[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 770 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 770

To amend title 10, United States Code, to ensure proper classification 
  as employees and independent contractors of persons awarded Federal 
                         procurement contracts.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 13, 1997

 Mr. Lantos (for himself and Mr. Shays) introduced the following bill; 
        which was referred to the Committee on National Security

_______________________________________________________________________

                                 A BILL


 
To amend title 10, United States Code, to ensure proper classification 
  as employees and independent contractors of persons awarded Federal 
                         procurement contracts.

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

SECTION 1. CLASSIFICATION OF PERSONS AS EMPLOYEES AND INDEPENDENT 
              CONTRACTORS UNDER DEFENSE CONTRACTS.

    (a) In General.--Chapter 137 of title 10, United States Code, is 
amended by adding at the end the following new section:
``Sec. 2332. Classification of persons as employees and independent 
              contractors
    ``(a) Ineligibility for Defense Contracts and Subcontracts.--
            ``(1) In general.--A person (including any subsidiary, 
        successor, or related entity of a person) shall not be eligible 
        for any defense contract during the two-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) Final determination.--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 defense 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 defense 
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 
        protections and benefits under Federal laws relating to fair 
        labor standards, occupational health and safety, civil rights, 
        unemployment insurance, and worker's compensation.
    ``(d) Right of Action.--A person who submits a bid or proposal for 
a defense 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.--For purposes of this section:
            ``(1) Employment tax.--The term `employment tax' means any 
        tax imposed by subtitle C of the Internal Revenue Code of 1986.
            ``(2) Defense contract.--The term `defense contract' means 
        a contract awarded by the Department of Defense, and all 
        subcontracts under such a contract.
            ``(3) Misclassify.--The term `misclassify' means to treat 
        as an independent contractor an individual who is an 
        employee.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``2332. Classification of persons as employees and independent 
                            contractors.''.

SEC. 2. APPLICABILITY.

    Section 2332 of title 10, United States Code, as added by section 
1, shall apply to--
            (1) defense contracts entered into 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 defense contract after the 
        expiration of the 180-day period beginning on the date of the 
        enactment of this Act.
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