June 8, 2011 Issue - State Legislation Update

June 8, 2011 Issue

GOVERNMENT AFFAIRS NEWS

UPDATED STATE LEGISLATION

California Senate Bill 459 (UPDATED)

Sponsored by Senator Ellen Corbett (D – Majority)

This legislation prohibits willful misclassification of employees as independent contractors. The bill gives authorization to the Labor and Workforce Development Agency to assess specified civil penalties from persons or employers who are in violation. This bill would require an
employer to provide an independent contractor with a form that includes an explanation of their tax obligations, eligibility for labor and employment protections, and a notice of the individual’s ability to seek advice from the Employment Development Department or the Labor Commissioner. Status: On February 16, the bill was introduced and referred to the Committee on Rules. On March 31, the bill was referred to the Senate Committees on Labor and Industrial Relations and Judiciary. On April 27, the bill was passed out of committee and sent to the Committee on Appropriations. On May 27, the bill passed off the suspense file and was eventually passed by the Senate. On June 2, the bill was sent to the Assembly for consideration.

Connecticut Senate Bill 678 (UPDATED)

Sponsored by Senator Anthony Musto (D – Majority)

This legislation aims to provide more clarity by amending the definition of an independent contractor to exclude any individual that is paid hourly, whose tools are provided by the person paying the worker, or who otherwise acts at the specific direction of the payor. Status: On January 24, the bill was introduced and referred to the Joint Committee on Labor and Public Employees. This bill has died in committee.

Massachusetts House Bill 1393 (UPDATED)

Sponsored by Representative Linda Forry (D – Majority)

This legislation pertains to staffing agencies and relates to how they are regulated and licensed. The definitions section includes a provision stating that “employment” includes services in interstate commerce performed for wages and under contract. Status: On January 20, the bill was filed in the House. On January 24, the bill was referred to the Joint Committee on Labor and Workforce Development. A hearing is scheduled for June 9 at 10:30am in room A-1 of the State House.

Nevada Senate Bill 207 (UPDATED)

Sponsored by Senate Committee on Commerce, Labor, and Energy

This legislation gives the Labor Commissioner authority to impose an administrative penalty against an employer who, regardless of the employer’s intent, misclassifies an employee as an independent contractor. The bill defines an individual as an independent contractor if: (1) the person performs services for wages on behalf of an employer; (2) the person has been and will continue to be free from control or direction by the employer over the performance of the services, both under a contract of service and in fact; (3) the service is either outside the usual course of the employer’s business or the service is performed outside of all the places of business of the employer for whom the service is performed; and (4) the service is performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged and which is of the same nature as that involved in the contract of service. Status: On March 1, the bill was introduced and referred to the Senate Committee on Commerce, Labor, and Energy. A public hearing was held on March 30. On April 4, the committee passed the bill by a 4-3 vote. On May 29, the bill was passed by the Senate and referred to the Assembly Committee on Commerce and Labor. On June 4, the bill was passed by the full Assembly with a 25-13 vote.

Nevada Senate Bill 208 (UPDATED)

Sponsored by Senate Committee on Commerce, Labor, and Energy

This legislation defines "independent contractor" as a person who performs services for an employer if: 1) the person has been and will continue to be free from control or direction by the employer over the performance of the services, both under a contract of service and in fact; 2) the services are outside the usual course of the employer’s business or the services are performed outside of all the places of business of the employer for which the services are performed; and 3)the services are performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged and which is of the same nature as that involved in the contract of service. It requires directed state agencies to share amongst their respective offices information relating to suspected employee misclassification that is received in the performance of their official duties. Finally, the legislation creates a task force on employee misclassification. Status: On March 1, the bill was introduced and referred to the Senate Committee on Commerce, Labor, and Energy. A public hearing was held on March 30. On April 4, the committee passed the bill by a 4-3 vote. On May 29, the bill was passed by the Senate and referred to the Assembly Committee on Commerce and Labor. On June 4, the bill was passed by the full Assembly with a 26-15 vote.

OTHER STATE LEGISLATION

California Senate Bill 316

Sponsored by Senator Bill Emmerson (R – Minority)

The legislation provides meal and rest period requirements for employees. Unless waived by mutual consent of both the employer and employee, a 30 minute rest period is required once the employee has worked a specific amount of hours. Under this legislation, employees employed in the “transportation industry” are exempt from the meal and rest period requirement. Transportation industry is defined as any industry, business, or establishment operated for the purpose of conveying persons or property from one place to another whether by rail, highway, air, or water, and all operations and services in connection therewith; and also includes storing or warehousing of goods or property, and the repairing, parking, rental, maintenance, or cleaning of vehicles. Status: On February 15, the bill was introduced and is currently waiting committee assignment.

Illinois Senate Bill 1851

Sponsored by Senator Gary Forby (D – Majority)

This legislation amends the Employee Classification Act to provide that the term “employment” does not include services performed by an individual as an operator of a truck, truck-tractor, or tractor if the person or entity is registered or licensed as a motor carrier, operates the equipment under an owner-operator lease contract, and the ability to set their own hours and work for additional companies. Status: On February 9, the bill was introduced and referred to Assignments. On March 2, it was assigned to the Senate Committee on Labor. On March 18, the bill was re-referred to Assignments.

Kansas House Bill 2131

Sponsored by House Committee on Commerce and Economic Development

This legislation states that an individual performing services for a contractor is deemed to be an employee of the contractor unless it is shown that the: (1) individual has been and will continue to be free from direction and control, (2) service performed by the individual is outside the usual course of services performed by the contractor, and (3) individual is engaged in an independently established business or is deemed a legitimate sole proprietor. Status: On February 3, the bill was introduced and referred to the House Committee on Commerce and Economic Development.

Kansas Senate Bill 157

Sponsored by Senate Committee on Commerce

This legislation states that no person shall knowingly and intentionally misclassify an employee as an independent contractor. If a court determines that an employer misclassifies a worker, the state may impose penalties of $50 per day for each misclassified worker up to a maximum amount of $50,000. Status: On February 10, the bill was introduced and referred to the Senate Committee on Commerce.

Maine House Bill 960

Sponsored by Representative Dianne Tilton (R – Majority)

This legislation standardizes the definition of "independent contractor" for employment security law and workers' compensation law. An independent contractor is a person who: (1) performs services free from direction and control over the means and manner of providing the services; (2) furnishes the tools and equipment necessary to provide the services; (3) operates a business that is considered inseparable from the individual for purposes of taxes, profits, and liabilities; (4) exercises complete control over the management and operations of the business; and (5) exercises the right and opportunity to perform the services of the business for multiple entities at the individual’s sole choice and discretion. Status: On March 25, this bill was introduced and referred to the House Committee on Labor, Commerce, Research and Economic Development.

Maine Senate Bill 332

Sponsored by Senator Douglas Thomas (R – Majority)

This legislation establishes a set of factors to determine whether an individual engaged in the courier business is an employee or an independent contractor for purposes of the workers' compensation laws. To be considered an independent contractor, the individual must be the following factors: (1) owns the motor vehicle or holds it under a lease agreement; (2) is responsible for the maintenance of the motor vehicle; (3) is responsible for substantially all of the operating expenses of the motor vehicle; (4) is responsible for paying the operator’s personal expenses; (5) is responsible for supplying the necessary services to operate the motor vehicle; (6) is compensated based on the factors directly related to the work performed; (7) substantially controls the means and manner of performing the services related to the business; and (8) enters into a written contract. Status: On March 15, this bill was introduced and referred to the Senate Committee on Labor, Commerce, Research and Economic Development.

Massachusetts House Bill 1391

Sponsored by Representative Fred Barrows (R – Minority)

This legislation amends the definition of certain independent contractors. For purposes of chapter 148 and chapter 151, an individual performing any service shall be considered an employee unless certain requirements can be satisfied. Status: On January 20, this bill was filed in the House. On January 24, the bill was referred to the Joint Committee on Labor and Workforce Development.

Massachusetts House Bill 2298

Sponsored by Representative Bradley Johnes (R – Minority)

This legislation clarifies the definition of an employee as an individual performing any service unless the service is performed outside of all the places of business of the enterprise. Status: On January 20, the bill was filed in the House. On January 25, the bill was referred to the Joint Committee on Labor and Workforce Development.

Massachusetts House Bill 2874

Sponsored by Representative Louis Kafka (D – Majority)

This legislation specifies that an individual performing a service shall be considered an employee unless certain requirements can be met. Status: On January 21, the bill was filed in the House. On January 24, the bill was referred to the Joint Committee on Labor and Workforce Development.

Massachusetts House Bill 3091

Sponsored by Representative Joseph Wagner (D – Majority)

This legislation relates to independent contractors in the trucking and courier industries. An individual is considered an independent contractor if the following factors are met: (1) the individual owns the equipment or holds it under a bona fide lease arrangement; (2) the individual is responsible for the maintenance of the equipment; (3) the individual is responsible for the operating costs, including fuel, repairs, supplies, vehicle insurance, and personal expenses. The individual may be paid the carrier's fuel surcharge and incidental costs, including, but not limited to, tolls, permits, and lumper fees; (4) the individual is responsible for supplying the necessary personal services to operate the equipment; (5) the individual's compensation is based on factors related to the work performed, such as a percentage of any schedule of rates, and not on the basis of the hours or time expended; (6) the individual substantially controls the means and manner of performing the services, in conformance with regulatory requirements and specifications of the shipper; and (7) the individual enters into a written contract that specifies the relationship to be that of an independent contractor and not that of an employee. Status: On March 1, the bill was introduced and referred to the Joint Committee on Transportation.

Massachusetts Senate Bill 957

Sponsored by Senator Michael Rodrigues (D – Majority)

This legislation provides a technical correction to the Massachusetts Independent Contractor Law. An individual is considered an independent contractor if: (1) the individual is free from direction and control, and (2) the service is performed outside the usual course of the business of the employer, or (3) the individual is customarily engaged in an independently established business of the same nature as that involved in the service performed. Status: On January 24, the bill was introduced and referred to the Joint Committee on Labor and Workforce Development.

Nevada Senate Bill 242

Sponsored by Senate Committee on Commerce, Labor, and Energy

This legislation states that an independent contractor is an individual who: (1) has been and will continue to be free from direction and control; (2) performs the service outside the usual course of the business for which the service is performed; and (3) performs the service in the course of an independently established business in which the person is customarily engaged and which is of the same nature as that involved in the contract of service. Status: On March 17, this bill was introduced and referred to the Senate Committee on Commerce, Labor and Energy. A public hearing was held on March 30. On April 4, the committee passed the bill by a 4-3 vote.

New Hampshire Senate Bill 191

Sponsored by Senator Tom De Blois (R – Majority)

This legislation requires independent contractors to register as sole proprietors for purposes of workers’ compensation. The Secretary of State may charge a fee for filing the registration and insurance of a certificate of registration. Status: On February 23, this bill was introduced and referred to the Senate Committee on Commerce. A public hearing took place on March 15. On March 24, the committee reported the bill favorably as amended. On March 30, the bill was re-referred back to the Senate Committee on Commerce.

New York Assembly Bill 1073

Sponsored by Assemblyman Felix Ortiz

This legislation defines an independent contractor as an individual who: (1) performs services free from direction and control over the means and manner of providing the services, (2) furnishes the tools and equipment necessary to provide the service, (3) operates a business that is considered inseparable from the individual for purposes of taxes, profits, and liabilities, in which the individual owns all of the assets and profits of the business; and has sole, unlimited, personal liability for all of the debts and liabilities of the of the business, (4) exercises complete control over the management and operations of the business, and (5) exercises the right and opportunity on a continuing basis to perform the services of the business for multiple entities at the individual's sole choice and discretion. It provides that an individual who has not been properly classified as an employee may bring civil action for damages against the employer for any violation under this Act. Status: On January 5, the bill was introduced and referred to the Assembly Committee on Labor.

New Hampshire House Bill 420

Sponsored by Representative William Infantine (R – Majority)

This legislation requires the Commissioner of Labor to establish a voluntary registration procedure for independent contractors under the workers compensation law. The registration form will include explanations of the consequences and possible penalties of misrepresenting their employment status. An independent contractor who registers will not be eligible for benefits if they incur an injury or illness. Status: On January 21, the bill was introduced and referred to the House Committee on Labor, Industrial, and Rehabilitative Services. A public hearing was held on March 1.

New York Assembly Bill 2274

Sponsored by Assemblyman Bob Reilly (D – Majority)

This legislation amends the workers compensation law by stating that an independent contractor cannot be classified as an employee during orientation or initial training. Status: On January 14, the bill was introduced and referred to the Assembly Committee on Labor.

New York Senate Bill 21

Sponsored by Senator Daniel Squadron (D – Minority)

This legislation defines an independent contractor as a sole proprietor who is not an employee and who is retained by a client for an amount equal to or greater than $600. It states that an independent contractor shall be paid the compensation earned in accordance with the agreed work terms no later than the last day of the month following the month in which the compensation was earned. It provides recourse for independent contractors seeking to file a complaint regarding a violation of this measure and recover back compensation. Status: On January 5, the bill was introduced and referred to the Senate Committee on Labor.

New York Senate Bill 630

Sponsored by Senator Daniel Squadron (D – Minority)

This legislation pertains to the payment of independent contractors. The independent contractor shall be paid the compensation earned in accordance with agreed work terms. The agreed work terms shall be reduced in writing, signed by both the client and the independent contractor, and made available to the Commissioner upon request. The writing shall include a description of how compensation earned and payable shall be calculated. A client who is found by the Commissioner to be in violation will be subjected to various civil penalties.

Status: On January 5, the bill was introduced and referred to the Senate Committee on Labor.

North Carolina House Bill 790

Sponsored by Representative Rick Glazier (D – Minority)

This legislation amends the labor laws to enact the Employee Fair Classification Act. In this bill, an independent contractor is defined as an individual who performs services for an employer and: (1) has been and will continue to be free from control and direction; (2) the service is, in fact, either outside the usual course of the business for which the service is performed or the service is performed outside of all the places of business of the enterprise for which the service is performed; and (3) the individual is customarily engaged in an independently established trade. Status: On April 7, the bill was introduced and referred to the House Committee on Commerce and Job Development.

Ohio House Bill 137

Sponsored by Representative Debbie Phillips (D – Minority)

This legislation aims to create a uniform definition of “employee” in the Ohio Revised Code. An employer is prohibited from designating an individual as an independent contractor unless certain criteria are satisfied. The bill also requires various state departments to share information concerning suspected worker misclassification. Status: On March 2, the bill was introduced and referred to the House Committee on Commerce and Labor.

Ohio Senate Bill 107

Sponsored by Senator Michael Skindell (D – Minority)

This legislation aims to create a uniform definition of “employee” in the Ohio Revised Code. An employer is prohibited from designating an individual as an independent contractor unless certain criteria are satisfied. The bill also requires various state departments to share information concerning suspected worker misclassification. Status: On March 2, the bill was introduced and referred to the Senate Committee on Insurance, Commerce, and Labor.

Oregon House Bill 2313

Sponsored by Representative Chris Harker (D – Even Party Split)

This legislation instructs the Bureau of Labor and Industries to study the development of an independent contractor definition for purposes of adopting by rule a determination of independent contractor status. Status: On January 21, the bill was introduced and referred to the House Committee on Business and Labor.

Oregon House Bill 2469

This legislation establishes a review processes for the Departments of Revenue and Employment based on finding that workers are employees and not independent contractors. The legislation requires the Interagency Compliance Network to work together to share information and increase compliance efforts. Several of the agencies within this network include the Departments of Revenue and Employment, as well as the Bureau of Labor and Industries. Status: On January 21, the bill was introduced and referred to the House Committee on Business and Labor.

Texas House Bill 1358

Sponsored by Representative Charlie Howard (R – Majority)

For the purposes of the franchise tax, this legislation excludes certain flow through funds (for example, subcontracting payments made by the taxable entity to nonemployee delivery service agents) by qualified courier and logistics companies. A qualified courier and logistics company is defined as a registered motor carrier and taxable entity that receives at least 80 percent of its total revenue from two of the following: (1) expedited same day delivery, (2) temporary storage and delivery, and (3) brokeraged same day and logistics services. Status: On February 15, the bill was filed. On March 1, the bill was referred to the House Committee on Ways and Means. On May 2, the bill was passed out of committee with a 9-0 vote.

Texas House Bill 2989

Sponsored By Representative Joe Deshotel (D – Minority)

This legislation aims to prevent worker classification in the construction industry. Improper classification includes a failure by the contractor to: (1) provide the employee with an employment identification number for federal tax purposes; (2) provide the employee with a w-2 or other relevant federal tax form that correctly records the employee's name and social security number; (3) properly withhold income, medicare, social security, or unemployment taxes on wages paid to the employee; (4) include the employee in an applicable employee benefits plan; or (5) provide the employee with workers' compensation insurance coverage. Status: On March 17, the bill was introduced and referred to the House Committee on Business and Industry. On March 28, a public hearing was held. On April 6, the bill was voted out of committee.

Texas Senate Bill 1347

Sponsored by Senator Leticia Van De Putte (D – Minority)

For the purposes of the franchise tax, this legislation excludes certain flow through funds (for example, subcontracting payments made by the taxable entity to nonemployee delivery service agents) by qualified courier and logistics companies. A qualified courier and logistics company is defined as a registered motor carrier and taxable entity that receives at least 80 percent of its total revenue from two of the following: (1) expedited same day delivery, (2) temporary storage and delivery, and (3) brokeraged same day and logistics services. Status: On March 9, this bill was received by the Secretary of the Senate and filed. On March 22, the bill was referred to the Senate Committee on Finance.

Washington State House Bill 1701

Sponsored by Representative Timm Ormsby (D – Majority)

This legislation pertains to the misclassification of independent contractors in the construction industry. An independent contractor is found to be in violation if he/she engages three or more subcontractors to all work on the same task at a single job site. An independent contractor has the burden of proof to show that all subcontractors are not working on the same tasks at a single job site. Status: On January 31, the bill was introduced and referred to the House Committee on Labor and Workforce Development. On February 16, a public hearing was held and the bill was reported favorably out of the committee. The bill was then moved to the House Rules Committee. In early March, the full House passed the bill by a 54-43 vote and it was sent to the Senate Committee on Labor, Commerce, and Consumer Protection. On March 18, the bill was reported favorable out of the committee and passed to the Rules Committee for second reading. On April 4, the full Senate passed the bill by a 25-23 vote. The House and Senate are now debating amendments.

Washington State Senate Bill 5599

Sponsored by Senator Jeanne Kohl-Welles (D – Majority)

This legislation pertains to the misclassification of independent contractors in the construction industry. An independent contractor is found to be in violation if he/she engages three or more subcontractors to all work on the same task at a single job site. An independent contractor has the burden of proof to show that all subcontractors are not working on the same tasks at a single job site. Status: On January 31, the bill was introduced and referred to the Senate Committee on Labor, Commerce, and Consumer Protection. On February 21, a public hearing was held and the bill was reported favorably out of committee. The bill was then moved to the Senate Rules Committee.

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Courtesy of Messenger Courier Association of America (MCAA)