Bill B. 169
This bill, the Workplace Fraud Act, would prevent misclassification of workers in the construction services industry. The bill would define “construction services” as including, without limitation, all building or work on buildings, structures, and improvements of all types such as bridges, dams, plants, highways, parkways, streets, tunnels, sewers, mains, power lines, pumping stations, heaving generators, railways, airports, terminals, docks, piers, wharves, buoys, jetties, breakwaters, levees, canals, dredging, shoring, rehabilitation and reactivation of plants, scaffolding, drilling, blasting, excavating, clearing and landscaping.
The bill would prohibit misclassification such that an employer shall not improperly classify an individual who performs service for remuneration provided by an employer as an independent contractor. An employer has improperly classified an individual when an employer-employee relationship exists, as determined by subsection (c), but the employer has not classified the individual as an employee.
Subsection (c) provides that an employer-employee relationship shall be presumed to exist when work is performed by an individual for remuneration paid by an employer, unless to the satisfaction of the Mayor, the employer demonstrates that:
(1) the individual is an exempt person; or
(2)(A) the individual who performs the work is free from control and direction over the performance of services;
(B) the individual is customarily engaged in an independently established trade, occupation, profession or business; and
(C) the work is outside of the usual course of business of the employer for whom the work is performed.
For purposes of the bill, an “exempt person” means an individual who:
(A) performs services in a personal capacity and who employs no individuals other than a spouse, child, or immediate family member of the individual;
(B) performs services free from direction and control over the means and manner of providing the services, subject only to the right of the person or entity for whom services are provided to specify the desired result;
(C) furnishes the tools and equipment necessary to provide the service; and
(D) operates a business that is considered inseparable from the individual for purposes of taxes, profits, and liabilities, in which the individual exercises complete control over the management and operations of the business.
Among other things, the bill authorizes the Mayor to enter and inspect premises and places of business, examine books, registers, payrolls and other records, and issue stop work orders to alleged violators. Failure to produce records requested by the Mayor is punishable by a $500 per day fine for each day the records are not produced.
Penalties for misclassification are not less than $1,000, but no more than $5,000 for each violation, and each employee who is not properly classified is considered a separate violation. In addition, within 30 days of the final order, an employer found in violation would be required to:
(1) pay restitution to or on behalf of any individual not properly classified; and
(2) otherwise come into compliance with all applicable labor laws, including but not limited to those related to income tax withholding, unemployment insurance, wage and laws, and workers’ compensation.
The bill would provide that an employer who has been found to have violated the bill twice in a two year period:
(1) shall have the choice of being assessed an administrative penalty of $ 20,000 for each employee that was not properly classified, or be debarred for five (5) years; and
(2) notwithstanding subparagraph (1) of this subsection, an employer that is debarred shall be subject to a civil penalty of not less than $ 5,000, and not more than $ 10,000, for each employee that was not properly classified, and may be ordered to make restitution, pay any interest due, and otherwise comply with all applicable laws and regulations.
The bill would also create a private right of action, which allows an individual or entity to collect:
(1) the amount of any wages, salary, employment benefits, or other compensation denied or lost to the person by reason of the violation, plus an equal amount in liquidated damages;
(2) compensatory damages and an amount up to $ 500 for each violation of this Act or any rule adopted under this Act; and
(3) in the case of unlawful retaliation, all legal or equitable relief as may be appropriate.
The bill also would establish record-keeping requirements such that an employer shall keep, for at least three (3) years, in or about its place of business, records of the employer containing the following information:
(1) The name, address, occupation, and classification of each employee or independent contractor;
(2) The rate of pay of each employee or method of payment for the independent contractor;
(3) The classification of each individual as an employee or an independent contractor;
(4) The amount that is paid each pay period to each employee or, if applicable, independent contractor;
(5) The hours that each employee or independent contractor works each day and each work week;
(6) For all individuals who are not classified as employees, evidence that each individual is an exempt person or an independent contractor or its employee; and
(7) Other information that the Mayor requires, by regulation, as necessary to enforce this act.In addition, an employer would be required to provide each individual classified as an independent contractor or exempt person written notice of such classification at the time the individual is hired, which shall:
(1) Include an explanation of the implications of the individual’s classification as an independent contractor or exempt person rather than as an employee; and
(2) include contact information for the Mayor;
Failure to provide a written notice would be evidence of a knowing violation. The employer would be liable for an administrative penalty of $ 500.00 for each individual that the employer failed to notify.
