A BILL TO BE ENTITLED
AN ACT TO enact the fair COMPETITION AND EMPLOYEE classification act.
The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 95 of the General Statutes is amended by adding a new Article to read:
"Article 4.
"Fair Competition and Employee Classification Act.
"§ 95‑275.  Title.
Title. – This Article shall be known and may be cited as the "Fair Competition and Employee Classification Act."
"§ 95‑276.  Definitions.
The following definitions apply in this Article:
(1)	Commissioner. – The Commissioner of Labor.
(2)	Employ. – As defined in G.S. 95‑25.2(3).
(3)	Employee. – As defined in G.S. 95‑25.2(4).
(4)	Employer. – As defined in G.S. 95‑25.2(5). The term includes the State and its local political subdivisions and any agency or instrumentality of the State. The term does not include employees of the United States government or any political subdivision thereof.
(5)	Employee‑employer relationship. – The relationship presumed to exist when work is performed by an individual for remuneration paid by an employer.
(6)	Enforcement agencies. – The North Carolina Department of Labor, Industrial Commission, Department of Revenue, and Department of Commerce.
(7)	Independent contractor. – An individual who performs services for an employer and:
a.	Who has been and will continue to be free from control or direction by an employer over the performance of the services, both under the individual's contract of service and in fact;
b.	The service is, in fact, either outside the usual course of the business of the employer; and
c.	The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
(8)	Interested party. – A person with an interest in compliance with this Article.
(9)	Knowingly. – Having actual knowledge of, or acting with deliberate ignorance or reckless disregard for, the prohibition involved.
(10)	Misclassification. – Wrongly designating an individual who performs services for the employer as not an employee of the employer.
(11)	Violate or violated. – Includes, but is not limited to, any intent to evade, misrepresent, or willfully nondisclose the provisions of this Article.
"§ 95‑277.  Notice.
(a)	If an employer engages an individual to perform services and that individual is not considered by the employer to be an employee pursuant to G.S. 95‑276, that employer shall post and keep posted, in a conspicuous place on each job site where that individual performs services and in each of the employer's offices in the State, in English and Spanish, the following notice:
(1)	Every individual working for a contractor has the right to be properly classified by the contractor as an employee rather than an independent contractor if the individual does not meet the requirements of an independent contractor under the law known as the Employee Fair Classification Act.
(2)	If you believe you or someone else has not been properly classified as an employee or an independent contractor under the Employee Fair Classification Act, you have the right to challenge this classification by bringing an action in State civil district court.
(b)	Every employer shall notify every person who performs services for remuneration for that employer of that person's employment status as an employee or an independent contractor at the time of hire. Such notification or classification by the employer shall not be determinative of the employee's actual employment status.
"§ 95‑278.  Prohibited conduct.
(a)	An employer shall not misclassify an employee as an independent contractor.
(b)	A person shall not incorporate or form, or assist in the incorporation or formation of, a corporation, partnership, limited liability corporation, or other entity, or pay or collect a fee for use of a foreign or domestic corporation, partnership, limited liability corporation, or other entity for the purpose, in whole or part, of facilitating, or evading detection of, a violation of this section.
(c)	No person shall require or request an individual to enter into an agreement or sign a document that results in the misclassification of the individual as an independent contractor or otherwise does not accurately reflect the individual's relationship with an employer.
(d)	A person shall not knowingly conspire with, aid and abet, assist, advise, or facilitate an employer with the intent of violating the provisions of this Article.
"§ 95‑279.  Prohibited retaliation.
(a)	No person shall retaliate through discharge, or in any other manner, against any individual for exercising any rights granted under this Article. Where an adverse action is taken within 90 days of exercising any right under this Article, there shall be a rebuttable presumption that such action was taken in retaliation for the exercise of those rights.
(b)	No person shall retaliate against an individual if the individual does any of the following:
(1)	Makes a written or verbal complaint to an employer or to a federal or State agency or at a public hearing, stating that provisions of this act allegedly have been violated, or otherwise opposes any practice made unlawful under this Article.
(2)	Causes to be instituted any proceeding under or related to this Article.
(3)	Testified or prepared to testify, assisted, or participated in any manner in an investigation or proceeding under this Article.
"§ 95‑280.  No waivers by agreement.
No provision of this Article may be waived, contravened, or set aside by private agreement, unless the agreement to waive is specifically authorized by this Article.
"§ 95‑281.  Presumptions; violations.
(a)	If an employer asserts that an individual is not an employee, then the employer must establish by a preponderance of the evidence that the individual is an independent contractor. An employer's failure to withhold federal or State income or unemployment taxes or failure to provide workers' compensation coverage shall not be a factor in determining whether an individual is an independent contractor, nor shall the existence of a signed contract between the employer and the individual.
(b)	Each violation of this Article constitutes a separate violation for each individual involved and for each day the violation continues.
(c)	Prior to initiating any action under this section, the Commissioner shall exhaust all administrative remedies, including giving the employer the opportunity to be heard on the matters at issue and giving the employer notice of the pending action.
(d)	In an action brought by the Commissioner in which a default judgment is entered, the clerk shall order attorneys' fees of three hundred dollars ($300.00) to be paid by the defendant.
(e)	Actions under this section must be brought within three years.
"§ 95‑282.  Enforcement.
(a)	The Commissioner shall enforce and administer the provisions of this Article, and the Commissioner or the Commissioner's authorized representative may hold hearings and institute criminal and civil proceedings hereunder.
(b)	The Commissioner or the Commissioner's authorized representative shall have power to administer oaths and examine witnesses, issue subpoenas, compel the attendance of witnesses and the production of papers, books, accounts, records, payrolls, documents, and take depositions and affidavits in any proceeding hereunder.
(b1)	Any employer who violates the provisions of G.S. 95‑278 or any regulation issued thereunder, shall be subject to a civil penalty not less than five hundred dollars ($500.00) nor greater than four thousand dollars ($4,000) for each violation. In determining the amount of such penalty, the appropriateness of the penalty to the size of the business of the person charged and the gravity of the violation shall be considered. The determination by the Commissioner shall be final, unless, within 15 days after receipt of notice thereof by certified mail, the person charged with the violation takes exception to the determination, in which case final determination of the penalty shall be made in an administrative proceeding pursuant to Article 3 of Chapter 150B of the General Statutes and in a judicial proceeding pursuant to Article 4 of Chapter 150B of the General Statutes.
(c)	The amount of such penalty or damages as described in subsection (b1) of this section when finally determined may be recovered in the manner set forth in G.S. 95‑25.23B.
(d)	Sums collected under this section by the Commissioner shall be paid into the General Fund of the State Treasury.
(e)	The Commissioner may enter into reciprocal agreements with the U.S. Department of Labor or a corresponding agency of any other state or with the person, board, officer, or commission authorized to act on behalf of the department or agency, for the collection in the other state of claims and judgments for wages based upon investigations and findings made by the Commissioner or his authorized representative. The Commissioner may, to the extent provided for by any reciprocal agreement entered into by law or with an agency of another state, as provided in this section, maintain actions in the courts of any other state for the collection of claims or judgments for wages and may assign the claims and judgments to the labor department or agency of the other state for collection to the extent that such an assignment may be permitted or provided for by the law of that state or by reciprocal agreement. Except as otherwise provided, the Commissioner may, upon the written consent of the labor department or corresponding agency of any other state or of any person, board, officer, or commission authorized to act on behalf of the department or agency, maintain actions in the courts of this State upon assigned claims and judgments for wages arising in the other state in the same manner and to the same extent that these actions by the Commissioner are authorized when arising in this State. This subsection applies only to those states that extend comity of enforcement to this State.
"§ 95‑283.  Issuance of stop work order.
(a)	On receipt of information relating to a violation of the provisions of the Article, the enforcement agencies may enter, during usual business hours, the place of business or employment of any employer to determine compliance with this Article, and for such purpose may examine payroll and other records and may interview employees, call hearings, administer oaths, take testimony under oath, and take depositions.
(b)	The heads of the enforcement agencies, for the purposes of this section, may issue subpoenas for the attendance of witnesses and the production of books and records.
(c)	A stop work order against an employer requiring the cessation of all business operations of the employer may be issued by an enforcement agency if one or more of the enforcement agencies determines after investigation that an employer is in violation of G.S. 95‑277. The stop work order:
(1)	Shall be issued immediately but not later than 72 hours after the determination is made by the enforcement agency.
(2)	Shall be issued only against the employer found to be in violation and only as to the specific place of business or employment for which the violation exists.
(3)	Is effective when served upon the employer or at the place of business or employment.
(4)	May be served at a place of business or employment by posting a copy of the stop work order in a conspicuous location at the place of business or employment.
(5)	Shall remain in effect until the enforcement agency issues an order releasing the stop work order upon a finding by the agency head that the employer has come into compliance with G.S. 95‑277.
(d)	Any employer against which a stop work order is issued pursuant to subsection (c) of this section may request a hearing before the enforcement agency issuing the order. The request shall be made in writing to the head of the enforcement agency not more than 10 days after the issuance of the order.
(e)	A stop work order and any penalties imposed under G.S. 95‑280 against a corporation, partnership, or sole proprietorship for a violation of G.S. 95‑277 shall be effective against any successor entity that has one or more of the same principals or officers as the corporation, partnership, or sole proprietorship against which the stop work order was issued and are engaged in the same or equivalent trade or activity.
(f)	The enforcement agencies shall adopt regulations, in accordance with the provisions of this Article that are necessary to carry out this subsection.
"§ 98‑284.  Debarments; other sanctions.
(a)	For any second or subsequent violation of this Article determined by the Department which occurs within five 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 Web site. Upon such notice, the Department shall notify the violating employer or entity that no State or local government contract shall be awarded to an employer or entity appearing on the list until four years have elapsed from the date of the last violation.
"§ 95‑285.  Cooperation.
The Department of Labor, the Division of Employment Security, the Department of Revenue, the Industrial Commission, the Department of Insurance, including county and city inspectors, shall cooperate under this Article by sharing information concerning any suspected misclassification by an employer or entity of one or more of its employees as independent contractors. Upon determining that an employer or entity has misclassified employees as independent contractors in violation of this Act, the Department of Labor shall notify the Division of Employment Security, the Department of Revenue, the State Auditor, and the Industrial Commission who shall be obliged to check the employer's or entity's compliance with their laws, utilizing their own definitions, standards, and procedures.
SECTION 2.  G.S. 95‑241(a)(1) reads as rewritten:
"(a)	No person shall discriminate or take any retaliatory action against an employee because the employee in good faith does or threatens to do any of the following:
(1)	File a claim or complaint, initiate any inquiry, investigation, inspection, proceeding or other action, or testify or provide information to any person with respect to any of the following:
a.	Chapter 97 of the General Statutes.
b.	Article 2A or Article 16 of this Chapter.
c.	Article 2A of Chapter 74 of the General Statutes.
d.	G.S. 95‑28.1.
e.	Article 16 of Chapter 127A of the General Statutes.
f.	G.S. 95‑28.1A.
g.	Article 52 of Chapter 143 of the General Statutes.
h.	Article 5F of Chapter 90 of the General Statutes.
i.	Article 4 of Chapter 95 of the General Statutes."
SECTION 3.  This act is effective when it becomes law and applies to employment existing on or after that date.