ENGROSSED SENATE
BILL NO. 1937 	By:	Coates of the Senate

			and

		Proctor of the House

[ labor - creating the Oklahoma Employee Classification Act - codification - 
		effective date ]

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 701 of Title 40, unless there is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the “Oklahoma Employee Classification Act”.  This act is intended to address the practice of misclassifying employees as independent contractors.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 702 of Title 40, unless there is created a duplication in numbering, reads as follows:
As used in the Oklahoma Employee Classification Act:
1.  "Construction" means any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom  fabricating, maintenance, landscaping, improving, wrecking, painting, decorating, demolishing, and adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, waterworks, parking facility, railroad, excavation or other structure, project, development, real property or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to, or fabrication into, any structure, project, development, real property or improvement herein described of any material or article of merchandise.  Construction shall also include moving construction-related materials on the job site to or from the job site;
2.  "Commissioner" means the Commissioner of Labor;
3.  "Contractor" means any sole proprietor, partnership, firm, corporation, limited liability company, association or other legal entity permitted by law to do business within the State of Oklahoma who engages in construction as defined in this act.  "Contractor" includes a general contractor and a subcontractor;
4.  "Department" means the Department of Labor;
5.  "Employer" means any contractor that employs individuals deemed employees under Section 3 of this act; however, employer does not include the State of Oklahoma or its officers, agencies, or political subdivisions, or the federal government;
6.  "Entity" means any contractor for which an individual is performing services and is not classified as an employee under Section 3 of this act; however, entity does not include the State of Oklahoma or its officers, agencies, or political subdivisions or the federal government;
7.  "Interested party" means a person with an interest in compliance with this act; and
8.  "Performing services" means the performance of any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom fabricating, maintaining, landscaping, improving, wrecking, painting, decorating, demolishing, and adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, waterworks, parking facility, railroad, excavation or other structure, project, development, real property or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to, or fabrication into, any structure, project, development, real property or improvement herein described of any material or article of merchandise.  Construction shall also include moving construction-related materials on the job site to or from the job site.
SECTION 3.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 703 of Title 40, unless there is created a duplication in numbering, reads as follows:
A.  For the purposes of the Oklahoma Employee Classification Act, a person performing services for a contractor is deemed to be an employee of the employer, except as provided in subsections B and C of this section.
B.  A person performing services for a contractor is deemed to be an employee of the contractor, unless it is shown that:
1.  The person has been and will continue to be free from control or direction over the performance of the service for the contractor, both under the individual's contract of service and in fact;
2.  The service performed by the person is outside the usual course of services performed by the contractor; and
3.  The person is engaged in an independently established trade, occupation, profession or business; or
4.  The person is deemed a legitimate sole proprietor or partnership under subsection C of this section.
C.  The sole proprietor or partnership performing services for a contractor as a subcontractor is deemed legitimate if it is shown that:
1.  The sole proprietor or partnership is performing the service free from the direction or control over the means and manner of providing the service, subject only to the right of the contractor for whom the service is provided to specify the desired result;
2.  The sole proprietor or partnership is not subject to cancellation or destruction upon severance of the relationship with the contractor;
3.  The sole proprietor or partnership has a substantial investment of capital in the sole proprietorship or partnership beyond ordinary tools and equipment and a personal vehicle;
4.  The sole proprietor or partnership owns the capital goods and gains the profits and bears the losses of the sole proprietorship or partnership;
5.  The sole proprietor or partnership makes its services available to the general public or the business community on a continuing basis;
6.  The sole proprietor or partnership includes services rendered on a Federal Income Tax Schedule as an independent business or profession;
7.  The sole proprietor or partnership performs services for the contractor under the sole proprietorship's or partnership's name;
8.  When the services being provided require a license or permit, the sole proprietor or partnership obtains and pays for the license or permit in the sole proprietorship's or partnership's name;
9.  The sole proprietor or partnership furnishes the tools and equipment necessary to provide the service;
10.  If necessary, the sole proprietor or partnership hires its own employees without contractor approval, pays the employees without reimbursement from the contractor and reports the employees' income to the Internal Revenue Service;
11.  The contractor does not represent the sole proprietorship or partnership as an employee of the contractor to its customers; and
12.  The sole proprietor or partnership has the right to perform similar services for others on whatever basis and whenever it chooses.
D.  Where a sole proprietor or partnership performing services for a contractor as a subcontractor is deemed not legitimate under subsection C of this section, the sole proprietorship or partnership shall be deemed to be performing services as an individual who is subject to the provisions of subsections A and B of this section for purposes of this act.
E.  Subcontractors or lower-tiered contractors are subject to all provisions of this act.
F.  A contractor shall not be liable under this act for any subcontractor's failure to properly classify persons performing services as employees, nor shall a subcontractor be liable for any lower-tiered subcontractor's failure to properly classify persons performing services as employees.
SECTION 4.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 704 of Title 40, unless there is created a duplication in numbering, reads as follows:
An entity for whom one or more persons perform services who are not classified as employees under Section 3 of this act shall post and keep posted, in a conspicuous place on each job site where those persons perform services and in each of its offices, a notice prepared by the Department of Labor summarizing the requirements of this act.  The Department shall furnish copies of summaries without charge to entities upon request.
SECTION 5.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 705 of Title 40, unless there is created a duplication in numbering, reads as follows:
It is a violation of the Oklahoma Employee Classification Act for an employer or entity not to designate a person as an employee under Section 3 of this act, unless the employer or entity satisfies the provisions of Section 3 of this act.
SECTION 6.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 706 of Title 40, unless there is created a duplication in numbering, reads as follows:
A.  Any interested party may file a complaint with the Department of Labor against an entity or employer covered under this act if there is a reasonable belief that the entity or employer is in violation of this act.  It shall be the duty of the Department to enforce the provisions of this act.  The Department shall have the power to conduct investigations in connection with the administration and enforcement of this act and any investigator with the Department shall be authorized to visit and inspect, at all reasonable times, any places covered by this act and shall be authorized to inspect, at all reasonable times, documents related to the determination of whether a person is an employee under Section 3 of this act.  The Commissioner of Labor or his or her representative may compel, by subpoena, the attendance and testimony of witnesses and the production of books, payrolls, records, papers, and other evidence in any investigation and may administer oaths to witnesses.
B.  Whenever the Department believes upon investigation that there has been a violation of any of the provisions of this act or any rules or regulations promulgated under this act, the Department may:
1.  Issue and cause to be served on any party an order to cease and desist from further violation of this act;
2.  Take affirmative or other action as deemed reasonable to eliminate the effect of the violation;
3.  Collect the amount of any wages, salary, employment-related taxes, employment benefits, or other compensation denied or lost to the individual; and
4.  Assess any civil penalty allowed by this act.
The civil penalties assessed by the Department, as well as any other relief requested by the Department, shall be recoverable in an action brought in the name of the people of the State of Oklahoma by the Attorney General.
SECTION 7.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 707 of Title 40, unless there is created a duplication in numbering, reads as follows:
Criminal violations of the Oklahoma Employee Classification Act shall be prosecuted by the Attorney General.  The Department of Labor shall refer matters to the Attorney General upon determining that a criminal violation may have occurred.  In all other proceedings the Department shall be represented by the Office of the Attorney General.
SECTION 8.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 708 of Title 40, unless there is created a duplication in numbering, reads as follows:
Whenever it appears that any employer or entity has violated a valid order of the Department issued under the Oklahoma Employee Classification Act, the Commissioner of Labor may commence an action in the district court to enforce such order.
SECTION 9.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 709 of Title 40, unless there is created a duplication in numbering, reads as follows:
An employer or entity that violates any of the provisions of the Oklahoma Employee Classification Act or any rule adopted under this act shall be subject to a civil penalty not to exceed One Thousand Five Hundred Dollars ($1,500.00) for each violation found in the first audit by the Department.  Following a first audit, an employer or entity shall be subject to a civil penalty not to exceed Two Thousand Five Hundred Dollars ($2,500.00) for each repeat violation found by the Department within a five-year period.  For purposes of this section, each violation of this act for each person and for each day the violation continues shall constitute a separate and distinct violation.  In determining the amount of a penalty, the Commissioner shall consider the appropriateness of the penalty to the employer or entity charged, upon the determination of the gravity of the violations.  A penalty may be enforced in a civil action filed in district court by the Commissioner of Labor, or a person aggrieved by a violation of this act or any rule adopted under this act.  In any civil action brought by an interested party pursuant to this section, the district court shall award the prevailing party ten percent (10%) of the amount recovered.  In such case, the remaining amount recovered shall be submitted to the Commissioner of Labor.
SECTION 10.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 710 of Title 40, unless there is created a duplication in numbering, reads as follows:
For any second or subsequent violation determined by the Department of Labor after notice and hearing pursuant to the Administrative Procedures Act, which is within five (5) years of an earlier violation, the Department shall add the employer's or entity's name to a list to be posted on the Department's official website.  Upon such notice, the Department shall notify the violating employer or entity.  No state contract shall be awarded to an employer or entity appearing on the list until four (4) years have elapsed from the date of the last violation.  After the final decision of the Department, an employer whose name is on the list may appeal the final decision pursuant to the Administrative Procedures Act.
SECTION 11.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 711 of Title 40, unless there is created a duplication in numbering, reads as follows:
A.  Whoever willfully violates any of the provisions of the Oklahoma Employee Classification Act or any rule adopted under this act or whoever obstructs the Commissioner of Labor, or its representatives, or any other person authorized to inspect places of employment under this act, shall be liable for penalties up to double the statutory amount.
B.  Whoever willfully violates any of the provisions of this act or any rule adopted under this act shall be liable to the employee for punitive damages in an amount equal to the penalties assessed in subsection A of this section.
C.  The penalty shall be imposed in cases in which an employer's or entity's conduct in violation of any of the provisions of this act is proven by a preponderance of the evidence to be willful.  The penalty may be recovered in a civil action brought by the Commissioner of Labor in any district court.  In any such action, the Commissioner of Labor shall be represented by the Attorney General.
SECTION 12.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 712 of Title 40, unless there is created a duplication in numbering, reads as follows:
A.  An interested party or person aggrieved by a violation of the Oklahoma Employee Classification Act or any rule adopted under this act by an employer or entity may file suit in district court, in the county where the alleged offense occurred or where any person who is party to the action resides, without regard to exhaustion of any alternative administrative remedies provided in this act.  Actions may be brought by one or more persons for and on behalf of themselves and other persons similarly situated.  A person whose rights have been violated under this act by an employer or entity is entitled to collect:
1.  The amount of any wages, salary, employment benefits, or other compensation denied or lost to the person by reason of the violation, plus an equal amount in liquidated damages;
2.  Compensatory damages and an amount up to Five Hundred Dollars ($500.00) for each violation of this act or any rule adopted under this act;
3.  In the case of unlawful retaliation, all legal or equitable relief as may be appropriate; and
4.  Attorney fees and costs.
B.  The right of an interested party or aggrieved person to bring an action under this section terminates upon the passing of three (3) years from the final date of performing services for the employer or entity.  This limitations period is tolled if an employer or entity has deterred a person's exercise of rights under this act.
SECTION 13.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 713 of Title 40, unless there is created a duplication in numbering, reads as follows:
The Department of Labor may adopt administrative rules to implement and administer the Oklahoma Employee Classification Act.
SECTION 14.  This act shall become effective November 1, 2010.
Passed the Senate the 2nd day of March, 2010.

	
Presiding Officer 	of the Senate

Passed the House of Representatives the ____ day of __________, 2010.

	
Presiding Officer	of the House
	of Representatives