by Fred Abramson on April 29, 2010
I have written extensively about the potential problems employers can have by misclassifying their workers as employees. The IRS has been cracking down on companies that try to pass off regular employees as independent contractors. It now may become a crime.
Congress is about to act on a bill entitled the Employee Misclassification Prevention Act that would impose criminal penalties on companies that misclassify workers. It appears that both the House and Senate is behind the bill, so it is likely to become law.
If this new law is passed, it would impose finds of $5,000.00 for each worker that is misclassified as an independent contractor. According to the American Bar Association Journal, the new law would also require employers to provide new hires with notice concerning their rights
There is an excellent and lengthy article on the subject by the large law firm Pepper Hamilton, LLP.
The new law is a natural progression of the Obama administration focus on cracking down on employers who improperly classify employees as independent contractors.
I would suggest that companies review all of their employment classifications to avoid potential criminal liability. You may be able to minimize the risk to your company by:
- Wholesale review of all of your workers.
- Restructuring the relationship that you have with your independent contractors that fall within a gray area of the law by re-classifying them as employees. I would suggest that you should err on the side of caution and classify your workers as employees if you are not sure.
- Draft written agreements with all of your workers stating their employment status.
- If you want to limit the workers that you classify as employees, you may have a third-party such as a staffing agency performing the hiring.
If you have any questions regarding independent contractor agreements or classification of employees, contact me at the Law Office of Frederic R. Abramson at 212-233-0666.
by Fred Abramson on February 24, 2010 · 1 comment
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Senators Dick Luger and John Kerry introduced today a new piece of legislation entitled “The Startup Visa Act of 2010.” This visa would permit immigrant entrepreneurs to stay or immigrate into the United States if they have secured “significant” funds to start a new company. The goal of the act is to bring new jobs, opportunity and investment to the US.
To make the visa available, a new EB-6 category would be created. This new visa category would draw from visas under the existing EB-5 category.
One potential sticking point for many budding entrepreneurs is the proposed legislation’s definition of “significant” funds. The bill requires investment capital available from a sponsoring US venture capital or angel investor of at least $100,000 in an equity financing of not less than $250,000. If after 2 years the immigrant entrepreneur can show that he or she has generated at least 5 full time jobs or attracted at least $1 million in additional capital or revenue, then he or she would achieve legal status.
Clearly, this bill is aimed at attracting startup immigrant all-stars. Perhaps the young entrepreneur from Russia who started Chatroulette would qualify. It will also help young entrepreneurs with great ideas who have recently graduated from college who have obtained venture funding.
Most immigrant entrepreneurs who contact my office have great ideas but only limited access to capital. I field a few calls a week from potential immigrant entrepreneurs who have amazing business plans which would be inexpensive to implement, but would fall short of the capital requirements. I am not sure Bill Gates would qualify for a visa under the Startup Visa Act of 2010 if he hailed from Bangalore when he started Microsoft.
Nevertheless, this proposed law is a step in the right direction and I support the bill.
Full Text of Proposed Legislation of The Startup Visa Act
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