This bill establishes a prohibition against the willful misclassification of employees as independent contractors, which can deny individuals access to employment benefits or government programs. It defines key terms such as "employee," "employer," "independent contractor," and "misclassification," referencing the regulations of the federal Internal Revenue Service. The enforcement of this prohibition falls under the jurisdiction of the Department of Workforce Development, which is also tasked with administering unemployment compensation benefits and related services.

Employers found in violation of this prohibition face escalating civil penalties, starting at $5,000 for a first offense and increasing to $10,000 for subsequent offenses. The bill also introduces a criminal penalty, classifying willful misclassification as a class D felony, which carries potential imprisonment and fines. The Department of Workforce Development is empowered to enforce these provisions and may establish additional procedures as necessary. The bill applies to any misclassification occurring on or after its effective date.

Statutes affected:
Introduced: 84A.5