaid revenues.” For example, it deprives governments of the payments that support unemployment and workers’ compensation systems, as employers are only required to make these payments on behalf of employees and not independent contractors. Accordingly, Harkin posited that while employer misclassification laws are currently in place in several states, a federal legislative response is necessary.

The committee’s Ranking Member, Senator Enzi (R-WY), responded by calling EMPA an example of “what’s wrong with Washington today.” He argued that the bill would saddle small businesses with additional administrative work and needless costs. Enzi also expressed concerns that EMPA would punish honest business owners for accidental administrative mistakes, while allowing employers that intentionally misclassify workers to remain under the radar. Senator Sherrod Brown (D-OH), who introduced EMPA in the Senate, acknowledged Enzi’s concerns and stated he would work to ensure the bill’s provisions do not overly burden small businesses. He emphasized, however, his belief that employers cannot be left to “self-police,” as without any regulation employers will continue to avoid and manipulate misclassification laws in order to gain a competitive advantage. He further stated that hard economic times particularly call for labor law protections, as many individuals will “do anything” to get a job and are thus at the mercy of unscrupulous employers. Senator Isakson (R-GA) also weighed in, arguing that Congress should be “very careful” not to “demonize” those employers who are currently trying to comply with employee classification laws.

The committee first heard from Seth Harris, Deputy Secretary of the U.S. Department of Labor, who testified in support of EMPA. While Harris acknowledged some employee misclassification may be the “result of uncertainty or misapplication of often complicated laws,” he asserted that “much worker misclassification is intentional.” Harris detailed the Obama administration’s efforts to combat employee misclassification, noting that the president’s fiscal year 2011 budget proposes a $25 million enforcement initiative that includes “close cooperation” between the Department of Labor and the Internal Revenue Service on misclassification issues. Harris also cited a proposed rule currently under consideration by the DOL’s Wage and Hour Division, which mirrors EMPA by requiring employers to perform written analyses and to disclose those analyses to employees before classifying them as independent contractors. Harris underlined the DOL’s belief that federal legislation is important to support these agency efforts, citing three provisions of EMPA as particularly crucial: (1) codifying employee misclassification as a violation of the Fair Labor Standards Act, (2) creating civil monetary penalties for employer recordkeeping violations, and (3) creating a legal presumption that an individual is an employee if the employer fails to keep accurate records.

The committee also heard testimony in support of EMPA from New York State Department of Labor Commissioner Colleen C. Gardner, who detailed her own state’s efforts to combat the problem of employee misclassification, and Legal Co-Director of the National Employment Law Project, Catherine Ruckelshaus, who urged the members to pass the legislation in order to afford greater protection to low-income workers. Business owners Frank Battaglino, representing the Sheet Metal and Air Conditioning Contractors’ National Association and the Campaign for Quality Construction, and Gary Uber, on behalf of the Private Care Association, Inc., a member of the Coalition to Preserve Independent Contractor Status, also testified before the committee. Battaglino testified in support of the legislation, detailing the problems his own construction business faces with “unfair, low-wage competition,” resulting from competitors’ misclassification of workers. Uber, in contrast, cautioned the committee against passing EMPA, noting the difficulties his own business would have meeting the bill’s record-keeping requirements.

Senator Brown introduced EMPA in the Senate on April 22, 2010 (S. 3254). Rep. Lynn Woolsey (D-CA) introduced parallel legislation in the House on the same date (H.R. 5107). The House version of EMPA is currently before the House Committees on Education and Labor and Ways and Means.

A webcast of the hearing, as well as written witness testimony, is available on the HELP Committee’s website.


Employee Misclassification Prevention Act (H.R. 5107, S. 3254)


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Core Provisions: This legislation would amend the Fair Labor Standards Act (FLSA) to strengthen enforcement and penalties for misclassification of employees as independent contractors. 

The bill creates new record-keeping requirements and requires employers to provide notice to employees and those classified as non-employees (1) of their classification, (2) that their rights to “wage, hour, and other labor protections” depend upon proper classification, and (3) directing them to the Department of Labor for further information about the rights of employees.  Failure to keep the required records or provide the required notice would create a rebuttable presumption that an individual who is remunerated for the performance of labor and services by an employer is an employee of that employer.

The legislation would impose civil penalties of up to $1,100, or up to $5,000 for repeated or willful violations, for each misclassification or violation of the record-keeping or notice provisions. If a misclassification accompanies violations under the FLSA’s maximum hours or minimum wage requirements, a worker could recover double his or her liquidated damages.

The legislation would also require state unemployment insurance agencies to conduct auditing and investigative programs to detect employers that misclassify or fail to properly report compensation to workers with the effect of excluding employees from unemployment compensation coverage. Additionally, the legislation would require the DOL to target industries it determines to have frequent incidence of misclassifying workers for audits.

Secretary of Labor Hilda Solis issued a statement supporting the bill and affirming the DOL’s committing to targeting worker misclassification.

Status: H.R. 5107 was introduced by Rep. Woolsey (D-CA) on April 22, 2010, and referred to the House Committees on Education and Labor and Ways and Means.  S. 3254 was introduced by Sen. Brown (D-OH) on April 22, 2010 and was referred to the Committee on Health, Education, Labor, and Pensions.  Both the House and Senate introduced similar bills in the 110th Congress, but both bills failed to make it out of committee.


Health Care Reform Bill Includes FLSA Amendment Requiring Unpaid Breaks for Nursing Mothers

Although it has not received much attention, part of the Patient Protection and Affordable Care Act, the health care reform bill signed into law by President Obama on March 23, contains an amendment to the Fair Labor Standards Act (”FLSA”) that requires employers to provide nursing mothers unpaid break time to express milk. 

Under this amendment to section 7 of the FLSA, employers are now required to provide “a reasonable break time” for an employee to express breast milk for a nursing child ”each time such employee has need to express the milk.”   The amendment also requires provision of a “place, other than a bathroom, that is shielded from view and free from intrusion” in which to take these breaks. These breaks are mandated for up to a year following the birth of a child and do not need to be compensated by the employer. 

All employers will be required to comply with these new break requirements, except those who employ less than 50 employees if compliance for these employers would “impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature or structure of the employee’s business.” The amendment also makes clear that it does not preempt more protective state laws.  The Department of Labor has not yet issued any guidance concerning this new amendment.


Senate HELP Committee Holds Hearing on Pay Equity

On March 11, the Senate Committee on Health Education Labor and Pensions (”HELP”) convened a hearing on the problem of gender pay inequity entitled, “A Fair Share for All: Pay Equity in the New American Workplace.”In his opening remarks, Senator Tom Harkin (D-Iowa), Chairman of the Committee, noted that despite passage of the Equal Pay Act in 1963 women today make only 77 cents for every dollar a man makes. Sen. Harkin characterized pay inequity as “not just a women’s issue, but a family issue” and expressed strong support for the Paycheck Fairness Act introduced by Senators Christopher Dodd (D-Connecticut) and Barbara Mikulski (D-Maryland), which was passed overwhelming by the House in January. Harkin said the legislation would provide the same pay for equivalent jobs, require employers to disclose pay scales and job descriptions, and give women more information to enable to negotiate better deals for themselves.

Ranking Member Michael Enzi (R-Wyoming) expressed his concern that the Paycheck Fairness Act would subject employers to more litigation, particular large class actions. He also criticized the bill for adding more “burdensome government reporting requirements,” and argued that improved job training nationwide and an improved economy would resolve many pay inequity issues. Sen. Dodd rejected criticism about the possibility for increased litigation and argued that the legislation would simply ensure women get the pay that they deserve.

The first witness at the hearing was the Honorable Rosa DeLauro, U.S. Representative for Connecticut’s 3rd District. She stated that the Paycheck Fairness Act would “close numerous longstanding loopholes in the Equal Pay Act” and stiffen “penalties for employers who discriminate based on gender.” Rep. DeLauro noted that the legislation would strengthen remedies to include punitive and compensatory damages, remedies already afforded to victims of race-based discrimination under the law. In response to the prediction that the legislation would result of in torrent of class actions lawsuits, Rep. Delauro argued that employers would successfully adjust to the new legislation and avoid any increased litigation effect, just as employers did in response to the passage of race-based discrimination laws.

The next witness was Stuart Ishimaru, Acting Chairman of the Equal Employment Opportunity Commission (”EEOC”). In addition to reiterating many of the facts showing that the gender wage gap persists, Ishimaru noted that caregiver discrimination is a part of the problem. Ishimaru explained that women are more than twice as likely to work part time, often because they need to provide care for kids and other family members, and that part time work pays less and is less likely to come with benefits. Ishimaru stated, “gender-based wage discrimination is especially untenable now, in this economy, as most families have come to rely on the incomes brought in by working women to make ends meet.” Ishimaru continued that EEOC’s “work would undoubtedly be strengthened by the passage of the Paycheck Fairness Act” and that the legislation would “provide essential tools” such as improved wage data “towards realizing the promise of equal pay.”

Heather Boushey, Senior Economist at the Center for American Progress, also testified before the panel stressing that women lose an average of $434,000 over a lifetime due to the gender wage gap. Boushey stated that the “largest chunk of the gender pay gap is due to combined effect of the segregation of men and women into different industries and occupations.” Boushey argued that the “data provisions of the Paycheck Fairness Act will allow employees to access the information they need to understand if their pay is at the market rate.”

The remaining witnesses were Deborah L. Brake, Professor of Law at the University of Pittsburgh, Deborah L. Frett , Chief Executive Officer of the Business and Professional Women’s Foundation, and Jane McFetridge, a partner at Jackson Lewis, LLP.


Corporate Executive Accountability Act of 2010 (“Say on Pay Bill”)


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Core Provisions: The Corporate Executive Accountability Act (S. 3049)comprises part of the Democrats’ comprehensive financial regulatory reform package, building on separate legislation previously passed in the House (H.R. 3269). The Act aims to reform executive pay practices by granting shareholders a non-binding vote on executive pay packages and requiring companies to disclose the ratio of CEO pay to median company worker pay in their annual reports. Additionally, the Act would hold executives accountable for failure or fraud by giving regulators and investors the authority to seize bonuses from executives who have engaged in misconduct, and by prohibiting “golden parachute” arrangements for executive who are fired for cause. The Act would also prohibit the executives of publicly listed companies from cashing out all of their vested equity compensation at once in order to encourage long-term corporate viability over short-term profitability practices that encourage excessive risk taking. The Act is sponsored by Sen. Robert Menendez (D-NJ).

Bill Status: The Bill was introduced in the Senate on February 26, 2010 and referred to the Senate Committee on Banking, Housing and Urban Affairs.


Senate Approves $15 Billion Jobs Creation Bill

On February 24, 2010, the Senate easily approved a $15 billion jobs bill. The measure passed by a 70-28 vote. Thirteen Republican senators joined 55 Democrats and two Independents to approve the bill. One Democrat, Sen. Ben Nelson, voted against the bill, along with 27 Republicans.

The bill (H.R. 2847) is intended to create jobs, help small businesses grow, and rebuild public infrastructure. According to Sen. Majority Leader Harry Reid (D-NV), the bill is the first part of a multipart “jobs agenda.”

The bill includes a new program that would give companies a break from paying Social Security taxes on new employees for the remainder of 2010. It also includes a one-year extension of the Highway Trust Fund, an expansion of the Build America Bonds program ,and a provision to allow companies to write off equipment purchases.


House Resolution on Immigration Enforcement (H.Res. 1026)


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Core Provisions: This resolution calls for the mandatory use of the E-Verify program by employers of workers within the United States as well as enforcement policies that hold both employers and employees responsible for violations of United States immigration law. The resolution also states that it is a “critical responsibility” of the Federal Government to install and sustain border infrastructure and manpower to control the United States borders and protect from unauthorized passage of persons or contraband. Additionally, the resolution states that no immigration reform adopted by Congress should legalize, condone, or grant amnesty for the otherwise unlawful entry or presence of individuals in the United States.

Status: Rep. Jason Chaffetz (R-UT) and twenty-one co-sponsors introduced the resolution on January 21, 2010. It was referred to the House Committee on the Judiciary and the Committees on Education and Labor, and Homeland Security on the same day.


President Obama Signs FY 2010 Defense Appropriations Bill (H.R. 3326) Into Law


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On December 19, 2009, President Obama signed the FY 2010 Defense Appropriations Bill (H.R. 3326) into law. The bill, which passed the Senate 88-10 on December 19, 2009, was nearly held up by a strategic Republican filibuster the previous day, achieving cloture by only four votes (63-33). The filibuster was aimed at stalling the progress of Democratic-sponsored health reform legislation concurrently under consideration in the Senate. The House of Representatives had previously approved the FY 2010 Defense Appropriations Bill on September 16 by a 395-34 vote.

The bill includes provisions to extend unemployment and COBRA benefits and also prohibits Defense Department contractors and subcontractors from requiring their employees and independent contractors to agree to arbitrate certain claims. Those provisions are discussed in greater detail in the Washington Labor & Employment Wire’s previous post on the House’s passing of this legislation.

The FY 2010 Defense Appropriations Bill is Public Law No: 111-118.