The Employee Misclassification Prevention Act, (S. 3254) introduced Thursday by Senator Sherrod Brown of Ohio, would amend the Fair Labor Standards Act to require companies to keep records of non-employees who work as independent contractors and to provide special penalties for misclassifying those workers.

The Act contains certain recordkeeping provisions that would require employers to keep records reflecting whether each worker is an actual employee or an independent contractor. The Act also would require employers to provide a written notice to all workers who perform labor or services informing them that they have been classified as either an employee or “non-employee,” directing them to a Department of Labor Web site for further information about the rights of employees under the law, and informing them to contact the Department of Labor if they have any questions about whether they have been misclassified. Penalties of $1,100 to $5,000 per worker may be imposed for a violation of the notice or recordkeeping requirements or for misclassifying an employee as a non-employee.


In addition to the recordkeeping requirements, the Act also would mandate state unemployment insurance agencies to conduct audits to identify employers who are misclassifying employees and allows the Department of Labor and the Internal Revenue Service to share information on cases where employers misclassify workers. Finally, the Act would direct the Department of Labor to perform targeted audits focusing on employers in industries that frequently misclassify workers.

As we have pointed out in previous posts on this blog, state and federal agencies are focused heavily on the misclassification of employees as independent contractors. As a result, it is important for Ohio employers to understand how to ensure that their independent contractors are not really employees and the potential consequences of improper classification.