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REFERENCE TITLE: misclassification; tax fraud; task force |
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State of Arizona House of Representatives Fifty-sixth Legislature First Regular Session 2023
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HB 2275 |
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Introduced by Representative Cano
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An Act
amending title 23, chapter 10, article 1, Arizona Revised Statutes, by adding section 23-1606; relating to employment relationships.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 23, chapter 10, article 1, Arizona Revised Statutes, is amended by adding section 23-1606, to read:
23-1606. Employee misclassification and payroll tax fraud advisory task force; membership; duties; annual report
A. The employee misclassification and payroll tax fraud advisory task force is established to study and make recommendations regarding issues relating to employee misclassification and payroll tax fraud in the construction industry. The task force shall consist of the following members:
1. The director of the industrial commission of Arizona or the director's designee.
2. The director of the department of insurance and financial institutions or the director's designee.
3. The registrar of contractors or the registrar's designee.
4. As nonvoting advisory members:
(a) The secretary of state or the secretary of state's designee.
(b) The attorney general or the attorney general's designee.
B. The task force may appoint additional nonvoting advisory members as the task force deems appropriate.
C. On or before February 1, 2024, the director of the industrial commission of Arizona shall convene the first meeting of the task force. At the first meeting, the task force shall elect a chairperson and any other officers the task force deems appropriate from the task force's voting membership. Advisory members are not counted to determine the presence of a quorum.
D. The task force shall study issues relating to employee misclassification and payroll tax fraud in the construction industry, including:
1. The impact of employee misclassification and payroll tax fraud on this state and local governments of this state and the amount of state revenue, if any, that is lost or not collected due to employee misclassification and payroll tax fraud.
2. The lost earnings of the insurance industry due to employee misclassification and payroll tax fraud.
3. Estimates of the frequency of occurrence and economic impact of employee misclassification and payroll tax fraud and whether particular industries are more likely to engage in the misclassification of employees and payroll tax fraud practices.
4. Whether state law should specify a uniform definition of the employment relationship and, if so, how it should be defined.
5. Whether existing laws of this state aimed at preventing, investigating and taking enforcement action against the failure of employers to properly classify individuals as employees or investigating payroll tax fraud are effective.
6. Whether there are ways to facilitate sharing information among agencies represented by task force members relating to violations of laws by employers that fail to classify individuals as employees and that engage in related payroll tax fraud practices.
7. Whether there are new ways to pool, focus and target investigative and enforcement resources relating to employee misclassification and payroll tax fraud practices.
8. New strategies for systematically investigating the failure of employers to properly classify individuals as employees and payroll tax fraud practices.
9. Whether improvements are needed to facilitate filing complaints and identifying potential violators, including soliciting referrals and other relevant information from the public.
10. Changes in the law, if any, that need to be made to ensure that agencies represented by task force members investigating the failure of employers to properly classify individuals as employees and payroll tax fraud practices under their own statutory or administrative enforcement mechanisms have the authority to refer a matter to other participating agencies to assess potential liability under the other agencies' relevant statutory or administrative enforcement mechanisms.
11. Innovative ways to prevent misclassification of employees by employers and payroll tax fraud practices, such as through disseminating educational materials regarding the legal differences between independent contractors and employees.
12. Methods by which public awareness can be increased of the illegal nature and harms inflicted by the failure of employers to properly classify individuals as employees and payroll tax fraud practices.
13. Any other issues relating to employee misclassification and payroll tax fraud practices in the construction industry.
E. The task force shall seek public input and may conduct public hearings or appoint study groups as necessary to obtain information necessary to conduct the task force's study.
F. On or before February 1, 2025, and on or before February 1 annually thereafter, the task force shall submit a report on its findings and progress to the senate commerce committee and the house of representatives commerce committee, or their successor committees. The task force shall submit a copy of the annual report to the secretary of state.
G. To the extent allowed by law, every agency, department, office and division of this state shall cooperate with the task force and furnish any information that the task force determines is reasonably necessary to accomplish the task force's purposes.
H. The industrial commission of Arizona, the department of insurance and financial institutions and the registrar of contractors may individually implement recommendations of the task force if the implementation is authorized under the existing statutory authority of the respective agency.