(Editor’s note: This story was expanded April 12 at 5:15 p.m.)
[T]he controversial bill that would redefine what makes a worker an independent contractor versus an employee will not become law this year, the House speaker predicted Tuesday.
Speaker Shap Smith, D-Morristown, said he doesn’t foresee H.867, whose vote on the House floor has been delayed several times, making it to Gov. Peter Shumlin’s desk this year.
Smith said the only political maneuvering that would keep the bill’s language alive would be to tack H.867’s provisions onto a bill that already passed the Senate, such as S.23, which relates to workers’ compensation settlements.
“I don’t think that there’s any way that it will go all the way to the governor’s desk,” he said. “I think that the work that we’re doing is important. If we can get it in a form that’s satisfactory, I think the work will be important for the next Legislature.”
The House Committee on Commerce and Economic Development, which voted the bill out unanimously, continues to take testimony on several amendments that would make the bill more satisfactory to pro-labor interests.
“It’s not clear to me whether we would or not” have the votes to pass the bill in its current form, Smith said. “What’s clear to me is in its current form, it wouldn’t go much beyond the floor of the House. In other words, I don’t think it would move in the Senate and make it to the governor’s desk.”
The biggest point of contention between labor and business interests has been a provision called “like work” or “nature of the business.” It means that under Vermont law, no business can use an independent contractor to perform duties that are core to the business.
The original language in H.867 would have removed the “nature of the business” provision from statute. The bill would have allowed multiple independent contractors to work for the same company doing the same work. A separate provision would have required a task force to meet and determine whether the new provisions were good for the economy.
Smith said one of his concerns with H.867 was whether the new language would encourage companies to eliminate employed positions and replace the workers with independent contractors, who would not enjoy the same benefits, such as being covered by the company’s unemployment insurance.
“Most of the job growth that has happened in the last four, five years has been for (independent contractors), and that is an erosion of the social safety net,” he said. “That is an erosion of people’s ability to have access to workers’ comp, their ability to have access to unemployment insurance. It makes it difficult for them to have access to health insurance.”
The House Commerce Committee took testimony all last week and continued taking testimony Tuesday in hopes of updating the independent contractor language and moving it out to S.23, which passed the Senate on Feb. 20.
Rep. Bill Botzow, D-Pownal, the chair of House Commerce, said he has split up his committee members into groups and assigned them to figure out how to address eight issues that advocates have raised with the independent contractor language.
Botzow said he wants a bill that will help artisans, such as software engineers and stoneworkers, to succeed in Vermont’s economy. “Our challenge is to find out if the barn door’s been left open,” he said. “We can look at all sorts of ideas.”
“There’s not much point in putting something out that potentially doesn’t do the job we set out to do,” Botzow said. “The job we set out to do is provide clarity for everybody … define an independent contractor.”
“I think it’s a good thing that we voted the bill out because it’s drawn a lot of attention and made people focus on a very important issue that just really hasn’t risen in their minds like other issues have,” he said. “The timelines, sure they concern me, but we’re using every minute we can.”
Rep. Mike Marcotte, R-Coventry, said he wants to add language to the bill that would clarify its intent because right now the Department of Labor cannot use “common sense” to interpret the law. He said the committee has been working with a former assistant attorney general in Massachusetts to come up with the right language.
“The law is the law, and it’s pretty straightforward that if you’re doing any type of like business, then you’re an employee,” Marcotte said, “so it kind of stymies the entrepreneurs that are in state and causes some companies to go out of state and do the jobs that independent Vermonters could be doing themselves.”
Labor Commissioner Annie Noonan said her staff conducts at least 2,000 audits of Vermont businesses every year. She said most businesses that fail the audits do so because of Vermont’s “nature of the business” test.
For example, Maureen Cregan Connolly, the executive officer for the Homebuilders and Remodelers Association, estimated that at least 40 percent of her group’s active members are currently being audited by the Department of Labor, and the rest are afraid to speak up about their experiences.
“It makes no sense,” Connolly said of the provision. “You’re driving companies away from Vermont. Why would a tech company choose to locate here if they can’t use contracting relationships?”
She called it “inappropriate” for Smith to comment on what would happen with the independent contractor issue in the Senate.
“If (lawmakers) are going to make alterations to the bill, then I’m going to have to see what those alterations are,” Connolly said. “I want to see the bill passed as it came out of Commerce on March 11. It came out with an 11-0 vote, Republican, Democrat, independent.”
