Employers in the construction industry should, by now, be painfully aware of the Delaware Workplace Fraud Act, signed into law in 2009. The Act imposes stiff penalties on construction-services employers who misclassify employees as “independent contractors.”
As a result of amendments signed into law on July 12, 2012 (HB 222.pdf), the General Assembly has added more teeth to the law, in the form of public shame. Now, the name of any employer that has violated the Workplace Fraud Act will be posted on the Department of Labor’s website for a period of 3 years from the date of the final determination.
The DDOL will maintain something akin to a sex offender registry for misclassification–or affix the offending contractor with a Scarlet “M”–to use a more literary analogy. Regardless of how you may feel about this new penalty or its effectiveness as a deterrent, it makes clear that this issue remains a top priority for legislators. So far, Delaware’s attempts to expand this law to other industries have not succeeded but, if Delaware follows the national trend, this won’t last long. All Delaware companies would be well advised to ensure that they are not wrongfully labeling employees as “independent contractors,” in light of the state and national focus on this issue.