Legislation Tackles Independent Contractor Misclassification

Tuesday, March 22, 2016 | 0

The Vermont House of Representatives is slated to vote this week on controversial legislation that would crack down on misclassification of employees as independent contractors.

Opponents of House Bill 867 say it would result in labor abuses by letting more employers misclassify workers as independent contractors, according to the VTDigger news website. But proponents say the bill gives true independent contractors more rights to recover damages from a customer if they are injured.

The outcry from labor has been strong enough to prompt lawmakers to postpone a hearing so the bill could be examined more closely.

One of the controversial parts of the bill seems to raise the bar for employers to be hit with fines. 

Under current law, employers who misclassify their workers are subject to a $5,000 per employee fine, and that provision would still stand. But the bar for being fined for a $20,000 willful misclassification offense would be higher under H. 867 than current law as it changes “willfully” to “purposefully.” This, opponents say, would reduce the ramifications for misclassifying employees.

The National Employment Law Project warned Vermont lawmakers in a letter last week that the bill would “would almost completely undermine decades of a well-established and strong safety net for Vermont workers by making it easier for employers to misclassify their employees and evade unemployment and workers' compensation insurance,” according to the news website.

Under H. 867, sponsored by the House Committee on Commerce and Economic Development, anybody who owns a business would not be considered an employee.

The legislation would allow independent contractors to file with the state labor commissioner a notice waiving the right to make a workers’ compensation claim against a person or company with which they have contracted. If an independent contractor is injured on the job and has filed a waiver, they could bring action to recover personal injury damages.

Finally, the bill would reconvene the “Vermont Employee Classification Task Force,” which would be charged with reducing the frequency of employee misclassification through education, coordination with various state agencies, businesses, labor and other stakeholders. The task force has not met for two years, according to VTDigger.

The task force would be charged with developing and implementing ongoing outreach programs to educate employers, workers and the public about proper classification.

It would also examine and evaluate current misclassification enforcement by state agencies and devise strategies to improve coordination among state agencies. It would also develop strategies for reaching out to businesses and recommend legislative and regulatory measures to reduce employee misclassification.