SB 684

This bill makes various changes in the unemployment insurance law, which is

administered by the Department of Workforce Development. Significant changes

include:

Employers, contributions, and finance

Misclassification; assessments and penalties

Under current law, an employer engaged in construction projects or in the

painting or drywall finishing of buildings or other structures who willfully provides

false information to DWD for the purpose of misclassifying or attempting to

misclassify an individual who is an employee of the employer as a nonemployee

under the UI law is subject to a criminal fine of $25,000 for each violation. Similar

penalties apply to such employers who so act with the intent to evade any

requirement of the worker's compensation law or the fair employment law. DWD is

required to promulgate rules defining what constitutes a willful misclassification of

an employee as a nonemployee for purposes of each of these provisions.

This bill does the following with respect to these provisions:

1. Repeals the prohibitions that apply with respect to the worker's

compensation law and the fair employment law, as well as the requirement that

DWD promulgate rules defining what constitutes a willful misclassification of an

employee as a nonemployee for purposes of these provisions.

2. Requires DWD to assess an administrative penalty against such an

employer who knowingly and intentionally provides false information to DWD for

the purpose of misclassifying or attempting to misclassify an individual who is an

employee of the employer as a nonemployee under the UI law. The bill provides for

a penalty of $500 for each employee who is misclassified, not to exceed $7,500 per

incident, and requires DWD to consider certain factors in determining whether an

employer committed a violation.

3. Revises the current prohibition regarding such employers who provide false

information to misclassify an individual under the UI law so that the bill 1) changes

the standard from "willfully" providing such false information to "knowingly and

intentionally" doing so; 2) requires, as an element of the crime, that the employer was

previously assessed a penalty by DWD for providing such false information; and 3)

revises the penalty to be $1,000 for each employee who is misclassified, subject to a

maximum fine of $25,000 for each violation.

In addition, the bill requires DWD to assess an administrative penalty against

such an employer who, through coercion, requires an individual to adopt the status

of a nonemployee in the amount of $1,000 for each individual so coerced, but not to

exceed $10,000 per calendar year.

Program integrity assessment

Currently, all employers that engage employees in work that is covered under

UI, other than governmental, nonprofit, and Indian tribal employers that elect to pay