I 
114TH CONGRESS 
1ST SESSION H. R. 3427 
To amend the Fair Labor Standards Act of 1938 to ensure that employees 
are not misclassified as non-employees, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 29, 2015 
Ms. WILSON of Florida (for herself, Mr. SCOTT of Virginia, Mr. CONYERS, 
and Mr. PAYNE) introduced the following bill; which was referred to the 
Committee on Education and the Workforce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To amend the Fair Labor Standards Act of 1938 to ensure 
that employees are not misclassified as non-employees, 
and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Payroll Fraud Preven-
tion Act of 2015’’. 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
SEC. 2. CLASSIFICATION OF EMPLOYEES AND NON-EM-
PLOYEES. 
(a) DEFINITIONS.—Section 3 of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 203) is amended by 
adding at the end the following: 
‘‘(z) ‘Non-employee’ means an individual who— 
‘‘(1) has been engaged, in the course of the 
trade or business of the person, for the performance 
of labor or services; and 
‘‘(2) is not an employee of the person. 
‘‘(aa) ‘Covered individual’ when used with respect to 
an employer or other person means— 
‘‘(1) an employee of the employer; or 
‘‘(2) a non-employee of the person (including a 
person who is an employer)— 
‘‘(A) whom the person has engaged, in the 
course of the trade or business of the person, 
for the performance of labor or services; and 
‘‘(B)(i) with respect to whom the person is 
required to file an information return under 
section 6041A(a) of the Internal Revenue Code 
of 1986; or 
‘‘(ii) who is providing labor or services to 
the person through an entity that is a trust, es-
tate, partnership, association, company, or cor-
poration (as such terms are used in section 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
7701(a)(1) of the Internal Revenue Code of 
1986) if— 
‘‘(I) such individual has an ownership 
interest in the entity; 
‘‘(II) creation or maintenance of such 
entity is a condition for the provision of 
such labor or services to the person; and 
‘‘(III) the person would be required to 
file an information return for the entity 
under section 6041A(a) of the Internal 
Revenue Code of 1986 if the entity were 
an individual.’’. 
(b) CLASSIFICATION AS EMPLOYEES.—Section 11(c) 
of the Fair Labor Standards Act of 1938 (29 U.S.C. 
211(c)) is amended— 
(1) by striking ‘‘(c) Every employer subject to 
any provision of this Act or of any order issued 
under this Act’’ and inserting the following: 
‘‘(c) RECORDKEEPING; CLASSIFICATION; NOTICE.— 
‘‘(1) RECORDKEEPING.—Every person subject 
to any provision of this Act or of any order issued 
under this Act’’; and 
(2) by adding at the end the following: 
‘‘(2) CLASSIFICATION.—Every person (includ-
ing every employer and enterprise), who employs any 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
‘‘(II) for each new non-employee, 
upon commencement of the labor or 
services provided by the non-employee. 
‘‘(ii) CHANGE IN STATUS.—Each per-
son required to provide a notice under sub-
paragraph (A) to a covered individual shall 
also provide such notice to such individual 
upon changing the status of such indi-
vidual as an employee or a non-employee. 
‘‘(C) CONTENTS OF NOTICE.—The notice 
required under this paragraph shall be in writ-
ing and shall— 
‘‘(i) inform the covered individual of 
the classification of such individual, by the 
person submitting the notice, as an em-
ployee or a non-employee; 
‘‘(ii) include a statement directing 
such individual to the Department of 
Labor website established under section 3 
of the Payroll Fraud Prevention Act of 
2015, for the purpose of providing further 
information about the legal rights of an 
employee; 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
‘‘(iii) include the address and tele-
phone number for the applicable local of-
fice of the Department of Labor; and 
‘‘(iv) include for each covered indi-
vidual classified as a non-employee by the 
person providing the notice, the following 
statement: ‘Your rights to wage, hour, and 
other labor protections depend upon your 
proper classification as an employee or a 
non-employee. If you have any questions or 
concerns about how you have been classi-
fied or suspect that you may have been 
misclassified, contact the U.S. Department 
of Labor.’. 
‘‘(D) PRESUMPTION.— 
‘‘(i) IN
GENERAL.—For purposes of 
this Act and the regulations or orders 
issued under this Act, a covered individual 
to whom a person is required to provide a 
notice under subparagraph (A) shall be 
presumed to be an employee of the person 
if the person has not provided the indi-
vidual with such notice within the time re-
quired under subparagraph (B). 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
‘‘(ii) REBUTTAL.—The presumption 
under clause (i) shall be rebutted only 
through the presentation of clear and con-
vincing evidence that a covered individual 
described in such subparagraph is not an 
employee of the person.’’. 
(c) SPECIAL PROHIBITED ACTS.—Section 15(a) of 
the Fair Labor Standards Act of 1938 (29 U.S.C. 215(a)) 
is amended— 
(1) by striking paragraph (3) and inserting the 
following: 
‘‘(3) to discharge or in any other manner dis-
criminate against any covered individual (including 
an employee) because such individual has— 
‘‘(A) opposed any practice, filed any peti-
tion or complaint, or instituted or caused to be 
instituted any proceeding— 
‘‘(i) under or related to this Act (in-
cluding concerning the status of a covered 
individual as an employee or a non-em-
ployee for purposes of this Act); or 
‘‘(ii) concerning the status of a cov-
ered individual as an employee or a non- 
employee for employment tax purposes 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
within the meaning of subtitle C of the In-
ternal Revenue Code of 1986; 
‘‘(B) testified or is about to testify in any 
proceeding described in subparagraph (A); or 
‘‘(C) served, or is about to serve, on an in-
dustry committee;’’; 
(2) in paragraph (5), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(6) to wrongly classify an employee of the per-
son as a non-employee in accordance with section 
11(c)(2).’’. 
(d) 
SPECIAL
PENALTY
FOR
CERTAIN 
MISCLASSIFICATION, RECORDKEEPING, AND NOTICE VIO-
LATIONS.—Section 16 of the Fair Labor Standards Act 
of 1938 (29 U.S.C. 216) is amended— 
(1) in subsection (b)— 
(A) in the sixth sentence, by striking ‘‘any 
employee’’ each place the term occurs and in-
serting ‘‘any covered individual’’; 
(B) in the fourth sentence— 
(i) by striking ‘‘employees’’ and in-
serting ‘‘covered individual’’; and 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
(ii) by striking ‘‘he gives his consent’’ 
and inserting ‘‘such covered individual con-
sents’’; 
(C) in the third sentence— 
(i) by striking ‘‘either of the preceding 
sentences’’ and inserting ‘‘any of the pre-
ceding sentences’’; 
(ii) by striking ‘‘one or more employ-
ees’’ and inserting ‘‘one or more covered 
individuals’’; and 
(iii) by striking ‘‘in behalf of himself 
or themselves and other employees’’ and 
inserting ‘‘on behalf of such covered indi-
vidual or individuals and other covered in-
dividuals’’; and 
(D) by inserting after the first sentence 
the following: ‘‘Such liquidated damages are 
doubled (subject to section 11 of the Portal-to- 
Portal Act of 1947 (29 U.S.C. 260)) where, in 
addition to violating the provisions of section 6 
or 7, the employer has violated the provisions of 
section 15(a)(6) with respect to such employee 
or employees.’’; and 
(2) in subsection (e), by striking paragraph (2) 
and inserting the following: 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
‘‘(2) Any person who violates section 6, 7, 
11(c), or 15(a)(6) shall be subject to a civil penalty, 
for each employee or other individual who was the 
subject of such a violation, in an amount— 
‘‘(A) not to exceed $1,100; or 
‘‘(B) in the case of a person who has re-
peatedly or willfully committed such violation, 
not to exceed $5,000.’’. 
SEC. 3. EMPLOYEE RIGHTS WEBSITE. 
Not later than 180 days after the date of enactment 
of this Act, the Secretary of Labor shall establish a single 
webpage on the Department of Labor website that sum-
marizes in plain language the rights of employees and non- 
employees under the Fair Labor Standards Act of 1938 
(29 U.S.C. 201 et seq.), including the rights described in 
the amendments made by section 2. 
SEC. 4. MISCLASSIFICATION OF EMPLOYEES FOR UNEM-
PLOYMENT COMPENSATION PURPOSES. 
(a) IN GENERAL.—Section 303(a) of the Social Secu-
rity Act (42 U.S.C. 503(a)) is amended— 
(1) in paragraph (11)(B), by striking the period 
and inserting ‘‘; and’’; 
(2) in paragraph (12), by striking the period 
and inserting ‘‘; and’’; and 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
(3) by adding after paragraph (12) the fol-
lowing: 
‘‘(13)(A) Such auditing and investigative proce-
dures as may be necessary to identify employers that 
have not registered under the State law or that are 
paying unreported wages, where these actions or 
omissions by the employers have the effect of exclud-
ing employees from unemployment compensation 
coverage; and 
‘‘(B) The making of quarterly reports to the 
Secretary of Labor (in such form as the Secretary 
of Labor may require) describing the results of the 
procedures under subparagraph (A); and 
‘‘(14) The establishment of administrative pen-
alties for misclassifying employees, or paying unre-
ported wages to employees without proper record-
keeping, for unemployment compensation pur-
poses.’’. 
(b) REVIEW
OF AUDITING PROGRAMS.—The Sec-
retary of Labor shall include, in the Department of La-
bor’s system for measuring the performance of States in 
conducting unemployment compensation tax audits, a spe-
cific measure of the effectiveness of States in identifying 
the under reporting of wages and the underpayment of 
unemployment compensation contributions (including the 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
effectiveness of States in identifying instances of such 
under reporting or underpayments despite the absence of 
cancelled checks, original time sheets, or other similar doc-
umentation). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by subsection (a) 
shall take effect 12 months after the date of enact-
ment of this Act. 
(2) EXCEPTION.—If the Secretary of Labor 
finds that legislation is necessary for the unemploy-
ment compensation law of a State to comply with 
the amendments made by subsection (a), such 
amendments shall not apply with respect to such law 
until the later of— 
(A) the day after the close of the first reg-
ular session of the legislature of such State that 
begins after the date of enactment of this Act; 
or 
(B) 12 months after the date of enactment 
of this Act. 
(d) DEFINITION OF STATE.—For purposes of this 
section, the term ‘‘State’’ has the meaning given the term 
in section 3306(j) of the Internal Revenue Code of 1986. 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
SEC. 5. DEPARTMENT OF LABOR COORDINATION, REFER-
RAL, AND REGULATIONS. 
(a) 
COORDINATION
AND
REFERRAL.—Notwith-
standing any other provision of law, any office, adminis-
tration, or division of the Department of Labor that, while 
in the performance of its official duties, obtains informa-
tion regarding the misclassification by a person subject to 
the provisions of the Fair Labor Standards Act of 1938 
(29 U.S.C. 201 et seq.), or any order issued under such 
Act of any individual regarding whether such individual 
is an employee or a non-employee engaged in the perform-
ance of labor or services for purposes of section 6 or 7 
of such Act (29 U.S.C. 206, 207), or in records required 
under section 11(c) of such Act (29 U.S.C. 211(c)), shall 
report such information to the Wage and Hour Division 
of the Department of Labor. The Wage and Hour Division 
may report such information to the Internal Revenue 
Service as the Wage and Hour Division considers appro-
priate. 
(b) REGULATIONS.—The Secretary of Labor shall 
promulgate regulations to carry out this Act and the 
amendments made by this Act. 
SEC. 6. TARGETED AUDITS. 
The audits of employers subject to the Fair Labor 
Standards Act of 1938 (29 U.S.C. 201 et seq.) that are 
conducted by the Wage and Hour Division of the Depart-
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS
ment of Labor shall include certain industries with fre-
quent incidence of misclassifying employees as non-em-
ployees, as determined by the Secretary of Labor. 
Æ 
VerDate Sep 11 2014 
22:18 Aug 10, 2015
Jkt 049200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6301
E:\BILLS\H3427.IH
H3427
asabaliauskas on DSK5VPTVN1PROD with BILLS