Rep. Frederica S. Wilson and Other Lawmakers Introduce the Payroll Fraud Prevention Act of 2015

The bill protects workers from being misclassified as independent contractors.

WASHINGTON – Today Congresswoman Frederica S. Wilson (FL-24), Ranking Member on the Subcommittee on Workforce Protections on the Committee on Education and the Workforce, introduced the Payroll Fraud Prevention Act of 2015, which amends the Fair Labor Standards Act to require that employers accurately classify their workers and provide employees with notice of that classification.

“Misclassification cheats hard-working Americans out of federally guaranteed labor rights and benefits, such as overtime pay, minimum wage, and family and medical leave. Misclassification cheats law-abiding businesses out of a level playing field. Misclassification cheats the American economy out of billions in tax revenues, putting a strain on already stressed programs like Medicare and Social Security,” said Rep. Wilson.  “The Payroll Fraud Prevention Act of 2015 will strengthen the Fair Labor Standards Act to ensure more American workers, businesses, and taxpayers receive the fair treatment they deserve.”

Rep. Wilson recently hosted a standing-room-only briefing during which experts and advocates spoke about the consequences of misclassification for workers, the burden it places on businesses and how it strains the federal government. The event also featured two workers who have first-hand experience with this fraudulent practice and its adverse effect. The Department of Labor, which recently issued new guidance on misclassification has been laser-focused on this critical issue, which has been at the center of debates about how to classify workers for innovative new companies like Uber and Airbnb. Just last night, during a Facebook Q&A, Labor Secretary Tom Perez weighed in, stating that “whether you are an employee or an independent contractor is very fact specific.”

Rep. Bobby Scott (VA-03), Ranking Democrat on the House Committee on Education and the Workforce; Rep. John Conyers, Jr. (MI-13); and Rep. Donald Payne, Jr. (NJ-10) are original co-sponsors of the legislation, which is a companion bill to one introduced by Sen. Robert Casey (D-PA).

Payroll fraud hurts wages, costs workers basic protections and harms economic growth,” Sen. Casey said. “We owe workers a fair shot at good job where they can receive basic workplace protections. Too many workers are classified as independent contractors when it’s clear that they are employees. This legislation is a commonsense fix that will ensure workers in Pennsylvania and throughout the nation are treated fairly.”

“Workers who are misclassified as independent contractors are denied the wages they’ve earned, the benefits to which they’re entitled, and protections they deserve under the law,” said Rep. Scott. “Dishonest businesses that misclassify their workforce put law-abiding small businesses at a disadvantage when competing for contracts. The Payroll Fraud Prevention Act would require proper classification of employees and make it a violation of the Fair Labor Standards Act to misclassify them. This bill is a responsible solution that helps both workers and businesses that play by the rules.”

“The evolving trend of misclassification represents a direct attack on the progress Americans won in the 20th Century. Calling an employee an independent contractor doesn’t make it so—and doing it to strip them of mandatory benefits, minimum wage, overtime, and workers’ compensation is not only unethical, it defrauds other taxpayers and the federal government,” said Rep. Conyers.  “The Payroll Fraud Prevention Act will clarify and strengthen the Fair Labor Standards Act to ensure every employee knows his or her rights and will have a realistic opportunity to enforce them.”

“The dishonest practice by companies of intentionally classifying their workers as independent contractors, as opposed to employees, contributes to the divide between hardworking Americans struggling to pay the bills and corporations making record profits,” said Rep. Payne. “It is a way for companies to cheat the system and deny employees decent wages, fair benefits, and critical workplace protections. When employers misclassify workers, they avoid paying payroll taxes on those workers, making it more difficult for law-abiding employers to compete and undermining our ability to make critical investments. It’s not fair to our workers, and it’s not fair to our government.”

“Payroll fraud has many victims:  of course the workers who are misclassified suffer, but high road businesses who play by the rules lose a competitive advantage when we allow less scrupulous employers to cheat the system, and state and federal coffers are also cheated out of the resources they need to serve the public,” notes Judy Conti, federal advocacy coordinator for the National Employment Law Project. “NELP commends Congresswoman Wilson for taking on this important issue and we stand ready to help her combat this serious problem.”

Provisions of the Payroll Fraud Prevention Act of 2015 can be found HERE.

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Congresswoman Frederica S. Wilson is a third-term Congresswoman from Florida representing parts of Northern Miami-Dade and Southeast Broward counties. A former state legislator and school principal, she is the founder of the 5000 Role Models for Excellence Project, a mentoring program for young males at risk of dropping out of school. Congresswoman Wilson also founded the Florida Ports Caucus, a bipartisan taskforce that coordinates federal action in support of Florida’s harbors and waterways.