Legislative Watch

Proposed penalties for wage theft and employee misclassification.

CIRI agrees wage theft and employee misclassification are serious issues that are damaging to our economy. However, we also contend the existing law provides adequate penalties to combat these issues. As such, we are prepared to oppose House Bill 5902 — Payment of Wages — which proposes to increase penalties for these offenses in the forms of excessive fines, felony charges and imprisonment. Examples include:

Penalties for violations. Each day of failure is subject to a minimum fine of $400, imprisonment up to one year, or both. An ascending scale of fines range from $3,000 to $20,000 based on the value of wages due. Potential imprisonment sentences based on the severity of the violation(s) range from 3 to 10 years.

Misclassification of employees. Includes the misclassification of employee as an independent contractor — as opposed to an employee — whether performing work as a natural person, business, corporation or entity of any kind. For each misclassified employee, a first offense can carry a civil penalty of $1,500 to $3,000 — up to $5,000 for any subsequent offense. Upon plea or conviction, the employer can also be subject to imprisonment of 3 to 5 years, along with additional fines up to twice the value of the wages.

The advocacy efforts of our lobbying firm, Government Strategies, have already been instrumental in adding “knowingly and willful violation” provisions when it comes to imprisonment. We intend to further oppose this overreaching legislation on behalf of our members — and are prepared to testify at any scheduled hearing.