Labor Dept. Considering Worker-Classification Rule

In an effort to crack down on companies that misclassify employees as independent contractors, the U.S department of Labor is contemplating a proposed regulation that would require an employer to complete a written analysis of a worker’s status, disclose that status to the worker and keep a record of the analysis on file. Testimony of Deputy Labor Secretary Seth D. Harris to the Senate’s Health, Education, Labor and Pensions committee stated that companies who misclassify employees as independent contractors can gain an advantage in the market over law abiding companies and asserted that the new rule, in conjunction with budget increases in the labor department, will significantly help in slowing the illegal practice. The testimony came during the committee’s current debate on a new bill that would boost penalties on companies convicted of misclassifying workers and require employers to notify each worker of their classification. Currently, the bill only has 7 co-sponsors and is adamantly opposed by committee republicans who think that the bill will penalize all companies, not just the few who are taking advantage of the system. With little time left in the legislative session, it is unlikely the bill will be passed before the current Congress ends.

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