[A] controversial bill that would change the definitions of employees and independent contractors under Vermont labor laws remains the focus of committee testimony as pro-labor organizations continue to oppose it.
H.867 was originally scheduled for a vote on the House floor March 17, but that has been delayed a second time until March 31.
The House Committee on General, Housing and Military Affairs took testimony Tuesday through Friday mornings last week. It pulled the bill into committee March 18 after the House Committee on Commerce and Economic Development passed it out unanimously.
At the core of a contentious debate between pro-labor and pro-business lobbyists is whether a company should be able to bring on a worker who does work similar to what the company’s employees do and consider that new worker an independent contractor.
Experts in employment law call the part of Vermont statute barring that practice the “like work” or “nature of the business” provision. It means 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.
Supporters of the bill say removing the provision would make it easier for companies to bring on independent contractors. For example, removing it would allow a property management company to bring on an independent painter to finish a job in an apartment when the company is in a bind.
Opponents of the bill say removing the “like work” provision would erode the current workforce and encourage more misclassification of employees.
Rep. Heidi Scheuermann, R-Stowe, has a day job in the property management industry and sits on the House Committee on Commerce and Economic Development. Scheuermann said her committee has been working on this issue for a decade and it needs to go to the House floor.
“The Department of Labor supports it,” Scheuermann said. “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,” she added. “I fear that their objections would simply maintain the status quo.”
Business owners also support the change. In February, Murphy Robinson, who has a startup company teaching outdoor sports such as archery and hunting to women, said she uses independent contractors for one to four days a year to teach classes.
“Because they are engaged in the core nature of my business, they have to be employees,” Robinson testified. She asked the committee to make sure H.867 would exclude “nature of the business” from Vermont law. “I’m paying as much in workers’ comp insurance as I am in payroll,” she said.
Matt Durocher, business manager for Carpenters Local 1996, told the House General Committee that the status quo is not good. He said Vermont’s construction industry is full of people misclassified as independent contractors, and they don’t have workers’ compensation insurance to cover them if they’re hurt on the job.
“These guys are being almost forced to become independent contractors, and that’s not the way it should be,” Durocher said. “The majority of people I talk to are not real contractors. I see that as a big problem in construction, more in construction than in the other job sectors.”
Durocher suggested that lawmakers add specific language to the bill regarding the construction industry because, he said, the abuses are so rampant that state law should not allow anyone to work on a construction site who is not covered by workers’ compensation.
The committee also heard from Jocelyn Jones, the former deputy chief of the Fair Labor Division at the Massachusetts attorney general’s office, who told legislators the bill is akin to “throwing the baby out with the bathwater.”
“The voices urging for what amounts to a gutting of the law often suggest adding all sorts of meaningless requirements to create a smoke-and-mirrors effect,” Jones said. “They want to gut the employee definition section but build up stringent ‘registration’ requirements, essentially making it look like the law is tough.”
H.867 would replace the “like work” or “nature of the business” provision with a six-point test.
A worker would need to meet these criteria to be considered an independent contractor: (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.
Another major provision allows what Scheuermann called a “workaround” for the “like work” or “nature of the business” standard. The bill would allow anyone who owns all or part of a business, including as an unincorporated sole proprietor, to work as an independent contractor as long as he or she is registered as a business with either the Vermont secretary of state or the business person’s local government.
“‘Look at all these new requirements,’ they will say,” Jones said. “But, don’t let them fool you. The six-part test of what it means to be an independent contractor contains a lot of bark and no bite. This is simply an effort to paper over the issue.”
“When the tide is turning across the country, with more and more states adopting stricter laws to ensure proper classification of workers, and the federal IRS working closely with the U.S. Department of Labor to fight misclassification, it’s not the right time to consider gutting your law,” Jones said.
The House General Committee is expected to take a straw poll this week to decide whether to support the bill. The vote on the House floor is scheduled for Thursday.
