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New legislation aims at misclassification

September 21, 2010

A new piece of federal legislation aimed at getting tough on independent contractor misclassification was introduced Sept. 15 in Congress.

"The Fair Playing Field Act of 2010" was put forward by Sen. John Kerry, D-MA, and Rep. Jim McDermott, D-WA.

It aims to:
-End the moratorium on IRS guidance addressing worker classification.
-Requires the Secretary of the Treasury to issue prospective guidance clarifying the employment status of workers for federal employment tax purposes
-Requires those who use independent contractors to provide them with a written statement on their federal tax obligations, the labor and employment law protections that do not apply to them and their right to seek a determination from the IRS on their status.
-Raises penalties for misclassification

"The legislation is timely, as misclassification is an increasing problem, one that puts employers who properly classify their workers at a disadvantage in the marketplace and costs the government billions of dollars in unpaid taxes," VP Joe Biden said in a statement.

Another piece of legislation, the "Employee Misclassification Prevention Act," was introduced in June.