MCAA Weekly Government Affairs Update: January 30, 2008
GOVERNMENT AFFAIRS NEWS
Teamsters Fail to Organize Independent Contractors
The Teamsters union pulled out of a planned February 1st election by drivers at a FedEx Ground terminal in Massachusetts. The two groups having been engaged in a long running battle over union representation for FedEx drivers for years. The latest failed election is the fourth such attempt to organize independent contractors at this location. The main point of disagreement surrounds FedEx’s classification of its drivers as independent contractors. Similar worker classification discrepancies have led to lawsuits in 36 states and an assessment by the Internal Revenue Service for $319 million in taxes and penalties.
New Independent Contractor Definition in New Hampshire
A new definition of employee has gone into effect in New Hampshire. As of January 2008, employers must satisfy both the state and federal definitions to properly classify individuals as independent contractors. This new law also requires employers to post a “Know Your Rights” poster that includes the revised criteria used to define the classification of workers as employees or independent contractors. As of January 2008, to qualify as an independent contractor, the worker must meet each of the following criteria:
- The individual possesses or has applied for a federal employer identification number or social security number.
- The individual has control and discretion over the means and manner of performance of the work.
- The individual has control over the time when the work is performed, and the time of performance is not dictated by the employer.
- The individual hires and pays their assistants, if any, and to the extent such assistants are employees, supervises the details of the assistants’ work.
- The individual is sought out be in business for himself or herself.
- The individual has continuing or recurring business liabilities or obligations.
- The individual receives compensation for work or services performed and remuneration is not determined unilaterally by the hiring party.
- The individual is responsible in the first instance for the main expenses related to the service or work performed.
- The individual is responsible for satisfactory completion of work and may be held contractually responsible for failure to complete the work.
- The individual supplies the principal tools and instrumentalities used in the work, except that the employer may furnish tools or instrumentalities that are unique to the employer’s special requirements or are located on the employer’s premises.
- The individual is not required to work exclusively for the employer.
MCAA to Hold Second Independent Contractor Summit
The independent contractor business model continues to be under siege from state regulators, trial lawyers, and increasingly the federal government. The MCAA plans to hold an Independent Contractor Summit on April 23, 2008 in Washington, DC. The summit will consist of educational sessions with outside speakers, closed-door discussions amongst MCAA members, and meetings on Capitol Hill with Members of Congress. More details and registration forms will be available shortly.
STATE LEGISLATION
Indiana House Bill 1269 (UPDATED)
Sponsored by Representative Niezgodski
This legislation aims to address employee classification in the construction industry. It provides that an individual performing services for a contractor is considered to be an employee of the contractor. The exceptions for this provision include meeting the requirements of the ABC test or meeting the requirements of being a legitimate sole proprietor or partnership. The Department of Labor (DOL) has authority to investigate the employment relationship between an individual and a contractor. Provides that a contractor or an agent of the contractor that intentionally fails to properly classify an individual as an employee commits a Class C misdemeanor, and that the second or subsequent intentional violation within five years is a Class D felony. This bill was referred to the House Committee on Labor and Employment. The Committee recommended the bill be passed and it has been moved to second reading on January 28, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=IN+H.B.+1269
Iowa House Bill 692 (NEW)
Sponsored by Representative Hunter
This legislation requires employers to provide employees with meal and rest periods at specific times during the work day. Management or salary-paid employees are exempt from this requirement. An exemption can also occur if the employer can show that the ordinary nature and circumstance of the work prevents the employer from establishing a regular scheduled meal period. Civil penalties are provided. This bill was carried over from the 2007 Legislative Session. It is currently being examined by a Subcommittee within the House Committee on Labor.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=IA+H.B.+692
Maryland House Bill 70 (UPDATED)
Sponsored by Representative Glenn
This legislation prohibits employers in the construction industry from intentionally misclassifying an individual with the goal of evading payment of wages, benefits, and taxes as required under State law. An individual who has not been properly classified as an employee may bring civil action for damages against the employers. The Commissioner can issue a stop-work order on any construction industry employer who fails to properly classify its workers. This bill was referred to the House Committee on Economic Matters. A hearing is scheduled for February 6, 2008 at 1:00pm.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=MD+H.B.+70
Missouri Senate Bill 929
Sponsored by Senator Green
This legislation aims to bar employers from misclassifying employees as independent contractors. The Department of Labor and Industrial Relations shall establish a complaint form to receive complaints about alleged misclassification of workers. If the department determines, after conducting a review, that an employer appears to have misclassified a worker, it shall forward its determination along with supporting documentation to the Attorney General. If a court determines that an employer has knowingly misclassified a worker, the court shall award penalties up to $100,000 to the Missouri worker protection fund. This bill was introduced on January 10, 2008.
http://www.senate.mo.gov/08info/pdf-bill/intro/SB929.pdf
Nebraska Legislative Bill 1016 (UPDATED)
Sponsored by Senator Lathrop
This legislation adopts the Proper Employee Classification Act. Under this legislation, to be considered an independent contractor, the individual must meet these conditions: (1) The individual has been and will continue to be free from control or direction, (2) The individual is engaged in an independently established business, (3) The individual can work for more than one company, (4) The individual furnishes all tools and equipment necessary, and (5) The employer does not represent the individual as an employee to customers. This bill was referred to the Committee on Business and Labor. A public hearing is scheduled for February 11, 2008 at 1:30pm.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=NE+L.B.+1016
New Jersey Executive Order 96
Sponsored by Office of the Governor
This executive order creates the Governors Advisory Commission on Construction Industry Independent Contractor Reform. The Commission will be created to develop recommendations for addressing the problem of employee misclassification in the construction industry. This executive order was introduced on January 18, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=NJ+E.O.+96
Vermont House Bill 568
Sponsored by Representative Marcotte
Alters language in Title 21 modifying the treatment of independent contractors in the field of workers' compensation and unemployment insurance. This legislation gives conditions that a worker must demonstrate in order to be classified as an independent contractor by the employer. This bill was referred to the House Committee on Commerce on January 11, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=VT+H.B.+568
FEDERAL LEGISLATION
United States Senate Bill 2044
Sponsored by Senator Obama
The bill provides changes to the current classification of employees and independent contractors. It would eliminate “safe harbor” provisions in the tax code for independent contractors as well as gives the Department of Labor authority to increase enforcement activities. Also encourages information sharing between the Department of Labor, Department of the Treasury, and state agencies. A number of influential Senate Democrats have cosponsored this harmful legislation. The bill was read twice and referred to the Committee on Finance on September 12, 2007.
http://thomas.loc.gov/cgi-bin/query/z?c110:S.2044:
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