New Bill Stops Worker Misclassification
By Neal Tepel
September 23, 2010
WASHINGTON, D.C. – Legislation introduced to protect workers from losing benefits and protections as the result of a tax loophole.
The Fair Playing Field Act of 2010, which Senator Kerry and Senator McDermott introduced, will close a tax loophole currently allowing businesses to misclassify workers as “independent contractors,” thereby creating an unfair environment for businesses that play by the rules and an unfair environment for workers.
“When employees are classified as independent contractors, whether by design or because the rules are unclear, they are denied access to critical benefits and protections, at significant cost to government at all levels,” said Vice President Joe Biden.
For these reasons, stopping worker misclassification is a priority for this administration continued Biden. “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. I urge the Congress to stand up for workers and create a level playing field for law-abiding businesses by supporting this bill,” said the Vice President.
“This reform is pro-worker and pro-business,” said Sen. Kerry. “Today a tax loophole is being abused to deny workers basic protections and benefits. We shouldn’t reward those who game the system while hard-working Americans are denied their due protections and businesses that play fair are disadvantaged.”
Current law provides a “safe harbor” loophole allowing employers to treat a worker as not being an employee for employment tax purposes, regardless of the worker’s actual status. This bill makes important legislative changes by making sure there is a smooth transition to a clear obeying of the rules and it gives the IRS the tools it needs to even-handedly enforce the law. Identical legislation has been introduced in both the House and the Senate.