MCAA Weekly Government Affairs Update: February 20, 2008
GOVERNMENT AFFAIRS NEWS
More Summit Details are Coming Later this Week!
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.
Added Protection for Colorado Couriers
To keep your company protected from unemployment insurance audits, review the below factors with your independent contractors. Past cases indicate that if your independent contractors initial next to each statement and sign at the bottom of the document, your company will have extra security against any potential audits in Colorado. The nine factors from the Colorado Statute are listed below.
- The contract must state that the drivers are not required to perform exclusively for the company.
- The contract must state that the company cannot establish a quality of standard for the drivers.
- There must be a fixed or contract rate for each courier.
- The contract must state that the company cannot terminate the contract unless the couriers violate the terms of the contract or fail to produce results that meet the contract requirements.
- Training for route planning or customer’s schedules must be minimal.
- The company cannot require that the drivers lease their communication devices from the company. They cannot be required to purchase uniforms.
- The contract must have a clause that specifies whether or not the company can dictate the time for performance. (Except a completion schedule and a range of mutually accepted hours)
- Checks must be paid to a trade or business name and not the individual.
- There must be mention of how the company’s business and the independent contractor’s business are separate and distinct.
Economic Stimulus Package Means Victory for Small Businesses
The economic stimulus package signed by the president included several important provisions for small businesses. Small businesses will now be able to expense up to $250,000, which is double the amount previously allowed. Companies will also receive a 50 percent bonus deduction on new equipment. These tax provisions couldn’t have come soon enough for many small businesses already starting to feel the slump of the possible recession. There are steps to take in order to give your business a fighting chance. Click on the below links to see what tactics your company could take to give yourself the advantage.
http://www.usatoday.com/money/economy/2008-02-19-small-business-recession_N.htm
http://www.marketingprofs.com/8/global-small-business-trends-in-2008-delaney.asp
NEW LEGISLATION
Connecticut House Bill 5110 (NEW)
Sponsored by Joint Committee on Labor and Public Employees
This legislation clarifies that escort car operators are independent contractors for the purposes of unemployment compensation, workers' compensation and taxation as long as the individual remains free from control and owns their own vehicle. This bill was introduced and referred to the Joint Committee on Labor and Public Employees on February 13, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=CT+H.B.+5110
Connecticut Senate Bill 56 (NEW)
Sponsored by Joint Committee on Labor and Public Employees
This legislation establishes a joint enforcement commission on employee misclassification. It creates a task force to make recommendations to reduce employer's misclassification of employees for the purpose of avoiding paying benefits, fees and taxes. The first report will be published in February 2010. This bill was introduced and referred to the Joint Committee on Labor and Public Employees on February 13, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=CT+S.B.+56
Minnesota Senate Bill 2688 (NEW)
Sponsored by Senator Tomassoni
This legislation states that the Commissioner of Employment and Economic Development shall conduct audits of trucking industry employers to determine if there is a pattern of improper classification of owner-operators as independent contractors. The Commissioner shall target audit companies that have been found by courts and regulators in other jurisdictions to have improperly classified owner-operators as independent contractors. This bill was introduced and referred to the Senate Committee on Business, Industry, and Jobs on February 14, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=MN+S.B.+2688
Mississippi Senate Bill 3062 (NEW)
Sponsored by Senator King
This legislation allows independent contractors to have an increased deduction from their gross income equal to one half of the federal self-employment taxes imposed on such an individual for the taxable year. This bill was introduced and referred to the Senate Committee on Finance on February 13, 2008.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=MS+S.B.+3062
UPDATED STATE LEGISLATION
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 public hearing was canceled and the bill has been withdrawn from the House.
http://www.multistate.com/IndependentContractors.nsf/billdetail?openform&billid=MD+H.B.+70
Missouri Senate Bill 929 (UPDATED)
Sponsored by Senator Green
This legislation aims to bar employers from misclassifying employees as independent contractors. Under this legislation, employers must submit federal IRS 1099 forms to the Department of Revenue. 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 $50,000 for first time offenders and $100,000 for repeat offenders to the Missouri worker protection fund. This bill was introduced on January 10, 2008. A committee substitute was agreed upon and passed out of the Senate Committee on Small Business, Insurance, and Industrial Relations on February 14, 2008. It has been placed on the calendar to be brought up on the Senate floor.
http://www.senate.mo.gov/08info/pdf-bill/comm/SB929.pdf
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 passed the full House 92-2 on February 14, 2008. It has been referred to Senate Committee on Labor, Commerce, Research, and Development.
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
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 was held on February 11, 2008.
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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