H.R. 3682 (104th): Part-Time and Temporary Workers Protection Act of 1996

104th Congress, 1995–1996. Text as of Jun 19, 1996 (Introduced).

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HR 3682 IH

104th CONGRESS

2d Session

H. R. 3682

To allow certain individuals seeking part-time employment to be eligible to receive unemployment compensation, to require the Secretary of Labor to establish and carry out an annual survey relating to temporary workers, to protect part-time and temporary workers relating to pension and group health plans, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

June 19, 1996

Mrs. SCHROEDER introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Economic and Educational Opportunities, Government Reform and Oversight, and National Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To allow certain individuals seeking part-time employment to be eligible to receive unemployment compensation, to require the Secretary of Labor to establish and carry out an annual survey relating to temporary workers, to protect part-time and temporary workers relating to pension and group health plans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Part-Time and Temporary Workers Protection Act of 1996’.

TITLE I--PROTECTION OF PART-TIME AND TEMPORARY WORKERS

SEC. 101. ELIGIBILITY FOR UNEMPLOYMENT COMPENSATION OF CERTAIN INDIVIDUALS SEEKING PART-TIME EMPLOYMENT.

    (a) GENERAL RULE- Subsection (a) of section 3304 of the Internal Revenue Code of 1986 (relating to requirements for approval of State unemployment compensation laws) is amended by striking ‘and’ at the end of paragraph (18), by redesignating paragraph (19) as paragraph (20), and by inserting after paragraph (18) the following new paragraph:

      ‘(19) in applying the State law provisions relating to availability for work, active search for work, or refusal to accept work, the term ‘suitable work’ shall not include any work where the individual would normally perform services for more hours per week than the number of hours per week for which the individual normally performed services in the individual’s last job in the base period, and’.

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect on the date of the enactment of this Act.

SEC. 102. ANNUAL BUREAU OF LABOR STATISTICS SURVEY RELATING TO TEMPORARY WORKERS.

    The Secretary of Labor, acting through the Commissioner of the Bureau of Labor Statistics, shall establish and carry out an annual survey identifying--

      (1) the characteristics of temporary workers in the United States;

      (2) the relationship between such workers and the establishments at which such workers are temporarily employed; and

      (3) where appropriate, the relationship between such workers and their permanent employers.

SEC. 103. PROTECTION OF PART-TIME AND TEMPORARY WORKERS.

    (a) TREATMENT OF EMPLOYEES WORKING AT LESS THAN FULL-TIME UNDER PARTICIPATION, VESTING, AND ACCRUAL RULES GOVERNING PENSION PLANS-

      (1) Participation rules-

        (A) IN GENERAL- Section 202(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1052(a)(3)) is amended by adding at the end the following new subparagraph:

    ‘(E)(i) For purposes of this paragraph, in the case of any employee who, as of the beginning of the 12-month period referred to in subparagraph (A)--

      ‘(I) has customarily completed 500 or more hours of service per year but less than 1,000 hours of service per year, or

      ‘(II) is employed in a type of position in which employment customarily constitutes 500 or more hours of service per year but less than 1,000 hours of service per year,

    completion of 500 hours of service within such 12-month period shall be treated as completion of 1,000 hours of service.

    ‘(ii) For purposes of this subparagraph, the extent to which employment in any type of position customarily constitutes less than 1,000 hours of service per year shall be determined with respect to each pension plan in accordance with such regulations as the Secretary may prescribe providing for consideration of facts and circumstances peculiar to the work-force constituting the participants in such plan.’.

        (B) CONFORMING AMENDMENT- Section 204(b)(1)(E) of such Act (29 U.S.C. 1054(b)(1)(E)) is amended by striking ‘section 202(a)(3)(A)’ and inserting ‘subparagraphs (A) and (E) of section 202(a)(3)’.

      (2) VESTING RULES-

        (A) IN GENERAL- Section 203(b)(2) of such Act (29 U.S.C. 1053(b)(2)) is amended by adding at the end the following new subparagraph:

    ‘(E)(i) For purposes of this paragraph, in the case of any employee who, as of the beginning of the period designated by the plan pursuant to subparagraph (A)--

      ‘(I) has customarily completed 500 or more hours of service per year but less than 1,000 hours of service per year, or

      ‘(II) is employed in a type of position in which employment customarily constitutes 500 or more hours of service per year but less than 1,000 hours of service per year,

    completion of 500 hours of service within such period shall be treated as completion of 1,000 hours of service.

    ‘(ii) For purposes of this subparagraph, the extent to which employment in any type of position customarily constitutes less than 1,000 hours of service per year shall be determined with respect to each pension plan in accordance with such regulations as the Secretary may prescribe providing for consideration of facts and circumstances peculiar to the work-force constituting the participants in such plan.’.

        (B) 1-YEAR BREAKS IN SERVICE- Section 203(b)(3) of such Act (29 U.S.C. 1053(b)(3)) is amended by adding at the end the following new subparagraph:

    ‘(F)(i) For purposes of this paragraph, in the case of any employee who, as of the beginning of the period designated by the plan pursuant to subparagraph (A)--

      ‘(I) has customarily completed 500 or more hours of service per year but less than 1,000 hours of service per year, or

      ‘(II) is employed in a type of position in which employment customarily constitutes 500 or more hours of service per year but less than 1,000 hours of service per year,

    completion of 250 hours of service within such period shall be treated as completion of 500 hours of service.

    ‘(ii) For purposes of this subparagraph, the extent to which employment in any type of position customarily constitutes less than 1,000 hours of service per year shall be determined with respect to each pension plan in accordance with such regulations as the Secretary may prescribe providing for consideration of facts and circumstances peculiar to the work-force constituting the participants in such plan.’.

      (3) ACCRUAL RULES- Section 204(b)(4)(C) of such Act (29 U.S.C. 1054(b)(4)(C)) is amended--

        (A) by inserting ‘(i)’ after ‘(C)’; and

        (B) by adding at the end the following new clauses:

    ‘(ii) For purposes of this subparagraph, in the case of any employee who, as of the beginning of the period designated by the plan pursuant to clause (i)--

      ‘(I) has customarily completed 500 or more hours of service per year but less than 1,000 hours of service per year, or

      ‘(II) is employed in a type of position in which employment customarily constitutes 500 or more hours of service per year but less than 1,000 hours of service per year,

    completion of 500 hours of service within such period shall be treated as completion of 1,000 hours of service.

    ‘(iii) For purposes of clause (ii), the extent to which employment in any type of position customarily constitutes less than 1,000 hours of service per year shall be determined with respect to each pension plan in accordance with such regulations as the Secretary may prescribe providing for consideration of facts and circumstances peculiar to the work-force constituting the participants in such plan.’.

    (b) Treatment of Employees Working at Less Than Full-Time Under Group Health Plans.

      (1) IN GENERAL- Part 2 of subtitle B of title I of such Act is amended--

        (A) by redesignating section 211 (29 U.S.C. 1061) as section 212; and

        (B) by inserting after section 210 (29 U.S.C. 1060) the following new section:

‘TREATMENT OF PART-TIME WORKERS UNDER GROUP HEALTH PLANS

    ‘SEC. 211. (a) IN GENERAL- A reduction in the employer-provided premium under a group health plan with respect to any employee for any period of coverage solely because the employee’s customary employment is less than full-time may be provided under such plan only if the employee is described in subsection (b) and only to the extent permitted under subsection (c).

    ‘(b) REDUCTIONS APPLICABLE TO EMPLOYEES WORKING LESS THAN FULL-TIME-

      ‘(1) IN GENERAL- An employee is described in this subsection if such employee, as of the beginning of the period of coverage referred to in subsection (a)--

        ‘(A) has customarily completed less than 30 hours of service per week, or

        ‘(B) is employed in a type of position in which employment customarily constitutes less than 30 hours of service per week.

      ‘(2) REGULATIONS- For purposes of paragraph (1), whether employment in any type of position customarily constitutes less than 30 hours of service per week shall be determined with respect to each group health plan in accordance with such regulations as the Secretary may prescribe providing for consideration of facts and circumstances peculiar to the work force constituting the participants in such plan.

    ‘(c) AMOUNT OF PERMISSIBLE REDUCTION- The employer-provided premium under a group health plan with respect to any employee for any period of coverage, after the reduction permitted under subsection (a), shall not be less than a ratable portion of the employer-provided premium which would be provided under such plan for such period of coverage with respect to an employee who completes 30 hours of service per week.

    ‘(d) DEFINITIONS- For purposes of this section--

      ‘(1) GROUP HEALTH PLAN- The term ‘group health plan’ has the meaning provided such term in section 607(1).

      ‘(2) EMPLOYER-PROVIDED PREMIUM-

        ‘(A) IN GENERAL- The term ‘employer-provided premium’ under a plan for any period of coverage means the portion of the applicable premium under the plan for such period of coverage which is attributable under the plan to employer contributions.

        ‘(B) APPLICABLE PREMIUM- For purposes of subparagraph (A), in determining the applicable premium of a group health plan, principles similar to the principles applicable under section 604 shall apply.’.

      (2) CONFORMING AMENDMENTS-

        (A) Section 201(1) of such Act (29 U.S.C. 1051(1)) is amended by inserting ‘, except with respect to section 211’ before the semicolon.

        (B) The table of contents in section 1 of such Act is amended by striking the item relating to section 211 and inserting the following new items:

      ‘Sec. 211. Treatment of part-time workers under group health plans.

      ‘Sec. 212. Effective date.’.

    (c) EXPANSION OF DEFINITION OF EMPLOYEE TO INCLUDE CERTAIN INDIVIDUALS WHOSE SERVICES ARE LEASED OR CONTRACTED FOR- Paragraph (6) of section 3 of such Act (29 U.S.C. 1002(6)) is amended--

      (1) by inserting ‘(A)’ after ‘(6)’; and

      (2) by adding at the end the following new subparagraph:

    ‘(B) Such term includes, with respect to any employer, any person who is not an employee (within the meaning of subparagraph (A)) of such employer and who provides services to such employer, if--

      ‘(i) such person has (pursuant to an agreement with such employer or any other person) performed such services for such employer (or for such employer and related persons (within the meaning of section 144(a)(3) of the Internal Revenue Code of 1986)) for a period of at least 1 year (6 months in the case of core health benefits) at the rate of at least 500 hours of service per year, and

      ‘(ii) such services are of a type historically performed, in the business field of the employer, by employees (within the meaning of subparagraph (A)).’.

    (d) Effective Dates-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply with respect to plan years beginning on or after January 1, 1997.

      (2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of this Act, paragraph (1) shall be applied to benefits pursuant to, and individuals covered by, any such agreement by substituting for ‘January 1, 1997’ the date of the commencement of the first plan year beginning on or after the earlier of--

        (A) the later of--

          (i) January 1, 1997, or

          (ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after the date of the enactment of this Act), or

        (B) January 1, 1999.

      (3) PLAN AMENDMENTS- If any amendment made by this section requires an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after January 1, 1998, if--

        (A) during the period after such amendment made by this section takes effect and before such first plan year, the plan is operated in accordance with the requirements of such amendment made by this section, and

        (B) such plan amendment applies retroactively to the period after such amendment made by this section takes effect and such first plan year.

      A plan shall not be treated as failing to provide definitely determinable benefits or contributions, or to be operated in accordance with the provisions of the plan, merely because it operates in accordance with this paragraph.

TITLE II--MISCLASSIFICATION OF EMPLOYEES AS INDEPENDENT CONTRACTORS

SEC. 201. INTERNAL REVENUE SERVICE PROCEDURES.

    (a) WAIVER OF EMPLOYMENT TAX LIABILITY FOR REASONABLE GOOD FAITH MISCLASSIFICATION BASED ON COMMON LAW RULES- Section 3509 of the Internal Revenue Code of 1986 (relating to determination of employer’s liability for certain employment taxes) is amended by adding at the end the following new subsection:

    ‘(e) WAIVER OF EMPLOYMENT TAX LIABILITY FOR REASONABLE GOOD FAITH MISCLASSIFICATION BASED ON COMMON LAW RULES-

      ‘(1) IN GENERAL- For purposes of determining the liability of any taxpayer for employment taxes with respect to any individual for any period, such individual shall be deemed not to have been an employee of the taxpayer for such period if--

        ‘(A) the taxpayer did not treat such individual as an employee for purposes of the employment taxes for such period,

        ‘(B) the taxpayer’s treatment of such individual as not being an employee was based on a reasonable good faith misapplication of the common law rules used for determining the employer-employee relationship,

        ‘(C) all Federal tax returns (including information returns) required to be filed by the taxpayer with respect to such individual for such period were filed on a basis consistent with the taxpayer’s treatment of such individual as not being an employee,

        ‘(D) the taxpayer (and any predecessor) did not treat any other individual holding a substantially similar position as an employee for purposes of the employment taxes for any period beginning after December 31, 1977, and

        ‘(E) the taxpayer enters into a closing agreement under section 7121 with the Secretary (in the time and manner determined by the Secretary) agreeing to treat such individual, and any other individual holding a substantially similar position, as employees and to file all Federal employment tax returns with respect to such individuals on a basis consistent with the taxpayer’s treatment of such individuals as employees.

      ‘(2) DEFINITIONS AND SPECIAL RULES-

        ‘(A) EMPLOYMENT TAX- For purposes of this subsection, the term ‘employment tax’ means any tax imposed by subtitle C, including any interest, penalty, or additional amount with respect to such tax.

        ‘(B) NO REFUND OR CREDIT OF OVERPAYMENT- No refund or credit of any overpayment of an employment tax resulting from the application of paragraph (1) shall be allowed, notwithstanding that the period for filing a claim for refund or credit of such overpayment is not barred on the effective date of this subsection.’

    (b) MODIFICATIONS TO SAFE HARBOR FOR CLASSIFICATIONS OF INDIVIDUALS AS NONEMPLOYEES-

      (1) REQUIREMENT OF REASONABLE BASIS- Paragraph (1) of section 530(a) of the Revenue Act of 1978 (relating to controversies involving whether

individuals are employees for purposes of the employment taxes) is amended by striking ‘unless the taxpayer had no reasonable basis’ and inserting the following: ‘if the taxpayer had a reasonable basis’.

      (2) REPEAL OF PRIOR AUDIT AS REASONABLE BASIS, ETC- Paragraph (2) of section 530(a) of the Revenue Act of 1978 is amended--

        (A) by striking the paragraph caption and inserting the following: ‘Reasonable basis for not treating individual as employee- ’,

        (B) in the matter preceding subparagraph (A)--

          (i) by striking ‘in any case’, and

          (ii) by inserting ‘only’ before ‘if the taxpayer’s’,

        (C) by adding ‘or’ at the end of subparagraph (A), and

        (D) by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B).

    (c) AUTHORITY FOR REGULATIONS AND RULINGS ON EMPLOYMENT STATUS- Section 530 of the Revenue Act of 1978 is amended by striking subsection (b) and by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.

    (d) Effective Dates-

      (1) IN GENERAL- The amendments made by this section shall take effect beginning on the date which is 120 days after the date of the enactment of this Act.

      (2) MODIFICATIONS TO SAFE HARBOR- The amendments made by subsection (b) shall apply to periods ending on or after the date which is 120 days after the date of the enactment of this Act.

SEC. 202. FEDERAL CONTRACTS.

    (a) CLASSIFICATION OF PERSONS AS EMPLOYEES AND INDEPENDENT CONTRACTORS UNDER CERTAIN PROCUREMENT CONTRACTS- (1) Title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.) is amended by adding at the end the following new section:

‘SEC. 317. CLASSIFICATION OF PERSONS AS EMPLOYEES AND INDEPENDENT CONTRACTORS.

    ‘(a) INELIGIBILITY FOR GOVERNMENT CONTRACTS AND SUBCONTRACTS- (1) A person (including any subsidiary, successor, or related entity of a person) shall not be eligible for a contract during the 2-year period beginning on the date of the issuance of any final determination under Federal law that the person (including any subsidiary or related entity of the person) willfully misclassified an individual for purposes of any employment tax.

    ‘(2) For purposes of this subsection, a determination is final if all rights to appeal the determination, or to request a review, rehearing, or redetermination of the matter that is the subject of the determination, have been exhausted or have lapsed.

    ‘(b) CERTIFICATION OF ADEQUACY OF BIDS TO PAY EMPLOYMENT TAXES- A person who submits a bid or proposal for a contract shall certify that the amount of the bid or proposal is adequate to pay all employment taxes with respect to all work to be performed under the contract by employees of the person.

    ‘(c) NOTIFICATION OF INDEPENDENT CONTRACTORS- Each contract shall include a requirement that the contractor provide, to each person who performs work under the contract and who is treated by the contractor as an independent contractor for purposes of employment taxes, a notification regarding--

      ‘(1) all obligations of the independent contractor under Federal and State law to withhold and pay employment taxes with respect to work performed under the contract by the independent contractor (including work performed by employees of the independent contractor); and

      ‘(2) all statutory rights and protections that are available under Federal and State law to employees of the contractor and are not available to the independent contractor (including employees of the independent contractor), including rights and protections under the Fair Labor Standards Act of 1938, the Occupational Safety and Health Act of 1978, and title VII of the Civil Rights Act of 1964.

    ‘(d) RIGHT OF ACTION- A person who submits a bid or proposal for a contract and who suffers damages as a result of the award of the contract to a person who knowingly and willfully submits a certification under subsection (b) with respect to the contract that is false, may bring an action for damages against the person awarded the contract in any district court of the United States in which the defendant is located.

    ‘(e) DEFINITIONS- As used in this section:

      ‘(1) The term ‘employment tax’ means any tax imposed by subtitle C of the Internal Revenue Code of 1986.

      ‘(2) The term ‘contract’ means a contract that is entered into by an executive agency under this title, and all subcontracts under such a contract.

      ‘(3) The term ‘misclassify’ means to treat as an independent contractor an individual who is an employee.’.

    (2) The table of contents in section 1 of the Federal Property and Administrative Services Act of 1949 is amended by inserting after the item relating to the last section in title III the following new item:

      ‘Sec. 317. Classification of persons as employees and independent contractors.’.

    (b) APPLICABILITY- Section 317 of the Federal Property and Administrative Services Act of 1949, as added by subsection (a), shall apply to--

      (1) contracts entered into under title III of such Act after the expiration of the 180-day period beginning on the date of the enactment of this Act;

      (2) subcontracts under contracts covered by paragraph (1); and

      (3) options exercised under any such contract after the expiration of the 180-day period beginning on the date of the enactment of this Act.

SEC. 203. DEFENSE CONTRACTS.

    (a) CLASSIFICATION OF PERSONS AS EMPLOYEES AND INDEPENDENT CONTRACTORS UNDER DEFENSE CONTRACTS- (1) Chapter 141 of title 10, United States Code, is amended by inserting after section 2393 the following new section:

‘Sec. 2393a. Classification of persons as employees and independent contractors

    ‘(a) INELIGIBILITY FOR DEFENSE CONTRACTS AND SUBCONTRACTS- (1) A person (including any subsidiary, successor, or related entity of a person) shall not be eligible for a contract during the 2-year period beginning on the date of the issuance of any final determination under Federal law that the person (including any subsidiary or related entity of the person) willfully misclassified an individual for purposes of any employment tax.

    ‘(2) For purposes of this subsection, a determination is final if all rights to appeal the determination, or to request a review, rehearing, or redetermination of the matter that is the subject of the determination, have been exhausted or have lapsed.

    ‘(b) CERTIFICATION OF ADEQUACY OF BIDS TO PAY EMPLOYMENT TAXES- A person who submits a bid or proposal for a contract shall certify that the amount of the bid or proposal is adequate to pay all employment taxes with respect to all work to be performed under the contract by employees of the person.

    ‘(c) NOTIFICATION OF INDEPENDENT CONTRACTORS- Each contract shall include a requirement that the contractor shall provide, to each person who performs work under the contract and who is treated by the contractor as an independent contractor for purposes of employment taxes, a notification regarding--

      ‘(1) all obligations of the independent contractor under Federal and State law to withhold and pay employment taxes with respect to work performed under the contract by the independent contractor (including work performed by employees of the independent contractor); and

      ‘(2) all statutory rights and protections that are available under Federal and State law to employees of the contractor and are not available to the independent contractor (including employees of the independent contractor), including rights and protections under the Fair Labor Standards Act of 1938, the Occupational Safety and Health Act of 1978, and title VII of the Civil Rights Act of 1964.

    ‘(d) RIGHT OF ACTION- A person who submits a bid or proposal for a contract and who suffers damages as a result of the award of the contract to a person who knowingly and willfully submits a certification under subsection (b) with respect to the contract that is false, may bring an action for damages against the person awarded the contract in any district court of the United States in which the defendant is located.

    ‘(e) APPLICABILITY- This section applies to contracts entered into under chapter 137 of this title.

    ‘(f) DEFINITIONS- In this section:

      ‘(1) The term ‘employment tax’ means any tax imposed by subtitle C of the Internal Revenue Code of 1986.

      ‘(2) The term ‘contract’ includes subcontracts.

      ‘(3) The term ‘misclassify’ means to treat as an independent contractor an individual who is an employee.’.

    (2) The table of sections at the beginning of such chapter is amended by inserting after the item relating to section 2393 the following new item:

      ‘2393a. Classification of persons as employees and independent contractors.’.

    (b) APPLICABILITY- Section 2393a of title 10, United States Code, as added by subsection (a), shall apply to--

      (1) contracts entered into under chapter 137 of title 10, United States Code, after the expiration of the 180-day period beginning on the date of the enactment of this Act;

      (2) subcontracts under contracts covered by paragraph (1); and

      (3) options exercised under any such contract after the expiration of the 180-day period beginning on the date of the enactment of this Act.