I
104TH CONGRESS
2D SESSION
H. R. 3682
To allow certain individuals seeking part-time employment to be eligible to
receive unemployment compensation, to require the Secretary of Labor
to establish and carry out an annual survey relating to temporary work-
ers, to protect part-time and temporary workers relating to pension
and group health plans, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 19, 1996
Mrs. SCHROEDER introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committees on
Economic and Educational Opportunities, Government Reform and Over-
sight, and National Security, 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 allow certain individuals seeking part-time employment
to be eligible to receive unemployment compensation, to
require the Secretary of Labor to establish and carry
out an annual survey relating to temporary workers,
to protect part-time and temporary workers relating to
pension and group health plans, 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 ‘‘Part-Time and Tem-
porary Workers Protection Act of 1996’’.
TITLE I—PROTECTION OF PART-
TIME 
AND 
TEMPORARY
WORKERS
SEC. 101. ELIGIBILITY FOR UNEMPLOYMENT COMPENSA-
TION OF CERTAIN INDIVIDUALS SEEKING
PART-TIME EMPLOYMENT.
(a) GENERAL RULE.—Subsection (a) of section 3304
of the Internal Revenue Code of 1986 (relating to require-
ments for approval of State unemployment compensation
laws) is amended by striking ‘‘and’’ at the end of para-
graph (18), by redesignating paragraph (19) as paragraph
(20), and by inserting after paragraph (18) the following
new paragraph:
‘‘(19) in applying the State law provisions relat-
ing to availability for work, active search for work,
or refusal to accept work, the term ‘suitable work’
shall not include any work where the individual
would normally perform services for more hours per
week than the number of hours per week for which
the individual normally performed services in the in-
dividual’s last job in the base period, and’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 102. ANNUAL BUREAU OF LABOR STATISTICS SURVEY
RELATING TO TEMPORARY WORKERS.
The Secretary of Labor, acting through the Commis-
sioner of the Bureau of Labor Statistics, shall establish
and carry out an annual survey identifying—
(1) the characteristics of temporary workers in
the United States;
(2) the relationship between such workers and
the establishments at which such workers are tempo-
rarily employed; and
(3) where appropriate, the relationship between
such workers and their permanent employers.
SEC. 103. PROTECTION OF PART-TIME AND TEMPORARY
WORKERS.
(a) TREATMENT OF EMPLOYEES WORKING AT LESS
THAN FULL-TIME UNDER PARTICIPATION, VESTING, AND
ACCRUAL RULES GOVERNING PENSION PLANS.—
(1) PARTICIPATION RULES.—
(A) IN
GENERAL.—Section 202(a)(3) of
the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1052(a)(3)) is amended by
adding at the end the following new subpara-
graph:
‘‘(E)(i) For purposes of this paragraph, in the case
of any employee who, as of the beginning of the 12-month
period referred to in subparagraph (A)—
‘‘(I) has customarily completed 500 or more
hours of service per year but less than 1,000 hours
of service per year, or
‘‘(II) is employed in a type of position in which
employment customarily constitutes 500 or more
hours of service per year but less than 1,000 hours
of service per year,
completion of 500 hours of service within such 12-month
period shall be treated as completion of 1,000 hours of
service.
‘‘(ii) For purposes of this subparagraph, the extent
to which employment in any type of position customarily
constitutes less than 1,000 hours of service per year shall
be determined with respect to each pension plan in accord-
ance with such regulations as the Secretary may prescribe
providing for consideration of facts and circumstances pe-
culiar to the work-force constituting the participants in
such plan.’’.
(B) CONFORMING
AMENDMENT.—Section
204(b)(1)(E) 
of 
such 
Act 
(29 
U.S.C.
1054(b)(1)(E)) is amended by striking ‘‘section
202(a)(3)(A)’’ and inserting ‘‘subparagraphs
(A) and (E) of section 202(a)(3)’’.
(2) VESTING RULES.—
(A) IN
GENERAL.—Section 203(b)(2) of
such Act (29 U.S.C. 1053(b)(2)) is amended by
adding at the end the following new subpara-
graph:
‘‘(E)(i) For purposes of this paragraph, in the case
of any employee who, as of the beginning of the period
designated by the plan pursuant to subparagraph (A)—
‘‘(I) has customarily completed 500 or more
hours of service per year but less than 1,000 hours
of service per year, or
‘‘(II) is employed in a type of position in which
employment customarily constitutes 500 or more
hours of service per year but less than 1,000 hours
of service per year,
completion of 500 hours of service within such period shall
be treated as completion of 1,000 hours of service.
‘‘(ii) For purposes of this subparagraph, the extent
to which employment in any type of position customarily
constitutes less than 1,000 hours of service per year shall
be determined with respect to each pension plan in accord-
ance with such regulations as the Secretary may prescribe
providing for consideration of facts and circumstances pe-
culiar to the work-force constituting the participants in
such plan.’’.
(B) 1-YEAR BREAKS IN SERVICE.—Section
203(b)(3) of such Act (29 U.S.C. 1053(b)(3))
is amended by adding at the end the following
new subparagraph:
‘‘(F)(i) For purposes of this paragraph, in the case
of any employee who, as of the beginning of the period
designated by the plan pursuant to subparagraph (A)—
‘‘(I) has customarily completed 500 or more
hours of service per year but less than 1,000 hours
of service per year, or
‘‘(II) is employed in a type of position in which
employment customarily constitutes 500 or more
hours of service per year but less than 1,000 hours
of service per year,
completion of 250 hours of service within such period shall
be treated as completion of 500 hours of service.
‘‘(ii) For purposes of this subparagraph, the extent
to which employment in any type of position customarily
constitutes less than 1,000 hours of service per year shall
be determined with respect to each pension plan in accord-
ance with such regulations as the Secretary may prescribe
providing for consideration of facts and circumstances pe-
culiar to the work-force constituting the participants in
such plan.’’.
(3) ACCRUAL RULES.—Section 204(b)(4)(C) of
such Act (29 U.S.C. 1054(b)(4)(C)) is amended—
(A) by inserting ‘‘(i)’’ after ‘‘(C)’’; and
(B) by adding at the end the following new
clauses:
‘‘(ii) For purposes of this subparagraph, in the case
of any employee who, as of the beginning of the period
designated by the plan pursuant to clause (i)—
‘‘(I) has customarily completed 500 or more
hours of service per year but less than 1,000 hours
of service per year, or
‘‘(II) is employed in a type of position in which
employment customarily constitutes 500 or more
hours of service per year but less than 1,000 hours
of service per year,
completion of 500 hours of service within such period shall
be treated as completion of 1,000 hours of service.
‘‘(iii) For purposes of clause (ii), the extent to which
employment in any type of position customarily constitutes
less than 1,000 hours of service per year shall be deter-
mined with respect to each pension plan in accordance
with such regulations as the Secretary may prescribe pro-
viding for consideration of facts and circumstances pecu-
liar to the work-force constituting the participants in such
plan.’’.
(b) TREATMENT OF EMPLOYEES WORKING AT LESS
THAN FULL-TIME UNDER GROUP HEALTH PLANS.
(1) IN GENERAL.—Part 2 of subtitle B of title
I of such Act is amended—
(A) by redesignating section 211 (29
U.S.C. 1061) as section 212; and
(B) by inserting after section 210 (29
U.S.C. 1060) the following new section:
‘‘TREATMENT OF PART-TIME WORKERS UNDER GROUP
HEALTH PLANS
‘‘SEC. 211. (a) IN GENERAL.—A reduction in the em-
ployer-provided premium under a group health plan with
respect to any employee for any period of coverage solely
because the employee’s customary employment is less than
full-time may be provided under such plan only if the em-
ployee is described in subsection (b) and only to the extent
permitted under subsection (c).
‘‘(b) REDUCTIONS
APPLICABLE
TO
EMPLOYEES
WORKING LESS THAN FULL-TIME.—
‘‘(1) IN GENERAL.—An employee is described in
this subsection if such employee, as of the beginning
of the period of coverage referred to in subsection
(a)—
‘‘(A) has customarily completed less than
30 hours of service per week, or
‘‘(B) is employed in a type of position in
which employment customarily constitutes less
than 30 hours of service per week.
‘‘(2) REGULATIONS.—For purposes of para-
graph (1), whether employment in any type of posi-
tion customarily constitutes less than 30 hours of
service per week shall be determined with respect to
each group health plan in accordance with such reg-
ulations as the Secretary may prescribe providing
for consideration of facts and circumstances peculiar
to the work force constituting the participants in
such plan.
‘‘(c) AMOUNT OF PERMISSIBLE REDUCTION.—The
employer-provided premium under a group health plan
with respect to any employee for any period of coverage,
after the reduction permitted under subsection (a), shall
not be less than a ratable portion of the employer-provided
premium which would be provided under such plan for
such period of coverage with respect to an employee who
completes 30 hours of service per week.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) GROUP HEALTH PLAN.—The term ‘group
health plan’ has the meaning provided such term in
section 607(1).
‘‘(2) EMPLOYER-PROVIDED PREMIUM.—
‘‘(A) IN GENERAL.—The term ‘employer-
provided premium’ under a plan for any period
of coverage means the portion of the applicable
premium under the plan for such period of cov-
erage which is attributable under the plan to
employer contributions.
‘‘(B) APPLICABLE
PREMIUM.—For pur-
poses of subparagraph (A), in determining the
applicable premium of a group health plan,
principles similar to the principles applicable
under section 604 shall apply.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 201(1) of such Act (29 U.S.C.
1051(1)) is amended by inserting ‘‘, except with
respect to section 211’’ before the semicolon.
(B) The table of contents in section 1 of
such Act is amended by striking the item relat-
ing to section 211 and inserting the following
new items:
‘‘Sec. 211. Treatment of part-time workers under group health plans.
‘‘Sec. 212. Effective date.’’.
(c) EXPANSION OF DEFINITION OF EMPLOYEE TO
INCLUDE CERTAIN INDIVIDUALS WHOSE SERVICES ARE
LEASED OR CONTRACTED FOR.—Paragraph (6) of section
3 of such Act (29 U.S.C. 1002(6)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(6)’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(B) Such term includes, with respect to any em-
ployer, any person who is not an employee (within the
meaning of subparagraph (A)) of such employer and who
provides services to such employer, if—
‘‘(i) such person has (pursuant to an agreement
with such employer or any other person) performed
such services for such employer (or for such em-
ployer and related persons (within the meaning of
section 144(a)(3) of the Internal Revenue Code of
1986)) for a period of at least 1 year (6 months in
the case of core health benefits) at the rate of at
least 500 hours of service per year, and
‘‘(ii) such services are of a type historically per-
formed, in the business field of the employer, by em-
ployees (within the meaning of subparagraph (A)).’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply with respect to plan years beginning on
or after January 1, 1997.
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED PLANS.—In the case of a plan maintained
pursuant to 1 or more collective bargaining agree-
ments between employee representatives and 1 or
more employers ratified on or before the date of the
enactment of this Act, paragraph (1) shall be ap-
plied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ‘‘Janu-
ary 1, 1997’’ the date of the commencement of the
first plan year beginning on or after the earlier of—
(A) the later of—
(i) January 1, 1997, or
(ii) the date on which the last of such
collective bargaining agreements termi-
nates (determined without regard to any
extension thereof after the date of the en-
actment of this Act), or
(B) January 1, 1999.
(3) PLAN
AMENDMENTS.—If any amendment
made by this section requires an amendment to any
plan, such plan amendment shall not be required to
be made before the first plan year beginning on or
after January 1, 1998, if—
(A) during the period after such amend-
ment made by this section takes effect and be-
fore such first plan year, the plan is operated
in accordance with the requirements of such
amendment made by this section, and
(B) such plan amendment applies retro-
actively to the period after such amendment
made by this section takes effect and such first
plan year.
A plan shall not be treated as failing to provide defi-
nitely determinable benefits or contributions, or to
be operated in accordance with the provisions of the
plan, merely because it operates in accordance with
this paragraph.
TITLE 
II—MISCLASSIFICATION
OF 
EMPLOYEES 
AS 
INDE-
PENDENT CONTRACTORS
SEC. 201. INTERNAL REVENUE SERVICE PROCEDURES.
(a) WAIVER OF EMPLOYMENT TAX LIABILITY FOR
REASONABLE GOOD FAITH MISCLASSIFICATION BASED
ON COMMON LAW RULES.—Section 3509 of the Internal
Revenue Code of 1986 (relating to determination of em-
ployer’s liability for certain employment taxes) is amended
by adding at the end the following new subsection:
‘‘(e) WAIVER OF EMPLOYMENT TAX LIABILITY FOR
REASONABLE GOOD FAITH MISCLASSIFICATION BASED
ON COMMON LAW RULES.—
‘‘(1) IN GENERAL.—For purposes of determin-
ing the liability of any taxpayer for employment
taxes with respect to any individual for any period,
such individual shall be deemed not to have been an
employee of the taxpayer for such period if—
‘‘(A) the taxpayer did not treat such indi-
vidual as an employee for purposes of the em-
ployment taxes for such period,
‘‘(B) the taxpayer’s treatment of such indi-
vidual as not being an employee was based on
a reasonable good faith misapplication of the
common law rules used for determining the em-
ployer-employee relationship,
‘‘(C) all Federal tax returns (including in-
formation returns) required to be filed by the
taxpayer with respect to such individual for
such period were filed on a basis consistent with
the taxpayer’s treatment of such individual as
not being an employee,
‘‘(D) the taxpayer (and any predecessor)
did not treat any other individual holding a
substantially similar position as an employee for
purposes of the employment taxes for any pe-
riod beginning after December 31, 1977, and
‘‘(E) the taxpayer enters into a closing
agreement under section 7121 with the Sec-
retary (in the time and manner determined by
the Secretary) agreeing to treat such individual,
and any other individual holding a substantially
similar position, as employees and to file all
Federal employment tax returns with respect to
such individuals on a basis consistent with the
taxpayer’s treatment of such individuals as em-
ployees.
‘‘(2) DEFINITIONS AND SPECIAL RULES.—
‘‘(A) EMPLOYMENT TAX.—For purposes of
this subsection, the term ‘employment tax’
means any tax imposed by subtitle C, including
any interest, penalty, or additional amount with
respect to such tax.
‘‘(B) NO REFUND OR CREDIT OF OVERPAY-
MENT.—No refund or credit of any overpay-
ment of an employment tax resulting from the
application of paragraph (1) shall be allowed,
notwithstanding that the period for filing a
claim for refund or credit of such overpayment
is not barred on the effective date of this sub-
section.’’
(b) MODIFICATIONS TO SAFE HARBOR FOR CLASSI-
FICATIONS OF INDIVIDUALS AS NONEMPLOYEES.—
(1) REQUIREMENT
OF
REASONABLE
BASIS.—
Paragraph (1) of section 530(a) of the Revenue Act
of 1978 (relating to controversies involving whether
individuals are employees for purposes of the em-
ployment taxes) is amended by striking ‘‘unless the
taxpayer had no reasonable basis’’ and inserting the
following: ‘‘if the taxpayer had a reasonable basis’’.
(2) REPEAL OF PRIOR AUDIT AS REASONABLE
BASIS, ETC.—Paragraph (2) of section 530(a) of the
Revenue Act of 1978 is amended—
(A) by striking the paragraph caption and
inserting the following: ‘‘REASONABLE
BASIS
FOR
NOT
TREATING
INDIVIDUAL
AS
EM-
PLOYEE.—’’,
(B) in the matter preceding subparagraph
(A)—
(i) by striking ‘‘in any case’’, and
(ii) by inserting ‘‘only’’ before ‘‘if the
taxpayer’s’’,
(C) by adding ‘‘or’’ at the end of subpara-
graph (A), and
(D) by striking subparagraph (B) and by
redesignating subparagraph (C) as subpara-
graph (B).
(c) AUTHORITY FOR REGULATIONS AND RULINGS ON
EMPLOYMENT STATUS.—Section 530 of the Revenue Act
of 1978 is amended by striking subsection (b) and by re-
designating subsections (c) and (d) as subsections (b) and
(c), respectively.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall take effect beginning on the date
which is 120 days after the date of the enactment
of this Act.
(2) MODIFICATIONS
TO
SAFE
HARBOR.—The
amendments made by subsection (b) shall apply to
periods ending on or after the date which is 120
days after the date of the enactment of this Act.
SEC. 202. FEDERAL CONTRACTS.
(a) CLASSIFICATION OF PERSONS AS EMPLOYEES
AND
INDEPENDENT
CONTRACTORS
UNDER
CERTAIN
PROCUREMENT CONTRACTS.—(1) Title III of the Federal
Property and Administrative Services Act of 1949 (41
U.S.C. 251 et seq.) is amended by adding at the end the
following new section:
‘‘SEC. 317. CLASSIFICATION OF PERSONS AS EMPLOYEES
AND INDEPENDENT CONTRACTORS.
‘‘(a) INELIGIBILITY FOR GOVERNMENT CONTRACTS
AND SUBCONTRACTS.—(1) A person (including any sub-
sidiary, successor, or related entity of a person) shall not
be eligible for a contract during the 2-year period begin-
ning on the date of the issuance of any final determination
under Federal law that the person (including any subsidi-
ary or related entity of the person) willfully misclassified
an individual for purposes of any employment tax.
‘‘(2) For purposes of this subsection, a determination
is final if all rights to appeal the determination, or to re-
quest a review, rehearing, or redetermination of the mat-
ter 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 contract shall certify that the amount of
the bid or proposal is adequate to pay all employment
taxes with respect to all work to be performed under the
contract by employees of the person.
‘‘(c) NOTIFICATION
OF INDEPENDENT CONTRAC-
TORS.—Each contract shall include a requirement that the
contractor provide, to each person who performs 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 rights and protec-
tions under the Fair Labor Standards Act of 1938,
the Occupational Safety and Health Act of 1978,
and title VII of the Civil Rights Act of 1964.
‘‘(d) RIGHT OF ACTION.—A person who submits a
bid or proposal for a contract and who suffers damages
as a result of the award of the contract to a person who
knowingly and willfully submits a certification under sub-
section (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.—As used in this section:
‘‘(1) The term ‘employment tax’ means any tax
imposed by subtitle C of the Internal Revenue Code
of 1986.
‘‘(2) The term ‘contract’ means a contract that
is entered into by an executive agency under this
title, and all subcontracts under such a contract.
‘‘(3) The term ‘misclassify’ means to treat as
an independent contractor an individual who is an
employee.’’.
(2) The table of contents in section 1 of the Federal
Property and Administrative Services Act of 1949 is
amended by inserting after the item relating to the last
section in title III the following new item:
‘‘Sec. 317. Classification of persons as employees and independent contractors.’’.
(b) APPLICABILITY.—Section 317 of the Federal
Property and Administrative Services Act of 1949, as
added by subsection (a), shall apply to—
(1) contracts entered into under title III of
such Act after the expiration 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 such contract
after the expiration of the 180-day period beginning
on the date of the enactment of this Act.
SEC. 203. DEFENSE CONTRACTS.
(a) CLASSIFICATION OF PERSONS AS EMPLOYEES
AND INDEPENDENT CONTRACTORS UNDER DEFENSE
CONTRACTS.—(1) Chapter 141 of title 10, United States
Code, is amended by inserting after section 2393 the fol-
lowing new section:
‘‘§ 2393a. Classification of persons as employees and
independent contractors
‘‘(a) INELIGIBILITY FOR DEFENSE CONTRACTS AND
SUBCONTRACTS.—(1) A person (including any subsidiary,
successor, or related entity of a person) shall not be eligi-
ble for a contract during the 2-year period beginning on
the date of the issuance 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) For purposes of this subsection, a determination
is final if all rights to appeal the determination, or to re-
quest a review, rehearing, or redetermination of the mat-
ter 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 contract shall certify that the amount of
the bid or proposal is adequate to pay all employment
taxes with respect to all work to be performed under the
contract by employees of the person.
‘‘(c) NOTIFICATION
OF INDEPENDENT CONTRAC-
TORS.—Each contract shall include a requirement that the
contractor shall provide, to each person who performs
work under the contract and who is treated by the contrac-
tor as an independent contractor for purposes of employ-
ment 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 rights and protec-
tions under the Fair Labor Standards Act of 1938,
the Occupational Safety and Health Act of 1978,
and title VII of the Civil Rights Act of 1964.
‘‘(d) RIGHT OF ACTION.—A person who submits a
bid or proposal for a contract and who suffers damages
as a result of the award of the contract to a person who
knowingly and willfully submits a certification under sub-
section (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) APPLICABILITY.—This section applies to con-
tracts entered into under chapter 137 of this title.
‘‘(f) DEFINITIONS.—In this section:
‘‘(1) The term ‘employment tax’ means any tax
imposed by subtitle C of the Internal Revenue Code
of 1986.
‘‘(2) The term ‘contract’ includes subcontracts.
‘‘(3) The term ‘misclassify’ means to treat as
an independent contractor an individual who is an
employee.’’.
(2) The table of sections at the beginning of such
chapter is amended by inserting after the item relating
to section 2393 the following new item:
‘‘2393a. Classification of persons as employees and independent contractors.’’.
(b) APPLICABILITY.—Section 2393a of title 10, Unit-
ed States Code, as added by subsection (a), shall apply
to—
(1) contracts entered into under chapter 137 of
title 10, United States Code, after the expiration of
the 180-day period beginning on the date of the en-
actment of this Act;
(2) subcontracts under contracts covered by
paragraph (1); and
(3) options exercised under any such contract
after the expiration of the 180-day period beginning
on the date of the enactment of this Act.
Æ