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Regular Session, 2011
HOUSE BILL NO. 535
BY REPRESENTATIVE LAFONTA
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
LABOR: Creates the Workplace Fraud Prevention Act
AN ACT1
To enact Part II-A of Chapter 9 of Title 23 of the Louisiana Revised Statutes of 1950, to be2
comprised of R.S. 23:931 through 934, and R.S. 38:2181, relative to the3
classification of construction employees; to provide for definitions; to provide with4
respect to the duty to properly classify workers; to provide for penalties for failure5
to properly classify; to provide relative to contracts with the state; and to provide for6
related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. Part II-A of Chapter 9 of Title 23 of the Louisiana Revised Statutes of9
1950, comprised of R.S. 23:931 through 934, is hereby enacted to read as follows:10
PART II-A WORKPLACE FRAUD PREVENTI ON ACT11
§931. Short title; legislative declaration12
A. This part shall be known and may be cited as the "Workplace Fraud13
Prevention Act".14
B. The legislature hereby declares that employers in the construction15
industry who improperly classify employees as independent contractors deprive16
these workers of proper social security benefits, worker's compensation, and other17
benefits, while reducing the employers' state and federal tax withholding and related18
obligations. This practice puts businesses that bear higher costs for complying with19
the law at a competitive disadvantage.20 HLS 11RS-734 ORIGINAL
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§932. Definitions1
For purposes of this Part, the following terms shall have the meaning ascribed2
to them in this Section, unless the context clearly indicates otherwise:3
(1) "Commission" shall mean the Louisiana Workforce Commission.4
(2) "Construction" means work related to the erection, improvement,5
alteration, repair, renovation, maintenance, or remodeling of a building, structure,6
appurtenance, road, highway, bridge, dam, levee, canal, jetty, or other improvement7
to or on real property, including moving, demolishing, dredging, shoring,8
scaffolding, drilling, blasting, and excavating real property.9
(3) "Contractor" means a person who contracts to perform construction10
services, including a subcontractor.11
(4) "Employee" and "Independent Contractor" shall be determined as12
provided in R.S. 23:1472.13
(5) "Performing service" means the performance of construction service for14
payment.15
§933. Violations; penalties16
A. A contractor shall properly classify an individual who performs17
construction services as an employee.18
B.(1) It shall be unlawful for a contractor to fail to properly designate an19
individual as an employee of the contractor.20
(2) Whoever fails to properly designate an individual as an employee of the21
contractor shall pay to the commission, upon first violation, five hundred dollars per22
individual not properly classified and upon second violation, five thousand dollars23
per individual not properly classified.24
C.(1) It shall be unlawful for an individual to knowingly form or assist in the25
formation of a corporation, partnership, limited liability corporation, or other26
business entity, or pay or collect a fee for use of a corporation, partnership, limited27
liability corporation, or other business entity, for fraudulent purposes.28 HLS 11RS-734 ORIGINAL
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(2) Whoever knowingly forms or assists in the formation of a corporation,1
partnership, limited liability corporation, or other business entity, or pays or collects2
a fee for use of a corporation, partnership, limited liability corporation, or other3
business entity, for fraudulent purposes shall pay to the commission a fine of two4
thousand five hundred dollars upon first violation, and a fine of ten thousand dollars5
for each subsequent violation.6
D.(1) It shall be unlawful for an individual to knowingly assist, aid, or7
conspire with any person in violation of this Subsection.8
(2) Whoever knowingly assists, aids, or conspires with any person in9
violation of this Subsection shall pay to the commission a fine of two thousand five10
hundred dollars upon first violation, and a fine of ten thousand dollars for each11
subsequent violation.12
E. Any penalty issued to a business entity pursuant to this Section shall apply13
to any successor business entity that has one or more officers in common with the14
original entity and is engaged in the same or similar business activity.15
F. Any fines collected as a result of a violation of this Section shall be16
deposited into the penalty and interest account established in R.S. 23:1513.17
G. In addition to any fines assessed, if the commission determines that a18
contractor or other person has violated the provisions of this Section, the commission19
shall initiate enforcement proceedings to collect unpaid unemployment taxes plus20
interest and notify the Louisiana Department of Revenue, the Louisiana Office of21
Workers Compensation fraud and financial and compliance units, the attorney22
general, and any other appropriate prosecuting authority of any violations.23
§934. Notice; complaints24
A. Employers shall post a notice in English and Spanish, in a conspicuous25
location on the job site, which specifies that every individual who works for the26
contractor has the right to be properly classified an employee or independent27
contractor if the individual meets the requirements pursuant to the Workplace Fraud28
Prevention Act. The notice shall also provide that if any worker believes that he or29 HLS 11RS-734 ORIGINAL
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another individual has not been properly classified as an employee or independent1
contractor pursuant to the Workplace Fraud Prevention Act, he should contact the2
Louisiana Workforce Commission.3
B.(1) The commission shall provide a toll-free telephone number and4
website for the public to confidentially report violations.5
(2) The commission shall promptly investigate any credible complaint that6
contains all of the following information:7
(a) The name and contact information for the party alleged to have8
committed the violation.9
(b) The job site location at which the violation is said to have occurred.10
(c) A description of the violation.11
C. Beginning on January first and annually thereafter, the commission shall12
issue a report to the governor and to the legislature regarding compliance with and13
enforcement of this Section. The report shall include the following:14
(1) The total number of complaints received.15
(2) The number of complaints investigated and the findings of the16
investigations.17
(3) The amount of unemployment taxes, interest, administrative penalties,18
and fines collected pursuant to R.S. 23:933.19
(4) The number of referrals to other agencies as provided by R.S. 23:933 and20
the outcome of those referrals.21
Section 2. R.S. 38:2181 is hereby enacted to read as follows:22
§2181. Workplace Fraud Prevention Act; compliance; penalties23
A. Any contract between a contractor performing construction services and24
the state or any political subdivision of this state shall specify compliance with the25
Workplace Fraud Prevention Act as provided in R.S. 23:931 through 934 and shall26
require the contractor to submit an affidavit attesting that:27
(1) Each individual performing services for the contractor has been properly28
classified as either an employee or an independent contractor.29 HLS 11RS-734 ORIGINAL
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(2) The contractor is in compliance with the requirements of R.S. 46:236.1.4.1
(3) The contractor is not barred from contracting with this state or any2
political subdivision of this state.3
B. Any contractor who knowingly swears to a false affidavit as provided by4
Subsection A of this Section shall be guilty of perjury as provided in R.S. 14:123,5
and upon a second violation, shall be barred from contracting with this state or a6
political subdivision for three years.7
C. Any contractor who violates the provisions of this Section may have his8
contract rescinded by the state or political subdivision.9
Section 3 . The provisions of Section 2 of this Act shall apply only to contracts10
entered into after August 15, 2011.11
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
LaFonta HB No. 535
Abstract: Creates the Workplace Fraud Prevention Act to ensure the proper classification
of employees in construction work.
Proposed law creates the Workplace Fraud Prevention Act.
Proposed law sets forth legislative intent that employers in the construction industry properly
classify employees and independent contractors so that the appropriate taxes and benefits
are paid and applied.
Proposed law provides definitions.
Proposed law requires that employers properly classify workers as employees or as
independent contractors and provides that failure to do so will result in a fine of $500 per
individual not properly classified on first violation, and a fine of $5,000 per individual not
properly classified upon any second violation.
Proposed law provides that it shall be unlawful for any person to form, or assist anyone in
the formation of a business entity for fraudulent purposes, or assist any person in improperly
classifying workers and that the penalty for doing so is a fine of $2,500 for the first violation
and $10,000 for any subsequent violation.
Proposed law provides that the fines shall be collected by the commission and shall be
deposited into the penalty and interest account.
Proposed law provides that in addition to any fines assessed, the commission shall initiate
enforcement proceedings to collect any unpaid taxes plus interest. HLS 11RS-734 ORIGINAL
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Proposed law further provides that the commission shall notify the LA Dept. of Revenue,
the LA Office of Workers' Comp., the attorney general, and any other appropriate
prosecuting authority of any violations.
Proposed law requires construction employers to post a notice on the job site, in English and
Spanish, notifying workers that they are entitled to be classified as employees or independent
contractors as per the Workplace Fraud Prevention Act, and that any worker should contact
the commission if he knows of any violation.
Proposed law requires the commission to provide a toll-free phone number and website for
confidential reports of violations.
Proposed law requires the commission to investigate violations and report the number of
investigated complaints to the governor and legislature annually.
Proposed law provides that all contracts with the state shall comply with the Workplace
Fraud Prevention Act.
Proposed law requires all contractors who contract with the state to execute an affidavit
providing that each worker has been properly classified and that the employer is in
compliance with present law, R.S. 46:236.1.4 (family and child support programs).
Proposed law provides that any contractor not in compliance is subject to rescission of the
state contract.
Proposed law provides that the provisions of proposed law shall apply only to contracts
entered into after Aug. 15, 2011.
(Adds R.S. 23:931-934 and R.S. 38:2181)