Misclassification of employees and providing a penalty. (FE)

What it would have done

Summary by the Legislative Reference Bureau, the Legislature's nonpartisan drafting office. It's their wording, not ours.

Under current law, any employer who willfully provides false information to the Department of Revenue or who willfully and with intent to evade any requirement of the state income tax law misclassifies or attempts to misclassify an individual who is an employee of the employer as a nonemployee is subject to a $25,000 penalty for each such violation. For purposes of imposing the penalty, “employer” means a person engaged in the construction of roads, bridges, highways, sewers, water mains, utilities, public buildings, factories, housing, or similar construction projects or a person engaged in the painting or drywall finishing of buildings or other structures.

This bill provides that if an employer misclassifies an individual who is an employee of the employer as a nonemployee, the employer may be subject to a penalty of $500 for each such violation, if DOR shows that the employer’s action or inaction was due to the employer’s willful neglect and not to reasonable cause. Under the bill, if DOR finds that an employer has had three or more cases of negligent misclassification of employees as nonemployees in a five-year period, the third negligent misclassification and any subsequent findings of negligent misclassification are treated as intentional misclassifications unless the employer proves by a preponderance of the evidence that the employer did not intentionally misclassify employees as nonemployees.

Who's behind it

Christine Sinicki, a Democrat, is its author⁠.

What it would cost

State agencies filed a cost estimate. Each opens as a PDF from the Legislature.

• Fiscal Estimate From DOR