The MCAA Government Affairs Update is emailed to the association membership on a regular basis. This informative newsletter contains information on state and federal legislation that impacts the sameday delivery industry. Also, included are government affairs news and other actions the MCAA Government Affairs Team is taking on behalf of the membership. To receive this weekly newsletter and other legislative action alert emails, please contact John Ferraro at 202-207-1121 or jferraro@mcaa.com to join the MCAA.
If you notice any one piece of legislation in your area that needs special attention or if you are aware of any local action being taken on specific legislation or regulations, please click here to submit your information. This way we can ensure a well coordinated effort on behalf of the courier industry.
MCAA would like to gain a better understanding of the current regulatory climate in your area of operations. Your responses will be very useful in allowing MCAA to coordinate information between companies interested in participating, as well as facilitate discussions with government agencies. Click here to submit your information.
Most Recent MCAA Government Affairs Update Newsletter
March 4, 2010 Issue
Maryland Courier Associations Takes on Major Legislative Initiative
The Maryland Same Day Messenger Courier Association is taking on another legislative challenge this session. In an attempt to better codify the courier industry under the Maryland Unemployment Insurance law, the MSDMCA has drafted legislation to expand the definition of a messenger. The current definition defines the messenger service business as someone who deliveries mostly paper messages. The Association is seeking to expand the definition to include supplies, records, parcels, or any object that a customer wants delivered. MSDMCA is asking for members who support the legislation to attend the March 9th hearing before the House Economic Matters Committee. Please contact Frank Callahan at (240) 264-1215 for more information.
VP Biden says Card Check will Pass
Vice President Joe Biden told the AFL-CIO that the Obama Administration will still be able to push through the controversial Card Check bill which will make it easier for unions to organize. Biden asked union leaders for their continued loyalty although the Administration has struggled with building support for the legislation and their inability to push through the pro-union nominee to the National Labor Relations Board. MCAA plans to have a Capitol Hill speaker attend the upcoming Government Affairs Lobby Day to address labor related issues.
Register Now for the MCAA Government Affairs Lobby Day
The MCAA Government Affairs Lobby Day will be held on March 25, 2010. The event will take place at the Hyatt Regency Washington on Capitol Hill which is just steps away from the United States Capitol Building. You are strongly encouraged to attend this event to tell your Members of Congress how your business will be negatively impacted by losing the IRS Section 530 safe harbor.
If you would like to attend, please complete the attached registration form and fax back to Tara McLaughlin at 202-223-9741. Or register online at: http://www.mcaa.com/Home/tabid/37/GovernmentAffairs/GovtAffairsLobbyDay/tabid/176/Default.aspx
The President’s Fiscal Year 2011 Budget submitted to Congress includes initiatives seeking to address the issue of workers being misclassified as independent contractors. President Obama is proposing to grant the Department of Treasury and the Internal Revenue Service the ability to issue guidance on the proper classification of workers under common law standards. The proposal would also authorize Treasury and the IRS to create more narrowly defined safe harbors than what exists under current law. The President’s Budget also proposes $25 million for the Department of Labor to target misclassification of workers.
Congressman McDermott introduced HR3408 on July 30th and Senator Kerry introduced S2882 on December 15th. As currently written, both HR3408 and S2882 make drastic changes to the safe harbor provision as well as severe penalties for misclassification. The MCAA lobbying team will continue to meet with these congressional offices but your help is needed so your federal representatives know their constituents will be impacted. MCAA will schedule all Capitol Hill meetings, individual attendees do not need to schedule their own meetings.
If you would like to attend, please complete the attached registration form and fax back to Tara McLaughlin at 202-223-9741. Or register online at: http://www.mcaa.com/Home/tabid/37/GovernmentAffairs/GovtAffairsLobbyDay/tabid/176/Default.aspx
Hyatt Regency Washington on Capitol Hill
400 New Jersey Avenue, NW
Washington, DC 20001
Phone: 202-737-1234
NEW STATE LEGISLATION
California Senate Bill 1309 (NEW)
Sponsored by: Senator Abel Maldonado (R - Minority)
This legislation states the intent of the Legislature to enact a bill that would require an independent contractor to file an annual report with the Department of Industrial Relations detailing any labor law violations for which that employer was cited during the previous year. Status: On February 19, 2010, this bill was introduced and sent to the Committee on Rules where it awaits assignment.
Maryland House Bill 1341 (NEW)
Sponsored by: Representative Dereck Davis (D - Majority)
This legislation aims to define criteria to be established for messenger service drivers to not be covered employment under the unemployment insurance law. The criteria include: (1) a written agreement is in effect, (2) the driver personally provides the vehicle, (3) compensation is by commission only, and (4) the driver sets their own hours. The written agreement must state that it is the driver's responsibility to pay Social Security, state, and federal taxes. It should be made clear that the Social Security taxes the driver must pay is higher than the Social Security tax the driver would otherwise pay. Status: On February 18, 2010, the bill was referred to the House Committee on Economic Matters. A public hearing is scheduled for March 9, 2010.
UPDATED STATE LEGISLATION
Connecticut House Bill 5204 (UPDATED)
Sponsored by Joint Committee on Labor and Public Employees
This legislation intends to implement the recommendations of the joint enforcement commission on employee misclassification. There is established a joint enforcement commission on employee misclassification that meets no less than four times each year. The task force shall review the problem of employee misclassification by employers for the purposes of avoiding their obligations under state and federal labor, employment and tax laws. The commission will submit a report summarizing their actions and recommendations. Status: On February 16, 2010, this bill was introduced and referred to the Joint Committee on Labor and Public Employees. A public hearing is scheduled for March 4, 2010.
Illinois Senate Bill 3571 (UPDATED)
Sponsored by Senator Gary Forby (D – Majority)
This legislation amends the Employee Classification Act by stating that the term “employment” does not include services performed by an individual as an operator of a truck, truck-tractor, or tractor as long as certain factors are met. It also states that an individual performing services for a independent contractor is deemed to be an employee of the employer. Status: On February 10, 2010, this bill was introduced and referred to the Committee on Assignments. On February 24, 2010, the bill was assigned to the Senate Committee on Labor.
OTHER STATE LEGISLATION
Delaware House Bill 196
Sponsored by Representative Melanie George Marshall (D – Majority)
This legislation is intended to address the increase in the number of robberies of delivery and service employees. This act makes it a robbery in the first degree to lure or entice a person to a location for the purpose of committing a robbery against the person. This crime can carry a 3-25 year prison term. Status: On June 24, 2009, this bill was passed by the full House and sent to the Senate. On January 20, 2010, the bill was reported favorably out of the Senate Committee on Judiciary.
Indiana House Bill 1120
Sponsored by Representative David Niezgodski (D – Majority)
This legislation states that an individual performing services for an independent contractor on a construction project is considered to be an employee of the independent contractor. The Department of Labor may investigate the employment relationship and assess various civil penalties if found to be in violation. Status: On January 5, 2010, this bill was introduced and referred to the House Committee on Labor and Employment. On January 13, 2010, the bill was moved to third reading and passed by a 52 – 44 vote. On February 1, 2010, the bill was sent to the Senate and referred to the Committee on Pensions and Labor.
Indiana Senate Bill 207
Sponsored by Senator Frank Mrvan (D – Minority)
This legislation states that an employee who intentionally makes a false statement to the Department of State Revenue regarding independent contractor status commits a Class D felony. A misdemeanor is committed if an employer classifies a worker as an independent contractor for the purpose of avoiding unemployment compensation and workers’ compensation. Status: On January 5, 2010, this bill was introduced and referred to the Senate Committee on Pensions and Labor.
Massachusetts House Bill 1844
Sponsored by Representative Michael Rodrigues (D – Majority)
This legislation provides clarity to the independent contractor classification issue. An individual will be considered an employee unless the following can be met: (1) the individual is free from direction and control, both under contract and in fact; and (2) the service is performed outside the usual course of the business of the employer; or (3) the individual is engaged in an independently established trade, occupation, or business. Status: As of February 2010, this bill remains in the Joint Committee on Labor and Workforce Development.
Oklahoma House Bill 2616
Sponsored by Representative Eric Proctor (D – Minority)
This legislation creates the Oklahoma Employee Classification Act which is intended to address the misclassification of independent contractors in the construction industry. Under this legislation, an individual performing services for an independent contractor is deemed to be an employee of the employer unless the ABC test can be met or the individual is a sole proprietor. The companion bill is Oklahoma Senate Bill 1937. Status: On January 14, 2010, this bill was introduced and referred to the House Committee on Economic Development and Financial Services.
Oklahoma Senate Bill 1937
Sponsored by Senator Harry Coates (R – Majority)
This legislation creates the Oklahoma Employee Classification Act which is intended to address the misclassification of independent contractors in the construction industry. Under this legislation, an individual performing services for an independent contractor is deemed to be an employee of the employer unless the ABC test can be met or the individual is a sole proprietor. The companion bill is Oklahoma House Bill 2616. Status: On January 14, 2010, this bill was introduced and referred to the Senate Committee on Business and Labor.
Rhode Island House Bill 7048
Sponsored by Representative Arthur Corvese (D – Majority)
This legislation requires employers to pay their delivery drivers or sales merchandisers an overtime rate of compensation for all hours worked in excess of forty hours per week and would prohibit employers from using the fluctuating workweek method to calculate the overtime. Status: On January 7, 2010, this bill was introduced and referred to the House Committee on Labor.
Rhode Island Senate Bill 2037
Sponsored by Senator Frank Ciccone (D – Majority)
This legislation would require employers to pay their delivery drivers an overtime rate of compensation for all hours worked in excess of forty hours per week. Status: On January 13, 2010, this bill was introduced and referred to the Senate Committee on Labor.
Rhode Island Senate Bill 2334
Sponsored by Senator Christopher Maselli (D – Majority)
This legislation aims to address worker misclassification by clarifying the definition of an employee. A worker will be considered an employee unless the ABC test can be met. Tax withholding will not be considered a classification factor. Information sharing between state departments is also encouraged. An employer failing to treat a person correctly will be subject to sanctions and penalties. Status: On February 11, 2010, this bill was introduced and referred to the Senate Committee on Labor.
Vermont Senate Bill 251
Sponsored by Senator Diane Snelling (R – Minority)
This legislation states that an independent contractor who is contracting with a delivery or messenger business is not considered an employee for purposes of workers’ compensation and unemployment compensation status. An individual providing services for a delivery or messenger company is considered an independent contractor if: (1) the individual is free to accept or reject jobs and the company does not have control over when the individual works, (2) the individual is remunerated for each delivery or based on factors that relate to the work performed, (3) the individual pays all expenses and has the opportunity for profit or loss, (4) the individual is responsible for operating costs including fuel, repairs, supplies, and motor vehicle insurance, (5) the individual determines the method of performing the service including selection of routes and order of deliveries, (6) the individual is responsible for the competition of a specific job and is liable for any failure to complete that job, (7) the individual enters into a contract with the company which specifies that the individual is an independent contractor and not an employee of the delivery or messenger company, and (8) the individual provides the vehicle used to perform the service. Status: On January 5, 2010, the bill was introduced and referred to the Senate Committee on Economic Development, Housing, and General Affairs.
Vermont Senate Bill 257
Sponsored by Mark Macdonald (D – Majority)
The legislation states that an individual is considered an independent contractor if the following conditions are met: (1) the individual maintains a separate business with a separate office, equipment, materials, or other facilities and has continuing recurring business liabilities or obligations, (2) the individual holds or has applied for a federal employer indemnification number with the IRS or has filed business or self-employment income tax returns with the IRS based on that work in the previous year, and (3) the individual operates under a written contract. The written contract must specify that the independent contractor complies with all of the following: (1) the independent contractor will perform specific services for specific amounts of money, and the independent contractor controls the means of performing the services, (2) the independent contractor incurs the main expenses related to the service performed under contract, (3) the independent contractor is responsible for the satisfactory competition of services that he contracts to perform and is liable for failure to complete the service, (4) the independent contractor receives compensation on a commission or per-job competitive bid basis, (5) the individual may realize a profit or suffer a loss, and (6) the independent contractor must voluntarily elect the status of independent contractor. Status: On January 5, 2010, the bill was introduced and referred to the Senate Committee on Economic Development, Housing, and General Affairs.
Virginia Senate Bill 377
Sponsored by Senator Phillip Puckett (D – Majority)
This legislation establishes penalties for employers in the construction industry that wrongly classify their employees as independent contractors. The measure authorizes the Commissioner of Labor and Industry to initiate an investigation to determine whether violations occurred. The legislation imposes civil penalties on employers who violate its provisions. Status: On January 13, 2010, this bill was introduced and referred to the Senate Committee on Commerce and Labor. On February 1, 2010, the Senate Committee on Commerce and Labor voted 15 – 0 to continue discussion on this legislation in 2011.
CONGRESSIONAL AND ADMINISTRATION NEWS
Worker Misclassification Provisions Contained in President Obama's Budget Proposal
The President’s Fiscal Year 2011 Budget submitted to Congress includes some initiatives seeking to address the issue of workers being misclassified as independent contractors. First, the President is proposing to grant the Department of Treasury and the Internal Revenue Service the ability to issue guidance on the proper classification of workers under common law standards. The guidance would be industry starting with the industries where there has been a history of misclassification. The proposal would also authorize Treasury and the Internal Revenue Service to create more narrowly defined safe harbors than what exists under current law. This change is estimated to raise a little more than $7 billion over the next ten years.
The President’s Budget also proposes $25 million for the Department of Labor to target misclassification of workers. The proposed funding would be used to hire additional Department of Labor personnel used for enforcement and to create competitive grants for states to address this issue. The proposals in the President’s Budget will not directly affect Congressional action on Section 530 legislation or Department of Labor actions. The significance of these proposals in the President’s budget is two-fold. First, it is a clear indication of the Administration’s position on the issue. While one can point to then Senator Obama’s legislation on this issue, the new development is that this is now an Administration priority. Second, it is something that supporters of the McDermott/Kerry legislation can point to and try to use to build momentum for their legislation.
If you notice any one piece of legislation in your area that needs special attention or if you are aware of any local action being taken on specific legislation, please contact MCAA Government Affairs Director John Ferraro at 202-207-1121 or jferraro@mcaa.com. This way we can ensure a well coordinated effort on behalf of the courier industry. We hope you enjoy this service, please feel free to contact me if you have any questions, comments, or suggestions. Thank you very much.
John Ferraro
Director, Government Affairs
Messenger Courier Association of America (MCAA)
750 National Press Building
529 Fourteenth Street, NW
Washington, D.C. 20045
Office: 202-207-1121