[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3682 Introduced in House (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.
                                 <all>