MCAA Weekly Government Affairs Update: February 13, 2008
GOVERNMENT AFFAIRS NEWS
Tentative Agenda Set for Independent Contractor Summit
The MCAA has a tentative agenda set for the Independent Contractor Summit on April 23, 2008 in Washington, DC. The summit will consist of education and informational sessions with outside speakers and closed-door discussions amongst MCAA members in the morning. The Keynote speaker for the event will be United States Congressman Dave Reichert from Washington State. Congressman Reichert has been a strong supporter of the independent contractor business model and has great insight into the situation.
In the afternoon, attendees will have pre-scheduled meetings on Capitol Hill with key Members of Congress. The Capitol Hill meetings should be completed around 4:00pm, at that time attendees will be free to leave. Breakfast and lunch will also be provided for attendees. Formal registration and hotel details for the summit will be available no later than the end of next week. Please contact John Ferraro at jferraro@kellencompany.com if you have any questions.
New York State Cracks Down on Independent Contractors
In September 2007, New York Governor Eliot Spitzer created the Joint Enforcement Task Force on Worker Misclassification to address the problem of employers misclassifying their workers. The task force was created after several labor leaders had complained that unionized trucking companies and construction contractors were being undercut by competitors that classified employees as independent contractors.
The task force plans to crack down on employers who use independent contractors inappropriately. One such measure included enforcement raids conducted around the state with the purpose of identifying workers misclassified as independent contractors. In all, 15 raids were conducted primarily aimed at construction companies and restaurants. The New York Department of Labor Commissioner M. Patricia Smith announced that the task force is working on 16 more cases of worker misclassification.
In the first report released, the task force has assessed more than $1.2 million in taxes and penalties owed to the state’s Unemployment Insurance fund. It also found $19 million in unreported wages. The task force report made proposals for improving enforcement, including the establishment of a single statewide standard for determining whether an individual is an employee or independent contractor, and legislative changes that will facilitate greater information sharing among agencies.
UPDATED STATE LEGISLATION
Washington House Bill 3122 (UPDATED)
Sponsored by Representative Conway
This legislation was introduced due to the recommendation of the Joint Legislative Task Force on the Underground Economy in the Construction Industry. This task force was created due to enacted legislation in 2007. Washington State House Bill 3122 aims to consolidate and clarify the definition of an independent contractor for the purposes of workers’ compensation and unemployment compensation by creating a seven-part test. In addition to meeting the requirements of the ABC test for independent contractor determination, an individual must also be responsible for filing a schedule of expenses with the Internal Revenue Service, have a valid certification of registration with the Department of Revenue and other required state agencies, have a Unified Business Identifier number, and maintain a separate set of records. A substitute bill which narrowed the legislation by applying only to the construction industry was agreed upon. This bill was been placed on the calendar for a second reading by the House Committee on Rules on February 12, 2008. Washington State Senate Bill 6731 sponsored by Senator Kohl-Welles is the companion bill to this legislation, having been introduced on January 22, 2008 into the Senate.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=WA+H.B.+3122
OTHER STATE LEGISLATION
Indiana House Bill 1269
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 has passed the full House and was referred to the Senate Committee on Pensions and Labor on February 4, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=IN+H.B.+1269
Iowa House Bill 692
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
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. The public hearing was rescheduled for February 14, 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
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
Rhode Island Senate Bill 2173
Sponsored by Senator Tassoni
This legislation requires independent contractors and subcontractors to maintain an apprentice training program before bidding on public works contracts. Independent contractors must also classify their workers as employees rather than independent contractors. This bill was introduced and referred to the Senate Committee on Labor on January 31, 2008.
http://www.rilin.state.ri.us//BillText08/SenateText08/S2173.pdf
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
Vermont House Bill 799
Sponsored by Representative Kitzmiller
This legislation aims to limit the misclassification of employees by creating a series of factors that must be met in order to be classified as an independent contractor. The bill was introduced on February 1, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=VT+H.B.+799
Vermont House Bill 802
Sponsored by Representative Kitzmiller
This legislation aims to reduce the misclassification of employees. It gives authorization to the Departments of Labor, Banking, Insurance, Securities, and Heath Care Administration to collaborate to adopt rules to address the practice. At a minimum, increased coordination, enforcement, and information sharing agreements should be established. The bill was introduced on February 1, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=VT+H.B.+802
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:
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. 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.
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