Bill Seeks to Prevent Independent Contractor Misclassification

Senator Bob Casey (D-Pa.) and five co-sponsors have introduced a bill they said would prevent fraud in the hiring of independent contractors. The Payroll Fraud Prevention Act seeks to prevent workers from misclassification as independent contractors, Casey said in a statement. Workers classified as independent contractors are not ensured access to such federal worker protections as fair labor standards, health and safety protections, and unemployment and workers' compensation benefits, he said. The bill also would prohibit employers from misclassifying workers in order to avoid paying federal payroll taxes. Casey introduced the bill November 12 after a hearing of the subcommittee on employment and workplace safety, of which the senator is the chairman. The subcommittee is one of several for the Senate Committee on Health, Education, Labor and Pensions. American Trucking Associations submitted written testimony at the hearing taking issue with the bill and saying that independent truckers are essential to the industry and that they prefer to operate their own small businesses rather than become employees. For decades, independent owner-operators have been used by the industry "to meet fluctuations in demand, provide needed equipment at considerable cost savings and address long-standing shortages of operators," ATA said. Also, many trucking companies structure their business models around the use of independent contractors, "recognizing that the experience, maturity, energy and initiative of the independent owner-operator can be harnessed to the mutual benefit of trucking companies and contractors alike," ATA said. Efforts by states and the federal government to pass laws that make it difficult for businesses to use private contractors, "are based on mistaken, paternalistic notions that will only serve to reduce economic growth, stifle small business entrepreneurialism and increase consumer costs - all with an uncertain impact on overall tax revenues," ATA said.

 

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