II 

110TH CONGRESS 

2D SESSION S. 3648 

To amend the Fair Labor Standards Act to require employers to keep records 

of non-employees who perform labor or services for remuneration and 

to provide a special penalty for employers who misclassify employees 

as non-employees, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29 (legislative day, SEPTEMBER 17), 2008 

Mr. REID (on behalf of Mr. KENNEDY) (for himself, Mr. OBAMA, and Mr. 

KERRY) introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Fair Labor Standards Act to require employers to keep records of non-employees who perform labor 

or services for remuneration and to provide a special 

penalty for employers who misclassify employees as nonemployees, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Employee 

5 Misclassification Prevention Act’’. 


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1 SEC. 2. CLASSIFICATION OF EMPLOYEES AND NON-EM2 PLOYEES. 

3 (a) RECORDKEEPING AND NOTICE REQUIRE4 MENTS.—Section 11(c) of the Fair Labor Standards Act 

5 of 1938 (29 U.S.C. 211(c)) is amended— 

6 (1) by striking ‘‘Every employer’’ and inserting 

7 ‘‘(1) Every employer’’; 

8 (2) by striking ‘‘the persons employed by him’’ 

9 and inserting ‘‘(A) the persons employed by such 

10 employer’’; 

11 (3) by striking ‘‘maintained by him’’ and insert12 ing ‘‘, (B) the individuals who are not employees of 

13 the employer (within the meaning of section 3(g)) 

14 but with whom the employer, in the course of the 

15 trade or business in which the employer is engaged, 

16 has engaged for the performance of labor or services, 

17 and of the remuneration relating to the performance 

18 of labor or services by such individuals, and (C) the 

19 notices required under paragraph (3),’’; and 

20 (4) by inserting at the end the following: 

21 ‘‘(2) All records under this subsection shall contain 

22 an accurate classification of the status of each individual 

23 described in paragraph (1) as either an employee of the 

24 employer (within the meaning of section 3(g)) or a non25 employee engaged by the employer for the performance of 

26 labor or services. 


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1 ‘‘(3)(A) Every employer subject to any provision of 

2 this Act or any order issued under this Act shall provide 

3 the notice described in subparagraph (C) to each employee 

4 of the employer and each individual classified under para5 graph (2) as a non-employee engaged by the employer for 

6 the performance of labor or services. 

7 ‘‘(B) Such notice shall be provided, at minimum, not 

8 later than 6 months after the date of enactment of the 

9 Employee Misclassification Prevention Act, and thereafter 

10 for new employees, upon employment, and for non-employ11 ees engaged for the performance of labor or services, upon 

12 commencement of the services subject to such contract. 

13 Every employer shall also provide such notice to any indi14 vidual upon changing such individual’s status as an em15 ployee or non-employee under paragraph (2). 

16 ‘‘(C) The notice required under this paragraph shall 

17 be in writing and shall— 

18 ‘‘(i) inform the individual of the employer’s 

19 classification of the individual as an employee or a 

20 non-employee under paragraph (2); 

21 ‘‘(ii) include a statement directing such indi22 vidual to a Department of Labor website established 

23 for the purpose of providing further information 

24 about the rights of employees under the law; 


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1 ‘‘(iii) include the address and telephone number 

2 for the applicable local office of the Federal Depart3 ment of Labor; 

4 ‘‘(iv) include for those individuals classified by 

5 the employer as a non-employee under paragraph 

6 (2), the following statement: ‘Your rights to wage, 

7 hour, and other labor protections depend upon your 

8 proper classification as an employee or non-em9 ployee. If you have any questions or concerns about 

10 how you have been classified or suspect that you 

11 may have been misclassified, contact the U.S. De12 partment of Labor.’; and 

13 ‘‘(v) include such additional information as the 

14 Secretary shall prescribe by regulation.’’. 

15 (b) SPECIAL PROHIBITED ACT.—Section 15(a) of 

16 such Act is amended by adding at the end the following: 

17 ‘‘(6) to fail to accurately classify an individual 

18 in accordance with section 11(c).’’. 

19 (c) SPECIAL PENALTY FOR CERTAIN RECORD20 KEEPING AND NOTICE VIOLATIONS.—Section 16 of the 

21 Fair Labor Standards Act of 1938 (29 U.S.C. 216) is 

22 amended— 

23 (1) in subsection (b)— 


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1 (A) in the third sentence, by striking ‘‘ei2 ther of the preceding sentences’’ and inserting 

3 ‘‘any of the preceding sentences’’; and 

4 (B) by inserting after the first sentence 

5 the following: ‘‘Such liquidated damages are 

6 doubled (subject to section 11 of the Portal-to7 Portal Pay Act of 1947 (29 U.S.C. 260)) 

8 where, in addition to violating the provisions of 

9 section 6 or 7, the employer has violated the 

10 provisions of section 15(a)(6) with respect to 

11 such employee or employees.’’; and 

12 (2) in subsection (e), after the first sentence in 

13 the matter preceding paragraph (1), by inserting the 

14 following: ‘‘Any person who repeatedly or willfully 

15 violates section 15(a)(6) shall be subject to a civil 

16 penalty of not to exceed $10,000 for each such viola17 tion.’’. 

18 (d) EMPLOYEE RIGHTS WEBSITE.—Not later than 

19 90 days after the date of enactment of this Act, the Sec20 retary of Labor shall establish, for purposes of section 

21 11(c)(3)(C)(ii) of the Fair Labor Standards Act of 1938 

22 (as added by this Act), a single web page on the Depart23 ment of Labor website that summarizes in plain language 

24 the rights of employees under the Fair Labor Standards 

25 Act and other Federal laws. Such web page shall contain 


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1 appropriate links to additional information on the Depart2 ment of Labor website or other Federal agency websites, 

3 including wage and hour complaint forms, along with a 

4 statement explaining that employees may have additional 

5 or greater rights under State or local laws and how em6 ployees may obtain additional information about their 

7 rights under State or local laws. Such web page shall be 

8 made available in English and any other languages which 

9 the Secretary determines to be prevalent among individ10 uals likely to access the web page. The Secretary shall co11 ordinate with other relevant Federal agencies in order to 

12 provide similar information (or a link to the Department 

13 of Labor web page required by this subsection) on the 

14 websites of such other agencies. 

15 SEC. 3. MISCLASSIFICATION OF EMPLOYEES FOR UNEM16 PLOYMENT COMPENSATION PURPOSES. 

17 (a) IN GENERAL.—Section 303(a) of the Social Secu18 rity Act (42 U.S.C. 503(a)) is amended— 

19 (1) in paragraph (10), by striking the period 

20 and inserting ‘‘; and’’; and 

21 (2) by adding after paragraph (10) the fol22 lowing: 

23 ‘‘(11)(A) Such auditing and investigative pro24 grams as may be necessary to identify employers 

25 that have not registered under the State law or that 


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1 are paying unreported compensation, where these ac2 tions or omissions by the employers have the effect 

3 of excluding employees from unemployment com4 pensation coverage; and 

5 ‘‘(B) The making of quarterly reports to the 

6 Secretary of Labor (in such form as the Secretary 

7 of Labor may require) describing the results of pro8 grams under subparagraph (A); and 

9 ‘‘(12) The establishment of administrative pen10 alties for misclassifying employees, or paying unre11 ported compensation to employees without proper 

12 recordkeeping, for unemployment compensation pur13 poses.’’. 

14 (b) REVIEW OF AUDITING PROGRAMS.—The Sec15 retary of Labor shall include, in the Department of La16 bor’s system for measuring States’ performance in con17 ducting unemployment compensation tax audits, a specific 

18 measure of their effectiveness in identifying the under19 reporting of wages and the underpayment of unemploy20 ment compensation tax contributions (including their ef21 fectiveness in identifying instances of such underreporting 

22 or underpayments despite the absence of cancelled checks, 

23 original time sheets, or other similar documentation). 

24 (c) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by subsection (a) 

3 shall take effect 12 months after the date of the en4 actment of this Act. 

5 (2) EXCEPTION.—If the Secretary of Labor 

6 finds that legislation is necessary in order for the 

7 unemployment compensation law of a State to com8 ply with the amendments made by subsection (a), 

9 such amendments shall not apply with respect to 

10 such law until the later of— 

11 (A) the day after the close of the first ses12 sion of the legislature of such State which be13 gins after the date of the enactment of this Act; 

14 or 

15 (B) 12 months after the date of the enact16 ment of this Act. 

17 (d) DEFINITIONS.—For purposes of this section— 

18 (1) the term ‘‘State’’ has the meaning given 

19 such term by section 3306(j) of the Internal Rev20 enue Code of 1986 (26 U.S.C. 3306(j)); and 

21 (2) the term ‘‘session’’, as used with respect to 

22 a State legislature, means a regular, special, budget, 

23 or other session of such legislature. 


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1 SEC. 4. DEPARTMENT OF LABOR COORDINATION AND RE2 FERRAL. 

3 Notwithstanding any other provision of law, any of4 fice, administration, or division of the Department of 

5 Labor that, while in the performance of its official duties, 

6 obtains information regarding the misclassification by an 

7 employer of any individual regarding whether such indi8 vidual is an employee or a non-employee contracted for 

9 the performance of services for purposes of section 6 or 

10 7 of the Fair Labor Standards Act or in records required 

11 under section 11(c) of such Act, shall report such informa12 tion to the Employment Standards Administration of the 

13 Department. The Employment Standards Administration 

14 may report such information to the Internal Revenue 

15 Service as the Administration considers appropriate. 

16 SEC. 5. TARGETED AUDITS. 

17 The Secretary of Labor shall ensure that at least 25 

18 percent of the audits of employers subject to the Fair 

19 Labor Standards Act that are conducted by the Wage and 

20 Hour Division of the Department of Labor are focused 

21 on potential violations of the recordkeeping requirements 

22 of section 11(c) of such Act (29 U.S.C. 211(c)) (as amend23 ed by this Act). Such Division shall focus such audits on 

24 employers in industries with frequent incidence of misVerDate Aug 31 2005 22:12 Oct 01, 2008 Jkt 069200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3648.IS S3648

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1 classifying employees as non-employees, as determined by 

2 the Secretary. 

Æ 


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