The BAC is supporting the swift passage of H.R.3408/S.2882 , The Taxpayer Responsibility, Accountability, and Consistency Act of 2009

The bill would amend Internal Revenue Code provisions that are overly permissive in countenancing misclassification of employees as independent contractors for far too long.

Misclassification hurts lawful employers, workers, taxpayers and governments. Law abiding employers are forced to compete in the marketplace against unlawful employers who unfairly cut their labor and administrative costs up to 30%. Working families are severely hurt when they lose essential benefits and worker protections, like unemployment insurance or workers' compensation, and are not eligible for overtime pay. They are burdened with paying the full portion of Social Security and Medicare taxes and they are not covered by employment or labor laws. Misclassification costs the government and the taxpayers, at all levels, substantial, uncollected revenues. One study showed that between 1994 and 2004, $34.7 billion in federal tax revenue went uncollected as a result of misclassification.

Studies show that misclassification of employees is steadily increasing. The epidemic rise of worker misclassification in construction has nothing to do with career enhancement or individual entrepreneurship, but rather everything to do with unfair low-wage competition and workforce degradation. Vague, complex and subjective rules regarding independent contractor determinations and lax enforcement have made this a problem of enormous proportions.

Still, the measure would remedy the problem prospectively, while equitably providing some measure of protection from retroactive penalties. A safe harbor would be maintained for employers to shield them from steep retroactive liability, yet this safe harbor would be narrowed to reduce abuses and to ensure employers have a genuinely reasonable basis for treating an individual as an independent contractor - not an employee - when that classification is warranted by the truly genuine specific terms of their economic relationship - judged objectively and without coercion.

For the above reasons, we are asking our Representatives in Congress to cosponsor H.R. 3408/S. 2882.