Substitute KY Bill Would Require Information-Sharing Agreements by State Agencies Regarding Misclassification

Kentucky S.B. 81
Status: House Committee Substitute Passed; Received in Senate, March 27, 2014

The House Committee Substitute version of this bill would replace the previously proposed Senate bill in its entirety and would require the following:

Information-Sharing Agreements

The new bill would require the Department of Revenue, Education and Workforce Development Cabinet, Department of Workers’ Claims of the Labor Cabinet, and Department of Workplace Standards of the Labor Cabinet to execute information-sharing agreements with each other regarding employee misclassification as it relates to coverage and compliance with the each agency’s areas of law.  “Employee misclassification” means an employer has incorrectly classified its employee as an independent contractor.

The purposes of the information-sharing agreements would be to:

(a) Identify any legislative or administrative changes needed to reduce or eliminate employee misclassification in the Commonwealth; and
(b) Establish protocols to assist the state agencies involved in efforts to ensure proper classification of employees

Each agency would also be required to execute information-sharing agreements with appropriate federal agencies, including the United States Department of Treasury, Internal Revenue Service, and the United States Department of Labor to participate in any federal efforts to eliminate employee misclassification.

Fact Sheets

The bill would also require each agency to develop a fact sheet on employee misclassification and post the fact sheet on the agency’s website, along with information on how employee misclassification can be reported to the agency.

Annual Reports

Additionally, on October 31, 2014, and annually thereafter, each agency would be required to report to the Interim Joint Committees on Appropriations and Revenue and Labor and Industry regarding the information-sharing agreements, including:

(a) Any legislative or administrative changes needed to enhance proper classification of employees; and
(b) The progress made related to classification compliance measures initiated in connection with the information-sharing agreements, including:

1. The number of employers cited for violations related to employee misclassification;
2. The approximate number of employees affected; and
3. Any increase in the amount of wages, taxes, premiums, or penalties collected as a result of the increased efforts to ensure that employees are properly classified for purposes of the employment, tax, or insurance laws of the Commonwealth.

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