Misguided Attempts to Stop Misclassification
Jun 21st, 2010 | By Dawn Rivers Baker | Category: RegulationsThere’s a problem. The problem is that there are some “unscrupulous” employers that take advantage of the desperation in the labor market to deliberately misclassify employees as independent contractors. That means that the employees involved probably are not properly filing IRS Schedule C, contributing to the tax gap, and law-abiding employers are (allegedly) at a competitive disadvantage. Last week, the Senate Committee on Health, Education, Labor and Pensions held a hearing on this problem and on the proposed solution contained within the Employee Misclassification Prevention Act (S. 3254).
This bill would require every business must notify every person who works for them to inform workers of their employment status and would make misclassification a violation of the law. It would also create a presumption that workers are employees rather than independent contractors in any case in which a written analysis had not been performed. Presumably, that would include nonemployer firms that make extensive use of its fellow nonemployers. Committee Ranking Member Mike Enzi (R-WY) spoke out strongly against the bill, citing the monumental paperwork burden to be imposed on small businesses with this bill. It also appears, at first glance, to be a piece of legislation that declares war on microbusinesses and the way do business.
