A Nebraska bill aimed at cracking down on trucking and construction companies that misclassify workers as independent contractors went through its first round of approvals Thursday.

Under the bill, LB 563, those companies that are found to have misclassified an employee will have to pay penalties, including $500 per employee for the first offense and $5,000 per employee for each subsequent violation, according to reports by the Associated Press.

"When a contractor misclassifies an employee, the employee is ineligible for unemployment and workers' compensation benefits, loses labor law protections and does not receive employer-provided health insurance," said Sen. Steve Lathrop in his statement of intent. Lathrop introduced the bill. "Misclassification creates an unfair advantage to unscrupulous contractors who are able to outbid law abiding employers who must take into account the payment of taxes and insurance premiums when bidding for jobs. The State's loss in revenue negatively affects the funding of essential programs such as unemployment benefits."

The bill would only apply to the construction and trucking industries.

According the AP, the bill will go through two more rounds of voting by Nebraska lawmakers. If it's approved, the legislation would go to Gov. Dave Heineman to sign into law.

To view a copy of the bill, click here.