Delaware’s Workplace Fraud Act to Expand Again?

Delaware’s Workplace Fraud Act , passed in July 2009, currently prohibits employers in the construction services industry from misclassifying employees as independent contractors. An employer who misclassifies its employees-intentionally or unintentionally-may be subject to civil penalties of up to $5,000 per misclassified employee; restitution obligations; stop-work orders; debarment from public contracts; and civil suit by the aggrieve employee(s).

Two bills currently under consideration by the Delaware General Assembly would amend and expand the Workplace Fraud Act. House Bill 221 would significantly expand the scope of the Act to cover all employers in the State. It would also make individual business owners jointly and severally liable with the business entity for any violation of the Act. House Bill 222 would allow the Department of Labor to publish a list of employers who had been found to have violated the Act.

Both Bills are currently in committee, and have not yet been put to a vote. It is unclear whether the bills have sufficient support to be passed by the General Assembly. But one thing is clear-passage of the bills would greatly impact Delaware employers using independent contractors!

These proposed amendments may reflect new enforcement efforts by the U.S. Department of Labor, seeking to put an end to employer practices of misclassification of employees as independent contractors in violation of the Fair Labor Standards Act and federal tax law.