To House Committee on Labor and Industrial Relations

Bill H.B. 535

This bill, the Workplace Fraud Prevention Act, would make it unlawful for a contractor to fail to properly designate an individual as an employee of the contractor, and whoever fails to properly designate an individual as an employee of the contractor would be required to pay to the Louisiana Workforce Commission (“Commission”), upon first violation, $500 per individual not properly classified and upon second violation, $5,000 per individual not properly classified.

For purposes of the bill, “contractor” means a person who contracts to perform construction services, including a subcontractor; and “construction” means work related to the erection, improvement, alteration, repair, renovation, maintenance, or remodeling of a building, structure, appurtenance, road, highway, bridge, dam, levee, canal, jetty, or other improvement to or on real property, including moving, demolishing, dredging, shoring, scaffolding, drilling, blasting, and excavating real property.

Also, for purposes of the bill, “independent contractor” is defined according to the ABC test established by current Louisiana unemployment insurance law.

The bill also would make it unlawful for an individual to knowingly form or assist in the formation of a corporation, partnership, limited liability corporation, or other business entity, or pay or collect a fee for use of a corporation, partnership, limited liability corporation, or other business entity, for fraudulent purposes. Whoever knowingly forms or assists in the formation of a corporation, partnership, limited liability corporation, or other business entity, or pays or collects a fee for use of a corporation, partnership, limited liability corporation, or other business entity, for fraudulent purposes would be required to pay to the Commission a fine of $2,500 upon first violation, and a fine of $10,000 for each subsequent violation.

Also, whoever knowingly assists, aids, or conspires with any person in violation of this subsection would be required to pay to the Commission a fine of $2,500 upon first violation, and a fine of $10,000 for each subsequent violation.

In addition to any fines assessed, if the Louisiana Workforce Commission (“Commission”) determines that a contractor or other person has violated the provisions of this section, the Commission shall initiate enforcement proceedings to collect unpaid unemployment taxes plus interest and notify the Louisiana Department of Revenue, the Louisiana Office of Workers Compensation Fraud and Financial and Compliance Units, the Attorney General, and any other appropriate prosecuting authority of any violations.

The bill also would require posted notices, such that employers must post a notice in English and Spanish, in a conspicuous location on the job site, which specifies that every individual who works for the contractor has the right to be properly classified an employee or independent contractor if the individual meets the requirements pursuant to the Workplace Fraud Prevention Act. The notice would also be required to provide that if any worker believes that he or another individual has not been properly classified as an employee or independent contractor pursuant to the bill, he should contact the Commission.

The bill would also require the Commission to provide a toll-free telephone number and website for the pubic to confidentially report violations.  The Commission would also be required to issue a yearly report to the Governor and the Legislature, which would include:

(1) the total number of complaints received.

(2) the number of complaints investigated and the findings of the investigations.

(3) the amount of unemployment taxes, interest, administrative penalties, and fines collected; and

(4) the number of referrals to other agencies and the outcome of those referrals.

For a contract between a contractor performing construction services and the state of Louisiana or any subdivision thereof, the contractor would be required to specify compliance with the bill and to submit an affidavit attesting that:

(1) each individual performing services for the contractor has been properly classified as either an employee or an independent contractor.

(2) the contractor is in compliance with the requirements of Louisiana law regarding family and child support programs;

(3) the contractor is not barred from contracting with this state or any political subdivision of this state.

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