Louisiana House committee approves misclassification, pay transparency measures

By David Jacobs | The Center Square

A Louisiana House committee advanced a bill Thursday meant to clarify enforcement of laws related to employee misclassification.

Businesses that misclassify their employees as independent contractors can get out of paying the taxes that support unemployment benefits, forcing businesses that follow the law to shoulder more of the tax burden. The issue has garnered additional attention in recent months as the state’s unemployment insurance trust fund has been depleted by unprecedented demand tied to the COVID-19-related downturn.

Companies that avoid paying some of their taxes also gain a competitive advantage over those that do, some lawmakers said. Yet Louisiana is the only state in the nation with a classification statute that lets employers off with a warning on the first offense.

Thursday’s meeting of the House Committee on Labor and Industrial Relations featured the rare sight of the Louisiana Association of Business and Industry and the Louisiana chapter of the AFL-CIO labor union at the witness table together in support of a bill.

Both organizations participated in the task force that led to the creation of House Bill 151, which calls for an administrative penalty of up to $500 per employee that an employer willfully misclassifies on a first offense, with escalating penalties on subsequent offenses. However, the penalty for a first offense may be waived if the employer comes into compliance within 60 days.

Jim Patterson with LABI said he hoped Rep. Neil Riser’s HB 151 would be “married” to Sen. Jay Luneau’s Senate Bill 244, which he said offers a “safe harbor” for employers who come forward voluntarily. Business advocates have stressed they don’t want companies that make honest mistakes to be harshly penalized.

Critics of HB 151 worry it defines “contractor” too broadly and favors businesses over workers. Erika Zucker with the Workplace Justice Project said the definition conflicts with federal policy and could lead to confusion and litigation.

The committee advanced HB 151 without objection.

The committee also agreed to advance House Bill 245 by Rep. Barbara Carpenter, D-Baton Rouge. It would ensure employees have the right to discuss their compensation without retribution from their employers. Employers would not be allowed to require applicants to disclose their wage history.

Supporters of the change, which has been implemented in 19 states according to committee testimony, said “pay transparency” helps to guard against pay discrimination against women because it helps them find out how much their colleagues make. Basing wages on salary history, rather than industry standards and experience, can lead to workers being underpaid throughout their career, supporters said.

Dawn McVea with the National Federation of Independent Business opposed the proposal, saying it duplicates federal law and could complicate hiring, which already is difficult right now. Gov. John Bel Edwards supports the change as part of his legislative package.

The committee also approved House Bill 480 by Rep. Matthew Willard, D-New Orleans, which is meant to encourage employers to at least consider applicants who have had run-ins with law enforcement. The bill says employers should not hold an arrest without a conviction against an applicant and, when there is a conviction, to evaluate the nature of the conviction and its relevance to the position rather than automatically screen out the applicant.

The bill does not contain penalties for employers who don’t follow its directives, however.

“I don’t think there is any kind of remedy [for applicants],” said LABI’s Patterson, calling the bill a “significant first step” to encourage employers to keep an open mind and help people become productive members of society.