Editorial: Focus on jobs when defining ‘independent contractor’ status
As the Vermont Legislature moves toward adjournment, several bills won’t make the deadline and will die half-baked in their development. One such bill, H.867. dealt with how to define an independent contractor. It was controversial because it was characterized as pitting pro-labor forces against pro-business forces, and that pits liberals against conservatives right from the get-go.
Except in this case, the liberals are working with an outdated perspective, and it’s the business community that better understands the rapidly changing work environment and the prospects of job growth by incorporating a more liberal definition of the work that gets done in today’s economy.
Under current law, a Vermont company that brings on a worker for a function that is core to the business cannot classify that person as an independent contractor. It’s part of the Vermont law called the “like work” or “nature of the business” provision. The bill proposed to remove that “like work” provision and redefine the parameters of being an “independent contractor” with six provisions rather than the current three. In so doing, supporters said, employers, employees and independent contractors would have a better sense of the definition, rather than the uncertainty of the current law. The bill passed out of the House Committee on Commerce and Economic Development — committee that deals closest with business and economic growth — in an unanimous 11-0 vote.
The six criteria to be considered an independent contractor were: 1) being free from control of the company; 2) controlling the means and manner of the work; 3) operating a separate business; 4) holding oneself out as a distinct business; 5) offering the services to the general public; and 6) not being treated as an employee under federal tax law.
It stalled in the House Committee on General, Housing and Military Affairs because of pro-labor concerns that it didn’t do enough to protect workers.
What seemed to sway the House General Committee were testimony of worst abuses from union voices, but other significant voices supported it.
“The Department of Labor supports it,” Rep. Heidi Scheuermann, R-Stowe, said of the bill after it passed the Commerce committee on which she sits. “Everybody else supports it. The labor unions have expressed some concerns with it. I understand that they have them, but frankly I don’t think they’re legitimate… We’re trying to put in place labor laws that will allow this new workforce to grow while retaining the protections.”
One business owner, Murphy Robinson, who owns a start-up company teaching outdoor sports, testified in February about the absurdity of the current law: Robinson explained she uses independent contractors one to four days a year to teach classes in such sports as archery and hunting to women. “Because they are engaged in the core nature of my business, they have to be employee,” she told the committee. “I’m paying as much in workers’ comp insurance as I am in payroll.”
“We have the responsibility to deal with a changing workplace both for employees and businesses,” said Rep. Bill Botzow, D-Bennington, the chair of House Commerce during a hearing. “We have what I would call 20th- and 19th-century policies around the workforce, and we’re 16 years into a next century and a next way of working.”
On the flip side, Matt Durocher, business manager for Carpenters Local 1996, testified to the House General Committee that the construction industry was rife with misclassified workers that often don’t have workers’ compensation insurance to cover them if they’re hurt on the job. Durocher suggested the state law add specific language for the construction industry to insure no individual worked on a construction site without being covered by workers’ compensation.
A task force over the summer will try to resolve some of the issues in the hopes that a new bill can be passed in the next session. To that task force, here’s a suggestion: While preventing blatant abuse of the independent contractor provision, worry about the restrictions placed on job growth, and the costs you add to doing business (particularly building houses) by being overly maternal. Error on the side of economic growth, and resist the urge to be a “nanny” state. Why? Because creating jobs for Vermonters is what the state needs most. That’s how we can keep our youth employed; how we create jobs for new families; how businesses can grow and expand and create more opportunities for Vermonters.
That doesn’t mean that worker should not be covered by workers’ comp, they should. But be sure they are able to get a job first, and then insure that employers operate by reasonable rules. The six provisions in the H.867 made progress in that direction. With a few more tweaks to insure worker protections in some cases, it should be almost set to go.
— Angelo S. Lynn
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