On September 12, 2007, Senators Obama, Durbin, Kennedy, and Murray introduced the Independent Contractor Proper Classification Act of 2007 (S. 2044), which addresses what the sponsors view as weaknesses in the current laws regarding independent contractors. The bill would:

• allow the IRS to require employers to reclassify workers misclassified as independent contractors;
• authorize the IRS to issue regulations and revenue rulings establishing standards for properly classifying workers as independent contractors;
• eliminate the ability of employers to rely on industry practices as a reasonable basis for classifying workers as independent contractors;
• require the IRS to develop a procedure by which employees could challenge their classification as independent contractors;
• provide protections against retaliation for workers who take advantage of the challenge procedure;
• require IRS audit of employers that have misclassified workers and require misclassifications to be reported to the Department of Labor;
• require DOL to investigate industries that are revealed by IRS data to have high rates of misclassifications;
• require the DOL's FLSA poster to inform workers of their right to challenge their classification as independent contractors;
• require employers to notify independent contractors of their federal tax obligations, of their right to obtain a determination of their independent contractor status from the IRS, and of the labor and employment law protections that apply only to employees; and
• require employers to keep certain records relating to independent contractors for three years.

• WATCH LIST:  The Independent Contractor Proper Classification Act of 2007