II 

111TH CONGRESS 

2D SESSION S. 3254 

To amend the Fair Labor Standards Act of 1938 to require persons to 

keep records of non-employees who perform labor or services for remuneration and to provide a special penalty for persons who misclassify 

employees as non-employees, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 22, 2010 

Mr. BROWN of Ohio (for himself, Mr. HARKIN, Mr. DURBIN, Mrs. MURRAY, 

Mr. CASEY, and Mr. MERKLEY) 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 of 1938 to require 

persons to keep records of non-employees who perform 

labor or services for remuneration and to provide a special penalty for persons who misclassify employees as 

non-employees, 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 Misclassifi5 cation 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 ‘‘(c) Every employer subject to 

7 any provision of this Act or of any order issued 

8 under this Act’’ and inserting the following: 

9 ‘‘(c) RECORDKEEPING AND NOTICE REQUIRE10 MENTS.— 

11 ‘‘(1) IN GENERAL.—Every person subject to 

12 any provision of this Act or of any order issued 

13 under this Act’’; 

14 (2) by striking ‘‘of the persons employed by 

15 him’’ and inserting the following: ‘‘of— 

16 ‘‘(A) each individual employed by such per17 son’’; 

18 (3) by striking ‘‘employment maintained by 

19 him, and shall’’ and inserting the following: ‘‘em20 ployment; 

21 ‘‘(B) subject to paragraph (2), each indi22 vidual— 

23 ‘‘(i) who is not an employee within the 

24 meaning given the term in section 3(e) (re25 ferred to in this subsection as a ‘non-em26 ployee’); 


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1 ‘‘(ii) whom the person has engaged, in 

2 the course of the person’s trade or busi3 ness, for the performance of labor or serv4 ices; and 

5 ‘‘(iii)(I) with respect to whom the per6 son is required to file an information re7 turn under section 6041A(a) of the Inter8 nal Revenue Code of 1986; or 

9 ‘‘(II) who is providing labor or serv10 ices to the person through an entity that 

11 is a trust, estate, partnership, association, 

12 company, or corporation (as such terms 

13 are used in section 7701(a)(1) of the In14 ternal Revenue Code of 1986) if— 

15 ‘‘(aa) such individual has an 

16 ownership interest in the entity; 

17 ‘‘(bb) creation or maintenance of 

18 such entity is a condition for the pro19 vision of such labor or services to the 

20 person; and 

21 ‘‘(cc) the person would be re22 quired to file an information return 

23 for the entity under section 6041A(a) 

24 of the Internal Revenue Code of 1986 

25 if the entity were an individual; and 


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1 ‘‘(C) the remuneration and hours relating 

2 to the performance of labor or services by each 

3 individual described in subparagraph (B); and 

4 ‘‘(D) the notices required under paragraph 

5 (5), 

6 and shall’’; and 

7 (4) by adding at the end the following: 

8 ‘‘(2) RECORDKEEPING LIMITATION.—A person 

9 otherwise subject to the requirements of paragraph 

10 (1) shall have no responsibility for making, keeping, 

11 or preserving records, including the records de12 scribed in such paragraph and paragraph (4), con13 cerning the employees of any individual described in 

14 paragraph (1)(B) or the non-employees with whom 

15 such individual has engaged for the performance of 

16 labor or services for such person, unless such 

17 records are provided during the course of the trade 

18 or business to the person. 

19 ‘‘(3) PRESUMPTION.— 

20 ‘‘(A) IN GENERAL.—For purposes of this 

21 Act and the regulations or orders issued under 

22 this Act, an individual who is employed, or who 

23 is remunerated for the performance of labor or 

24 services, by a person, shall be presumed to be 

25 an employee of the person if— 


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1 ‘‘(i) the person has not made, kept, 

2 and preserved records in accordance with 

3 subparagraphs (B) and (C) of paragraph 

4 (1) regarding the individual; or 

5 ‘‘(ii) the person has not provided the 

6 individual with the notice required under 

7 paragraph (5). 

8 ‘‘(B) REBUTTAL.—The presumption under 

9 subparagraph (A) shall be rebutted only 

10 through the presentation of clear and con11 vincing evidence that an individual described in 

12 such subparagraph is not an employee (within 

13 the meaning of section 3(e)) of the person. 

14 ‘‘(4) ACCURATE CLASSIFICATION.—An accurate 

15 classification of the status of each individual de16 scribed in paragraph (1) as either an employee 

17 (within the meaning of section 3(e)) of the person 

18 maintaining the records or a non-employee of such 

19 person shall be included within the records under 

20 this subsection. 

21 ‘‘(5) NOTICE.— 

22 ‘‘(A) IN GENERAL.—Every person subject 

23 to any provision of this Act or of any order 

24 issued under this Act shall provide the notice 

25 described in subparagraph (C) to each employee 


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1 of the person and each individual classified by 

2 the person as a non-employee under paragraph 

3 (1)(B). 

4 ‘‘(B) TIMING OF NOTICE.— 

5 ‘‘(i) IN GENERAL.—Such notice shall 

6 be provided, at a minimum, not later than 

7 6 months after the date of enactment of 

8 the Employee Misclassification Prevention 

9 Act, and thereafter— 

10 ‘‘(I) for new employees, upon em11 ployment; and 

12 ‘‘(II) for new non-employees who 

13 are classified under paragraph (1)(B), 

14 upon commencement of the labor or 

15 services described in such paragraph. 

16 ‘‘(ii) CHANGE IN STATUS.—Each per17 son required to provide notice under sub18 paragraph (A) to an individual shall also 

19 provide such notice to such individual upon 

20 changing such individual’s status as an 

21 employee or non-employee under paragraph 

22 (1). 

23 ‘‘(C) CONTENTS OF NOTICE.—The notice 

24 required under this paragraph shall be in writ25 ing and shall— 


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1 ‘‘(i) inform the individual of the indi2 vidual’s classification, by the person sub3 mitting the notice, as an employee or a 

4 non-employee under paragraph (1); 

5 ‘‘(ii) include a statement directing 

6 such individual to a Department of Labor 

7 Web site established for the purpose of 

8 providing further information about the 

9 rights of employees under the law; 

10 ‘‘(iii) include the address and tele11 phone number for the applicable local of12 fice of the United States Department of 

13 Labor; 

14 ‘‘(iv) include for each individual classi15 fied as a non-employee under paragraph 

16 (1)(B) by the person submitting the notice, 

17 the following statement: ‘Your rights to 

18 wage, hour, and other labor protections de19 pend upon your proper classification as an 

20 employee or non-employee. If you have any 

21 questions or concerns about how you have 

22 been classified or suspect that you may 

23 have been misclassified, contact the U.S. 

24 Department of Labor.’; and 


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1 ‘‘(v) include such additional informa2 tion as the Secretary shall prescribe by 

3 regulation.’’. 

4 (b) SPECIAL PROHIBITED ACTS.—Section 15(a) of 

5 the Fair Labor Standards Act of 1938 (29 U.S.C. 215(a)) 

6 is amended— 

7 (1) by striking paragraph (3) and inserting the 

8 following: 

9 ‘‘(3) to discharge or in any other manner dis10 criminate against any individual (including an em11 ployee) because such individual has— 

12 ‘‘(A) opposed any practice, or filed a peti13 tion or complaint or instituted or caused to be 

14 instituted any proceeding— 

15 ‘‘(i) under or related to this Act (in16 cluding concerning an individual’s status 

17 as an employee or non-employee for pur18 poses of this Act); or 

19 ‘‘(ii) concerning an individual’s status 

20 as an employee or non-employee for em21 ployment tax purposes within the meaning 

22 of subtitle C of the Internal Revenue Code 

23 of 1986; 

24 ‘‘(B) testified or is about to testify in any 

25 proceeding described in subparagraph (A); or 


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1 ‘‘(C) served, or is about to serve, on an in2 dustry committee;’’; 

3 (2) in paragraph (5), by striking the period at 

4 the end and inserting ‘‘; and’’; and 

5 (3) by adding at the end the following: 

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

7 as an employee.’’. 

8 (c) SPECIAL PENALTY FOR CERTAIN

9 MISCLASSIFICATION, RECORDKEEPING, AND NOTICE

10 VIOLATIONS.—Section 16 of the Fair Labor Standards 

11 Act of 1938 (29 U.S.C. 216) is amended— 

12 (1) in subsection (b)— 

13 (A) in the sixth sentence, by striking ‘‘any 

14 employee’’ each place the term occurs and in15 serting ‘‘any employee or individual’’; 

16 (B) in the fourth sentence, by striking 

17 ‘‘employee’’ and inserting ‘‘employee or indi18 vidual’’; 

19 (C) in the third sentence— 

20 (i) by striking ‘‘either of the preceding 

21 sentences’’ and inserting ‘‘any of the pre22 ceding sentences’’; 

23 (ii) by striking ‘‘one or more employ24 ees’’ and inserting ‘‘one or more employees 

25 or individuals’’; and 


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1 (iii) by striking ‘‘other employees’’ 

2 and inserting ‘‘other employees or individ3 uals, respectively,’’; and 

4 (D) 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), by striking paragraph (2) 

13 and inserting the following: 

14 ‘‘(2) Any person who violates section 6, 7, 11(c), or 

15 15(a)(6) shall be subject to a civil penalty, for each em16 ployee or other individual who was the subject of such a 

17 violation, in an amount— 

18 ‘‘(A) not to exceed $1,100; or 

19 ‘‘(B) in the case of a person who has repeatedly 

20 or willfully committed such violation, not to exceed 

21 $5,000.’’. 

22 (d) EMPLOYEE RIGHTS WEB SITE.— 

23 (1) IN GENERAL.—Not later than 180 days 

24 after the date of enactment of this Act, the Sec25 retary of Labor shall establish, for purposes of secVerDate Nov 24 2008 05:00 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S3254.IS S3254

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1 tion 11(c)(5)(C)(ii) of the Fair Labor Standards Act 

2 of 1938 (as added by this Act), a single web page 

3 on the Department of Labor Web site that summa4 rizes in plain language the rights of employees as 

5 described in the amendments made by subsection (a) 

6 and other information considered appropriate by the 

7 Secretary, including appropriate links to additional 

8 information on the Department of Labor Web site or 

9 other Federal agency Web sites. In addition, such 

10 web page— 

11 (A) shall include a statement explaining 

12 that employees may have additional or greater 

13 rights under State or local laws and how em14 ployees may obtain additional information about 

15 their rights under State or local laws; 

16 (B) shall be made available in English and 

17 any other languages that the Secretary deter18 mines to be prevalent among individuals likely 

19 to access the web page; and 

20 (C) may provide a link to permit individ21 uals to file complaints online. 

22 (2) COORDINATION WITH OTHER FEDERAL WEB

23 SITES.—The Secretary shall coordinate with other 

24 relevant Federal agencies in order to provide infor25 mation similar to the information described in paraVerDate Nov 24 2008 05:00 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S3254.IS S3254

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1 graph (1) (or a link to the Department of Labor web 

2 page required by this subsection) on the Web sites 

3 of such other agencies. 

4 SEC. 3. MISCLASSIFICATION OF EMPLOYEES FOR UNEM5 PLOYMENT COMPENSATION PURPOSES. 

6 (a) IN GENERAL.—Section 303(a) of the Social Secu7 rity Act (42 U.S.C. 503(a)) is amended— 

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

9 and inserting ‘‘; and’’; and 

10 (2) by adding after paragraph (10) the fol11 lowing: 

12 ‘‘(11)(A) Such auditing and investigative proce13 dures as may be necessary to identify employers that 

14 have not registered under the State law or that are 

15 paying unreported wages, where these actions or 

16 omissions by the employers have the effect of exclud17 ing employees from unemployment compensation 

18 coverage; and 

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

20 Secretary of Labor (in such form as the Secretary 

21 of Labor may require) describing the results of the 

22 procedures under subparagraph (A); and 

23 ‘‘(12) The establishment of administrative pen24 alties for misclassifying employees, or paying unre25 ported wages to employees without proper recordVerDate Nov 24 2008 05:00 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S3254.IS S3254

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1 keeping, for unemployment compensation pur2 poses.’’. 

3 (b) REVIEW OF AUDITING PROGRAMS.—The Sec4 retary of Labor shall include, in the Department of La5 bor’s system for measuring States’ performance in con6 ducting unemployment compensation tax audits, a specific 

7 measure of their effectiveness in identifying the under8 reporting of wages and the underpayment of unemploy9 ment compensation contributions (including their effec10 tiveness in identifying instances of such underreporting or 

11 underpayments despite the absence of cancelled checks, 

12 original time sheets, or other similar documentation). 

13 (c) EFFECTIVE DATE.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by subsection (a) 

16 shall take effect 12 months after the date of the en17 actment of this Act. 

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

19 finds that legislation is necessary in order for the 

20 unemployment compensation law of a State to com21 ply with the amendments made by subsection (a), 

22 such amendments shall not apply with respect to 

23 such law until the later of— 

24 (A) the day after the close of the first reg25 ular session of the legislature of such State 


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1 which begins after the date of the enactment of 

2 this Act; or 

3 (B) 12 months after the date of the enact4 ment of this Act. 

5 (d) DEFINITION OF STATE.—For purposes of this 

6 section, the term ‘‘State’’ has the meaning given such 

7 term by section 3306(j) of the Internal Revenue Code of 

8 1986. 

9 SEC. 4. DEPARTMENT OF LABOR COORDINATION, REFER10 RAL, AND REGULATIONS. 

11 (a) COORDINATION AND REFERRAL.—Notwith12 standing any other provision of law, any office, adminis13 tration, or division of the Department of Labor that, while 

14 in the performance of its official duties, obtains informa15 tion regarding the misclassification by a person subject to 

16 the provisions of the Fair Labor Standards Act of 1938 

17 (29 U.S.C. 201 et seq.) or any order issued under such 

18 Act of any individual regarding whether such individual 

19 is an employee or a non-employee contracted for the per20 formance of labor or services for purposes of section 6 or 

21 7 of such Act (29 U.S.C. 206, 207) or in records required 

22 under section 11(c) of such Act (29 U.S.C. 211(c)), shall 

23 report such information to the Wage and Hour Division 

24 of the Department. The Wage and Hour Division may reVerDate Nov 24 2008 05:00 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S3254.IS S3254

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1 port such information to the Internal Revenue Service as 

2 the Division considers appropriate. 

3 (b) REGULATIONS.—The Secretary of Labor shall 

4 promulgate regulations to carry out this Act and the 

5 amendments made by this Act. 

6 SEC. 5. TARGETED AUDITS. 

7 The audits of employers subject to the Fair Labor 

8 Standards Act of 1938 (29 U.S.C. 201 et seq.) that are 

9 conducted by the Wage and Hour Division of the Depart10 ment of Labor shall include certain industries with fre11 quent incidence of misclassifying employees as non-em12 ployees, as determined by the Secretary of Labor. 

Æ 


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