March 2023: Department of Revenue Release Bulletin Explanations for the Fresh Start Proper Worker Classification Initiative

Update Applicable to:

All employers in the state of Louisiana.

What happened?

On February 15, 2023, Louisiana Department of Revenue issued an information bulletin explaining its Fresh Start Proper Worker Classification Initiative, which allows employers who have misclassified certain workers as independent contractors to reclassify those workers and voluntarily disclose such reclassification to the Department without liability for prior tax periods.

What are the details?

The Louisiana Department of Revenue issued Revenue Information Bulletin (“RIB”) No. 23-010 stating that qualifying businesses can submit an application under the Fresh Start Proper Worker Classification Initiative by sending an email to FreshStart.LDR@LA.GOV. RIB No. 23-010 also states that in order to qualify, the employer must have consistently treated the entire class or classes of workers (i.e., providing the same or similar services) as non-employees for the last three years. For instance, if income taxes were withheld or unemployment contributions were made for a worker, that worker was not treated as a non-employee.

The Louisiana Department of Revenue will review applications and notify applicants in writing of their eligibility. An applicant who receives notice of the acceptance of their application must treat the class or classes of workers covered by the application as employees beginning on the reclassified date stated in the closing agreement.

The Louisiana Department of Revenue (“LDR”) recently promulgated rules to implement the Fresh Start Proper Worker Classification Initiative, and also published guidance to explain when and how businesses should file non-employee information returns (Forms 1099-NEC) directly with the LDR. These developments are potentially interrelated and may facilitate the LDR’s efforts to monitor the classification and taxation of workers as employees or independent contractors.

This law went into effect on February 15, 2023.

For more information, please see the links below:

Bulletin

Application

Article

What do employers need to do?

Employers should review the links provided above and should review the position of their employees to ensure that they are classified correctly in compliance with the law.