I
105TH CONGRESS
1ST SESSION
H. R. 770
To amend title 10, United States Code, to ensure proper classification as
employees and independent contractors of persons awarded Federal pro-
curement contracts.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 13, 1997
Mr. LANTOS (for himself and Mr. SHAYS) introduced the following bill; which
was referred to the Committee on National Security
A BILL
To amend title 10, United States Code, to ensure proper
classification as employees and independent contractors
of persons awarded Federal procurement contracts.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. CLASSIFICATION OF PERSONS AS EMPLOYEES
AND INDEPENDENT CONTRACTORS UNDER
DEFENSE CONTRACTS.
(a) IN GENERAL.—Chapter 137 of title 10, United
States Code, is amended by adding at the end the follow-
ing new section:
‘‘§ 2332. Classification of persons as employees and
independent contractors
‘‘(a) INELIGIBILITY FOR DEFENSE CONTRACTS AND
SUBCONTRACTS.—
‘‘(1) IN
GENERAL.—A person (including any
subsidiary, successor, or related entity of a person)
shall not be eligible for any defense contract during
the two-year period beginning on the date of the is-
suance of any final determination under Federal law
that the person (including any subsidiary or related
entity of the person) willfully misclassified an indi-
vidual for purposes of any employment tax.
‘‘(2) FINAL DETERMINATION.—For purposes of
this subsection, a determination is final if all rights
to appeal the determination, or to request a review,
rehearing, or redetermination of the matter that is
the subject of the determination, have been ex-
hausted or have lapsed.
‘‘(b) CERTIFICATION OF ADEQUACY OF BIDS TO PAY
EMPLOYMENT TAXES.—A person who submits a bid or
proposal for a defense contract shall certify that the
amount of the bid or proposal is adequate to pay all em-
ployment taxes with respect to all work to be performed
under the contract by employees of the person.
‘‘(c) NOTIFICATION
OF INDEPENDENT CONTRAC-
TORS.—Each defense contract shall include a requirement
that the contractor shall provide, to each person who per-
forms work under the contract and who is treated by the
contractor as an independent contractor for purposes of
employment taxes, a notification regarding—
‘‘(1) all obligations of the independent contrac-
tor under Federal and State law to withhold and pay
employment taxes with respect to work performed
under the contract by the independent contractor
(including work performed by employees of the inde-
pendent contractor); and
‘‘(2) all statutory rights and protections that
are available under Federal and State law to em-
ployees of the contractor and are not available to the
independent contractor (including employees of the
independent contractor), including protections and
benefits under Federal laws relating to fair labor
standards, occupational health and safety, civil
rights, unemployment insurance, and worker’s com-
pensation.
‘‘(d) RIGHT OF ACTION.—A person who submits a
bid or proposal for a defense contract and who suffers
damages as a result of the award of the contract to a per-
son who knowingly and willfully submits a certification
under subsection (b) with respect to the contract that is
false, may bring an action for damages against the person
awarded the contract in any district court of the United
States in which the defendant is located.
‘‘(e) DEFINITIONS.—For purposes of this section:
‘‘(1) EMPLOYMENT
TAX.—The term ‘employ-
ment tax’ means any tax imposed by subtitle C of
the Internal Revenue Code of 1986.
‘‘(2) DEFENSE CONTRACT.—The term ‘defense
contract’ means a contract awarded by the Depart-
ment of Defense, and all subcontracts under such a
contract.
‘‘(3) MISCLASSIFY.—The term ‘misclassify’
means to treat as an independent contractor an indi-
vidual who is an employee.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by adding
at the end the following new item:
‘‘2332. Classification of persons as employees and independent contractors.’’.
SEC. 2. APPLICABILITY.
Section 2332 of title 10, United States Code, as
added by section 1, shall apply to—
(1) defense contracts entered into after the ex-
piration of the 180-day period beginning on the date
of the enactment of this Act;
(2) subcontracts under contracts covered by
paragraph (1); and
(3) options exercised under any defense con-
tract after the expiration of the 180-day period be-
ginning on the date of the enactment of this Act.
Æ