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104TH CONGRESS

1ST SESSION H. R. 508

To amend the Federal Property and Administrative Services Act of 1949

to ensure proper classification as employees and independent contractors

of persons awarded Federal procurement contracts.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 13, 1995

Mr. LANTOS (for himself and Mr. SHAYS) introduced the following bill; which

was referred to the Committee on Government Reform and Oversight

A BILL

To amend the Federal Property and Administrative Services

Act of 1949 to ensure proper classification as employees

and independent contractors of persons awarded Federal

procurement contracts.

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

3 SECTION 1. CLASSIFICATION OF PERSONS AS EMPLOYEES

4 AND INDEPENDENT CONTRACTORS UNDER

5 CERTAIN PROCUREMENT CONTRACTS.

6 (a) IN GENERAL.—Title III of the Federal Property

7 and Administrative Services Act of 1949 (41 U.S.C. 251
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1 et seq.) is amended by adding at the end the following

2 new section:

3 ‘‘SEC. 317. CLASSIFICATION OF PERSONS AS EMPLOYEES

4 AND INDEPENDENT CONTRACTORS.

5 ‘‘(a) INELIGIBILITY FOR GOVERNMENT CONTRACTS

6 AND SUBCONTRACTS.—

7 ‘‘(1) IN GENERAL.—A person (including any

8 subsidiary, successor, or related entity of a person)

9 shall not be eligible for any Government contract

10 during the 2-year period beginning on the date of

11 the issuance of any final determination under Fed12 eral law that the person (including any subsidiary or

13 related entity of the person) willfully misclassified an

14 individual for purposes of any employment tax.

15 ‘‘(2) FINAL DETERMINATION.—For purposes of

16 this subsection, a determination is final if all rights

17 to appeal the determination, or to request a review,

18 rehearing, or redetermination of the matter that is

19 the subject of the determination, have been ex20 hausted or have lapsed.

21 ‘‘(b) CERTIFICATION OF ADEQUACY OF BIDS TO PAY

22 EMPLOYMENT TAXES.—A person who submits a bid or

23 proposal for a Government contract shall certify that the

24 amount of the bid or proposal is adequate to pay all em-
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1 ployment taxes with respect to all work to be performed

2 under the contract by employees of the person.

3 ‘‘(c) NOTIFICATION OF INDEPENDENT CONTRAC4 TORS.—Each Government contract shall include a require5 ment that the contractor shall provide, to each person who

6 performs work under the contract and who is treated by

7 the contractor as an independent contractor for purposes

8 of employment taxes, a notification regarding—

9 ‘‘(1) all obligations of the independent contrac10 tor under Federal and State law to withhold and pay

11 employment taxes with respect to work performed

12 under the contract by the independent contractor

13 (including work performed by employees of the inde14 pendent contractor); and

15 ‘‘(2) all statutory rights and protections that

16 are available under Federal and State law to em17 ployees of the contractor and are not available to the

18 independent contractor (including employees of the

19 independent contractor), including protections and

20 benefits under Federal laws relating to fair labor

21 standards, occupational health and safety, civil

22 rights, unemployment insurance, and worker’s com23 pensation.

24 ‘‘(d) RIGHT OF ACTION.—A person who submits a

25 bid or proposal for a Government contract and who suffers
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1 damages as a result of the award of the contract to a per2 son who knowingly and willfully submits a certification

3 under subsection (b) with respect to the contract that is

4 false, may bring an action for damages against the person

5 awarded the contract in any district court of the United

6 States in which the defendant is located.

7 ‘‘(e) DEFINITIONS.—For purposes of this section:

8 ‘‘(1) EMPLOYMENT TAX.—The term ‘employ9 ment tax’ means any tax imposed by subtitle C of

10 the Internal Revenue Code of 1986.

11 ‘‘(2) GOVERNMENT CONTRACT.—The term

12 ‘Government contract’ means a contract awarded by

13 an executive agency, and all subcontracts under such

14 a contract.

15 ‘‘(3) MISCLASSIFY.—The term ‘misclassify’

16 means to treat as an independent contractor an indi17 vidual who is an employee.’’.

18 (b) CLERICAL AMENDMENT.—The Federal Property

19 and Administrative Services Act of 1949 is amended in

20 the table of contents following the first section by adding

21 at the end of the portion of the table relating to title III

22 the following new item:

‘‘Sec. 317. Classification of persons as employees and independent contractors.’’.

23 SEC. 2. APPLICABILITY.

24 The amendments made by this Act shall apply to—
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1 (1) Government contracts entered into after the

2 expiration of the 180-day period beginning on the

3 date of the enactment of this Act;

4 (2) subcontracts under contracts covered by

5 paragraph (1); and

6 (3) options exercised under any Government

7 contract after the expiration of the 180-day period

8 beginning on the date of the enactment of this Act.

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