Delaware’s legislature passed the Workplace Fraud Act (HB 230), an employee misclassification bill that increases penalties for construction employers who knowingly misclassify employees as contractors in order to evade state and federal taxes and wage and hour laws, saving as much as 30% on the margins. Delaware joins Maryland and New Mexico this year in enacting strong wage laws to protect working families, and becomes one of over nine states that allow workers to collect triple damages for wage law violations. States are on the forefront of addressing this pervasive problem, which was found in a 2004 study out of Harvard University to plague an estimated 24% of construction work sites in Massachusetts alone.

Under the law, which Gov. Markell signed at the end of July, construction companies must keep records of employees for 3 years, face increased fines for violations. Department of Labor investigators can question employers and other employees, enter and inspect places of business and examine and copy books, registers, payrolls, and other records in order to determine if workplace fraud has occurred. Inspectors can also request sworn written statements from employers and interview witnesses under oath. Additionally, the law allows state agencies to coordinate efforts in finding.
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