Payne, Jr. Co-Sponsors Legislation to Protect Workers against Misclassification

Jul 29, 2015 Issues: Economy and Jobs

Washington, D.C. – Today, Congressman Donald M. Payne, Jr. (NJ-10) co-sponsored the Payroll Fraud Prevention Act of 2015, which amends the Fair Labor Standards Act to require that employers accurately classify their workers and provide employees with notice of their classification.

It has been estimated that up to 40 percent of New Jersey employers have misclassified their workers. These workers are denied employment law protections, public benefits programs, and fair compensation. For example, the estimated median annual wage for misclassified port truck drivers in New Jersey and New York is just $28,000—which comes out to under 10 dollars an hour.

“The dishonest practice by companies of intentionally classifying their workers as independent contractors, as opposed to employees, contributes to the divide between hardworking Americans struggling to pay the bills and corporations making record profits,” said Congressman Payne, Jr. “It is a way for companies to cheat the system and deny employees decent wages, fair benefits, and critical workplace protections. When employers misclassify workers, they avoid paying payroll taxes on those workers, making it more difficult for law-abiding employers to compete and undermining our ability to make critical investments. It’s not fair to our workers, and it’s not fair to our government.”

“Misclassification cheats hard-working Americans out of federally guaranteed labor rights and benefits, such as overtime pay, minimum wage, and family and medical leave. Misclassification cheats law-abiding businesses out of a level playing field. Misclassification cheats the American economy out of billions in tax revenues, putting a strain on already stressed programs like Medicare and Social Security,” said Congresswoman Wilson. “The Payroll Fraud Prevention Act of 2015 will strengthen the Fair Labor Standards Act to ensure more American workers, businesses, and taxpayers receive the fair treatment they deserve.”

The Payroll Fraud Prevention Act is sponsored by Congresswoman Frederica S. Wilson, Ranking Member on the Subcommittee on Workforce Protections on the Committee on Education and the Workforce. In addition to Congressman Payne, Jr., the original co-sponsors of the bill are Congressman Bobby Scott, Ranking Democrat on the House Committee on Education and the Workforce, and Congressman John Conyers, Jr., Ranking Member of the House Judiciary Committee. Companion legislation will be introduced in the U.S. Senate by Senator Robert Casey of Pennsylvania. 

The legislation is supported by the National Employment Law Project.

For a brief summary of the Payroll Fraud Prevention Act of 2015, click here. For the full text of the bill, click here.