Senators Consider Federal Minimum Wage and Employee Misclassification Bills

The U.S. Senate reconvenes today after a two-week break. Among the items to consider are bills to increase the federal minimum wage and to combat employee misclassification. 

Sen. Tom Harkin (D-Iowa) plans to bring the Fair Minimum Wage Act of 2013 (S. 460) to the Senate floor. This bill would gradually increase the federal minimum wage to $10.10 per hour. The bill would also increase the rate for tipped employees, currently $2.13 per hour, to 70 percent of federal minimum wage. President Obama supports the minimum wage increase. Sen. Harkin said the bill would “result in raises for 30 million American workers.”

On November 15, 2013, Sen. Bob Casey (D-Pa.) introduced The Payroll Fraud Prevention Act (S. 1687) to address misclassification of employees as independent contractors. The bill would amend the Fair Labor Standards Act and impose stiff penalties on employers for misclassification, even where the misclassification is shown to be the result of an innocent mistake. Within six months of its enactment, the bill requires employers to provide written notices to their current workforce explaining their status, including a statement directing workers to the Department of Labor for more information about the legal rights of employees. New workers must receive the notice upon hire. Workers not receiving notices would be presumed to be employees. The bill provides for targeted audits of construction and other industries where employee misclassification is believed to be more prevalent. It imposes administrative penalties for employers who improperly report wages to unemployment, and increases overall agency enforcement. Employers can be fined $1,100 per misclassified worker, and $5,000 for repeat or intentional misclassifications. Triple damages can be assessed for intentional violations of wage and hour, minimum wage, and notice requirements. The bill would prohibit employers from retaliating against workers for opposing a practice or filing a complaint.    

We will track this legislation and keep you apprised of new developments.