2012 Employee Misclassification Bills

workers

Employee misclassification is the practice of labeling workers as independent contractors or consultants, rather than employees. Employers don't pay unemployment and other payroll taxes on independent contractors and don't have to provide workers compensation coverage or unemployment benefits for such workers. That creates an unlevel playing field with competing businesses who properly classify their workers as employees.  In addition, states and the federal government lose millions of dollars each year in uncollected tax revenue because of the practice, while workers who are misclassified aren't given the protection of labor laws.

Twenty-six states considered legislation on employee misclassification during the 2012 legislative session.  Measures were enacted in 10 states: Alabama, Arizona, Delaware, Louisiana, Maine, Maryland, Minnesota, New Hampshire, Rhode Island and Utah.  In addition, the Governors in North Carolina and Vermont issued Executive Orders establishing task forces on employee misclassification.
 


2012 Introduced and Enacted Legislation on Employee Misclassification or Independent Contractors

  
ALABAMA
AL H 167              Barton (R)
Title:                       Bond of Bar Pilots Piloting Vessels
Summary:             Amends current law relating to the bond of bar pilots piloting vessels; provides limitations on the liability of bar pilots for damage or loss unless the damage or loss is caused because of willful, intentional, or reckless misconduct of the pilot; provides that such provisions apply only provided the bar pilots remain self-employed independent contractors and the number of such self-employed independent contractors does not exceed a specified amount.
05/14/2012           Signed by Governor. Act No. 2012-388
 
AL H 497              Shiver (R)
Title:                       Worker Compensation
Summary:             Amends existing law relating to the exemption from workers' compensation coverage for certain independent contractors; qualifies sports officials as independent contractors; exempts sports officials from workers' compensation coverage.
05/22/2012           Signed by Governor. Act No. 2012-523
 
ARIZONA
AZ H 2150            Forese (R)
Title:                       Independent Contractor Unemployment Insurance
Summary:             Relates to unemployment insurance; relates to independent contractors; relates to appeal tribunals; relates to indications of control by the employing unit include controlling the individual's hours of work, location of work, right to perform services for others, tools, equipment, materials, expenses, use of other workers and other indicia of employment; requires notification; provides for determinations of contribution rate redetermination or denial.
03/29/2012           Signed by Governor. Chapter No. 115
 
AZ S 1472             Gray L (R)
Title:                       Private Investigator and Security Guard Hearing Board
Summary:             Relates to private investigators and security guards; relates to the hearing board, independent contractors, disciplinary actions, unlicensed activity, bonds, proof of insurance, records, insurance adjusters, insurance ratings, bail bondmen, attorneys, court employee investigators, employee identification cards and fraud.
03/14/2012           From House Committee on Military Affairs and Public Safety: Do pass with amendment.
 
CALIFORNIA
CA A 950              Perez J (D)
Title:                       Employment: Drayage Truck Operators
Summary:             Deems drayage truck operators as employees of those persons who arrange for or engage their services, with the exception of public agency employers.
02/01/2012           Died on Inactive File.
 
CA A 2373            Norby (R)
Title:                       Independent Contractor: Definition
Summary:             Amends the definition of an independent contractor to state that whether a person is an independent contractor is determined by considering various factors. Amends various other statutory codes to incorporate this definition of independent contractor.
03/22/2012           To Assembly Committees on Labor and Employment and Insurance.
 
CA A 2449            Norby (R)
Title:                       Workers' Compensation: Independent Contractors
Summary:             Requires that the provisions of the workers' compensation system be strictly construed by the courts with respect to what constitutes an independent contractor, as defined for purposes of limiting the inappropriate extension of these benefits to persons not intended to receive them.
03/15/2012           To Assembly Committee on Insurance.
 
CONNECTICUT
CT S 385               Joint Committee on Transportation
Title:                       Motor Carrier Industry
Summary:             Concerns owner operators in the motor carrier industry; applies the independent contractor standard to owner operators in the motor carrier industry.
04/18/2012           To Joint Committee on Labor and Public Employees.
 
DELAWARE
DE H 222              Jaques (D)
Title:                       Workplace Fraud Act
Summary:             Requires that the Department of Labor to publish, on its website, the names of employers who have violated the Workplace Fraud Act by misclassifying an employee as an independent contractor or otherwise.
07/12/2012           Signed by Governor. Chapter Number 320
 
DISTRICT OF COLUMBIA
DC B 169              Mendelson (D)
Title:                       Workplace Fraud Amendment
Summary:             (Permanent Law) Provides for a penalty for an employer who misclassifies an employee as an independent contractor; allows the employee to seek up to treble damages for lost wages and benefits; requires an employer to pay restitution, be subject to a stop-work order or debarment, and come into compliance under the law; requires the employer to provide notice to each employee of their status as an independent contractor and the implications of such status, and to maintain records of independent contractors.
07/10/2012           To Council Committee on Jobs and Workforce Development.
 
ILLINOIS
IL H 4788             Cross (R)
Title:                       Unemployment Insurance Act
Summary:             Amends the Unemployment Insurance Act; makes a technical change in a Section concerning independent contractors.
03/30/2012           Rereferred to House Committee on Rules.
 
IL H 5313             Barickman (R)
Title:                       Procurement Code
Summary:             Amends the Procurement Code; provides that the Code shall not apply to contracts for services to public institutions of higher education by a person, acting as an independent contractor who is selected by negotiation for the purpose of providing educational services.
02/08/2012           To House Committee on Rules.
 
KANSAS
KS S 285               Senate Commerce Committee
Title:                       Employee Classification
Summary:             Concerns the miss-classification of employees; relates to penalty.
01/18/2012           To Senate Committee on Judiciary.
 
KENTUCKY
KY S 77                 Schickel (R)
Title:                       Employee Misclassification
Summary:             Relates to employee misclassification; defines person, contractor, prime contractor, and subcontractor; specifies the Department of Revenue as the determining authority in issues related to the classification of a person as an employee or independent contractor; defines characteristics of an independent contractor, to stipulate that a prime contractor is not responsible for a subcontractor's misclassification of independent contractors as employees.
02/27/2012           To House Committee on Appropriations and Revenue.
 
LOUISIANA
LA H 1148            Armes (D)
Title:                       Private Security Regulation
Summary:             Provides relative to the regulation of private security; provides that this shall not apply to a peace officer employed by a state, parish, or local law enforcement agency who contracts directly with a licensed contract security company or the actual consumer of contract security services to work during his off-duty hours and whose off-duty employment is conducted on an independent contractor basis with such licensed contract security company or consumer of security services.
05/31/2012           Signed by Governor. Act No. 439
 
LA S 472               Murray (D)
Title:                       Staffing Services
Summary:             Prohibits certain employees of staffing services from being classified as independent contractors by employers; relates to unemployment benefits and workers' compensation; prohibits such employer from contracting with any state or political agency for a specified time.
06/13/2012           Signed by Governor. Act No. 786
 
MAINE
ME H 960             Tilton (R)
Title:                       Independent Contractor Definition
Summary:             Standardizes the definition of independent contractor for employment security law and workers' compensation law; states penalties for the misclassification of a worker as an independent contractor; requires two reports on the implementation of the new definition.
04/18/2012           Signed by Governor. Public Law No. 643
 
MARYLAND
MD H 309             Miller W (R)
Title:                       Independent Contractor
Summary:             Defines independent contractor as an individual who is not an employee for purposes of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act, based on application of the 20 factors set forth in a specified Internal Revenue Service Revenue Ruling.
03/22/2012           Withdrawn from further consideration.
 
MD H 734             Schulz (R)
Title:                       Independent Contractor Registry
Summary:             Requires the Department of Labor, Licensing, and Regulation to develop and maintain an Independent Contractor Registry; authorizes an individual who performs construction services or landscaping services as an independent contractor to register with the Registry; establishes that work performed by an individual registered with the Registry is not presumed to create an employer-employee relationship for the purposes of specified provisions related to workplace fraud.
03/24/2012           Withdrawn from further consideration.
 
MD H 1364          Schulz (R)
Title:                       Workplace Fraud Act
Summary:             Establishes an exception for an employer that produces specified documents for inspection to the presumption that an employer-employee relationship exists for purposes of the Workplace Fraud Act; authorizes an employer to provide copies of records; alters the number of days within which an employer is required to product records; alter the requirement that a public body withhold funds from an employer; relates to violations under the act.
05/02/2012           Signed by Governor. Chapter No. 207
 
MD S 272              Peters (D)
Title:                       Workplace Fraud Act Revisions
Summary:             Establishes an exception for an employer that produces certain documents for inspection to the presumption that an employer-employee relationship exists for purposes of the Workplace Fraud Act; authorizes an employer to comply with a requirement to provide records by producing copies of the records; alters the number of days within which an employer is required to produce certain records; provides an employer is entitled to a related hearing; relates to the issuance of related violations.
05/02/2012           Signed by Governor. Chapter No. 206
 
MD S 600              Young (D)
Title:                       Department of Labor
Summary:             Requires the Department of Labor, Licensing, and Regulation to develop and maintain an Independent Contractor Registry; authorizes an individual who performs construction services or landscaping services as an independent contractor to register with the Registry; establishes that work performed by an individual registered with the Registry is not presumed to create an employer-employee relationship for the purposes of specified provisions related to workplace fraud.
03/21/2012           Withdrawn from further consideration.
 
MD S 1005           Pugh (D)
Title:                       Workplace Fraud Act
Summary:             Establishes an exception for an employer that produces specified documents for inspection to the presumption that an employer-employee relationship exists for purposes of the Workplace Fraud Act; provides for a presumption, under specified circumstances, that an individual working for remuneration is an independent contractor under specified circumstances.
03/22/2012           Withdrawn from further consideration.
 
MASSACHUSETTS
MA H 1391          Barrows (R)
Title:                       Independent Contractor Employee Definition
Summary:             Relates to the definition of certain independent contractors as employees for purposes of minimum wage and other requirements; provides that an individual performing any service shall be defined as an employee unless said employee satisfies certain other requirements.
04/17/2012           In Joint Committee on Labor and Workforce Development: Extension Order Filed.
 
MA H 1412          Walz (D)
Title:                       Certain Independent Contractors Under the Labor Laws
Summary:             Relates to certain independent contractors under the labor laws for purposes of workers compensation and unemployment insurance.
07/30/2012           From Joint Committee on Labor and Workforce Development: Ought not to pass.
 
MA H 2874          Kafka (D)
Title:                       Independent Contractors Under Labor Laws
Summary:             Relates to certain independent contractors under the labor laws; provides that an individual performing a service shall be considered an employee under most circumstances; provides that it shall be considered a felony to coerce, threaten, or intimidate an individual into establishing an independent business; provides that any person or persons creating intellectual property shall be exempted from certain provisions regarding independent contractors.
04/17/2012           In Joint Committee on Labor and Workforce Development: Extension Order Filed.
 
MA H 3091          Wagner (D)
Title:                       Trucking and Messenger and Courier Industries
Summary:             Relates to the trucking and messenger/courier industries; specifies the difference between an employee and independent contractor.
07/16/2012           From Joint Committee on Transportation: Accompanied Study Order H 4263.
 
MA HD 4568       Exec. Office of Labor & Workforce Development
Title:                       Appointments to Joint Task Force Studying Contractors
Summary:             Submits a communication from the Executive Office of Labor and Workforce Development of certain appointments to the Joint Task Force to the special commission tasked with investigating and studying independent contractors.
10/11/2012           Filed.
 
MA S 957              Rodrigues (D)
Title:                       Independent Contractor Labor Laws
Summary:             Relates to certain independent contractors under the labor laws; amends criteria for independent contractors for minimum wage and unemployment compensation purposes.
04/17/2012           In Joint Committee on Labor and Workforce Development: Extension Order Filed.
 
MICHIGAN
MI S 1012             Marleau (R)
Title:                       Workers Compensation
Summary:             Establishes criteria to determine employee and independent contractor status for worker's compensation coverage in trucking and messenger courier industries.
03/08/2012           To Senate Committee on Economic Development.
 
MINNESOTA
MN H 2093          Sanders T (R)
Title:                       Labor and Industry
Summary:             Relates to labor and industry; clarifies employee classification of independent contractors; provides pilot project for contractor registration.
03/28/2012           Rereferred to House Committee on Ways and Means.
 
MN S 1653           Pederson (R)
Title:                       Labor and Industry
Summary:             Relates to labor and industry; adds company and limited liability partnership to the definition of a person; defines a business entity; clarifies the criteria for classification as an independent contractor; provides pilot project for contractor registration of persons who perform public or private sector commercial or residential building construction or improvement services; provides for penalties for unregistered persons; relates to workers' compensation and unemployment insurance.
05/14/2012           Signed by Governor. Filed with Secretary of State. Chapter No. 295
 
MN S 1717           Miller (R)
Title:                       Labor and Industry
Summary:             Makes technical and housekeeping changes to apprenticeship law; makes changes to the State Building Code and State Fire Code to provide that they may not require the installation of fire sprinklers in single family dwellings; provides that contractors must offer to install fire sprinklers in single family dwellings; provides for construction contractor license fees and continuing education; clarifies employee classification of independent contractors; provides a pilot project for contractor registration.
05/07/2012           Vetoed by Governor.
 
NEW HAMPSHIRE
NH H 420             Infantine (R)
Title:                       Registration for Independent Contractors
Summary:             Clarifies the definition of employee and the criteria for exempting workers from employee status; redefines employee to include a person who holds himself or herself out to be in business for himself or herself or is registered with the state as a business and the person has continuing or recurring business liabilities or obligations.
06/07/2012           Signed by Governor. Chapter No. 2012-139
 
NH S 191              DeBlois (R)
Title:                       Independent Contractor Registration
Summary:             Relates to the registration of independent contractors for the purposes of workers' compensation.
02/08/2012           In Senate: Referred for interim study.
 
NEW JERSEY
NJ A 1578             Wisniewski (D)
Title:                       Truck Operator Independent Contractor Act
Summary:             Establishes Truck Operator Independent Contractor Act.
10/15/2012           From Assembly Committee on Labor.
 
NJ A 3310             Eustace (D)
Title:                       Payment of Independent Contractors
Summary:             Concerns payment of independent contractors; provides that an independent contractor must be paid the compensation earned according to work terms agreed to by the independent contractor and its client, and requires the Department of Labor and Workforce Development to act as a regulatory agency; provides that any client who does not pay the compensation of all of its independent contractors will be guilty of a disorderly persons offense.
10/15/2012           From Assembly Committee on Labor as amended.
 
NJ S 1450              Weinberg (D)
Title:                       Truck Operator Independent Contractor Act
Summary:             Establishes Truck Operator Independent Contractor Act.
02/06/2012           To Senate Committee on Labor.
 
NJ SR 64               Sweeney (D)
Title:                       Independent Contractor Misclassification
Summary:             Requests Governor to have State participate in joint State and federal initiative against misclassification of employees as independent contractors.
05/31/2012           To Senate Committee on Labor.
 
NEW MEXICO
NM H 91               Chavez E (D)
Title:                       Employee Fair Classification Act
Summary:             Relates to employment; creates the Employee Fair Classification Act; distinguishes between employees and independent contractors; creates presumptions; prohibits certain conduct; creates causes of action for violation of the employee fair classification act; requires notice to employees.
01/18/2012           To House Committee on Rules and Order of Business.
 
NEW YORK
NY A 6698            Silver (D)
Title:                       Payment of Independent Contractors
Summary:             Relates to payment of independent contractors and authorizes the department of labor to investigate complaints, make claims for compensation, assess liquid damages, civil penalties and criminal penalties, and authorizes the award of attorney fees and liquidated damages.
06/21/2012           To Senate Committee on Rules.
 
NY A 8287            Pretlow (D)
Title:                       Designation of Workers Compensation Coverage
Summary:             Relates to horse racing; intends to forbid workers compensation carriers from forcing policyholders to cover individuals who are not their employees; provides that only a workers’ compensation policyholder or the workers compensation board shall determine that an individual is the employee of such policyholder and therefore required to be covered by such employer's workers compensation insurance policy.
01/04/2012           To Assembly Committee on Labor.
 
NY A 8506            Lancman (D)
Title:                       Commercial Goods Transportation Industry Fair Play
Summary:             Enacts the New York State Commercial Goods Transportation Industry Fair Play Act; redefines the definition of employee.
01/09/2012           Enacting clause stricken.
 
NY A 8997            Wright (D)
Title:                       Commercial Goods Transportation
Summary:             Enacts the Commercial Goods Transportation Industry Fair Play Act; outlines commercial goods transportation contractors' obligation to correctly classify employees and to inform subcontractors, of their obligations regarding employee classification, the rights of employees to pay taxes required by state and federal law, workers' compensation, unemployment; defines penalties for contractors and sub-contractors who violate the provisions of the law; protects against-employer retaliation.
04/26/2012           To Assembly Committee on Codes.
 
NY S 4129            Golden (R)
Title:                       Payment of Independent Contractors
Summary:             Relates to payment of independent contractors and authorizes the department of labor to investigate complaints, make claims for compensation, assess liquid damages, civil penalties and criminal penalties, and authorizes the award of attorney fees and liquidated damages.
06/17/2012           Amended in Senate Committee on Labor.
 
NY S 4273            Marcellino (R)
Title:                       Defense of Independent Contractors
Summary:             Relates to requiring the state to defend and indemnify independent contractors and their employees when they install temporary traffic controls at accident scenes.
02/23/2012           Amended in Senate Committee on Finance.
 
NORTH CAROLINA
NC 13 2012          Executive Order 125
Title:                       Employee Misclassification Task Force
Summary:             Establishes the Governor's task force on employee misclassification to protect the health, safety and benefits of workers, eliminate any competitive advantage currently enjoyed by businesses who violate the law, and educate employers and employees regarding applicable legal requirements relevant to the practice of employee misclassification.
08/22/12               Executive Order 125 Issued
 
OKLAHOMA
OK S 1514            Coates (R)
Title:                       Labor
Summary:             Relates to labor; creates the Worker Classification Act; provides short title; defines terms; construes liability for certain acts or omissions of certain persons; requires certain insurance; provides an rebuttable presumption for certain classification; declares certain persons employees; states conditions to determine certain classification; requires certain classification to meet certain definition and conditions; provides misdemeanor penalty for providing false information on certain affidavit.
02/07/2012           To Senate Committee on Business and Commerce.
 
PENNSYLVANIA
PA H 2540            Sabatina (D)
Title:                       Commercial Carrier Industry Independent Contractors
Summary:             Provides for the criteria for independent contractors in the commercial carrier industry and for the powers and duties of the Department of Labor and Industry and the Secretary of Labor and Industry; imposes penalties.
07/02/2012           To House Committee on Labor and Industry.
 
RHODE ISLAND
RI H 7564             Ucci (D)
Title:                       Labor Misclassification Records Checks
Summary:             Requires the disclosure by state agencies of certain labor-related information necessary to investigate certain violations including misclassification of employee status and wage and hour violations; amends the powers and duties of the tax administrator to include providing any state tax information, state records, or state documents to assist in investigations; provides for the confidentiality of materials to be maintained to the extent required.
06/25/2012           Signed by Governor. Public Law No. 2012-483
 
RI H 7996             Ucci (D)
Title:                       Labor and Labor Relations
Summary:             Would clarify the definition of independent contractor by providing a presumption that a person is an employee unless certain specific conditions are met. This act would take effect upon passage.
05/02/2012           In House Committee on Labor. Committee Recommends Measure held for further study.
 
RI S 2343              Jabour (D)
Title:                       Labor and Labor Relations
Summary:             Would clarify the definition of independent contractor by providing a presumption that a person is an employee unless certain specific conditions are met. This act would take effect upon passage.
03/14/2012           In Senate Committee on Labor: Committee recommends measure to be held for further study.
 
RI S 2527              Doyle (D)
Title:                       Labor and Labor Relations
Summary:             Would address the issue of employee and independent contractor classification. It would clarify the definition of employee in the workers' compensation and unemployment benefits context, would permit the sharing of information by and between state departments to encourage enforcement. In addition, it would expand the tools which detect and limit the misclassification of employees. Education of the labor and business communities on the issue and its ramifications is mandated.
03/14/2012           In Senate Committee on Labor: Committee recommends measure to be held for further study.
 
RI S 3039              Nesselbush (D)
Title:                       State Affairs and Government
Summary:             Requires the disclosure by state agencies of the Department of Labor and Training any state tax information, state records or state documents they or the request agency certify as necessary to investigate misclassification of employee status, wage and hour violations, or prevailing wage violations subject to the agency's jurisdiction.
06/25/2012           Signed by Governor. Public Law No. 2012-424
 
UTAH
UT S 121               Mayne K (D)
Title:                       Utah Labor Code and Waiver Issuance
Summary:             Modifies the Utah Labor Code to correct language regarding the issuance of waivers; removes incorrect language regarding insurers issuing workers' compensation coverage waivers; makes technical and conforming amendments; provides that the terms employee, worker, and operative do not include a person who operates a motor vehicle under a written agreement with a motor carrier and provides to the motor carrier proof that the individual is covered by occupational accident insurance.
03/22/2012           Signed by Governor. Chaptered. Chapter No. 346
 
VERMONT
VT H 746              Partridge (D)
Title:                       Cosmetologists
Summary:             Classifies a cosmetologist who rents a booth at a salon as an employee of the salon unless it can be shown that the salon has no right to control the methodology used by the cosmetologist to produce a result and that the cosmetologist pays the salon either a fixed percentage of his or her gross receipts or a flat fee.
02/16/2012           To House Committee on Commerce and Economic Development.
 
VT H 762              House Commerce and Economic Development Committee
Title:                       Workers' and Unemployment Compensation
Summary:             Amends numerous sections of law; regards notice requirements for employers and independent contractors, remuneration as an independent contractor, and the powers of the Commissioner of Labor.
04/25/2012           To Senate Committee on Economic Development, Housing and General Affairs.
 
VT S 146               Galbraith (D)
Title:                       Independent Contractor
Summary:             Proposes to direct the Commissioner of Labor to formulate a single definition of independent contractor for the workers' compensation and unemployment compensation statutes, and an easy to follow test for determining independent contractor status.
01/03/2012           To Senate Committee on Economic Development, Housing and General Affairs.
 
VT 8 2012             Executive Order 2012-08
Title:                       Governor's Task Force on Employee Misclassification
Summary:             Provides for the Governor's Task Force on Employee Misclassification.
09/12/12               Executive Order 2012-08 Issued
 
WASHINGTON
WA H 1701          Ormsby (D)
Title:                       Misclassification of Contractors
Summary:             Concerns the misclassification of contractors as independent contractors in the construction industry.
01/09/2012           2012 Regular Session Action.
 
WA H 2395          Sells (D)
Title:                       Drayage Truck Operators
Summary:             Regulates drayage truck operator coverage for purposes of employment protections against misclassification; facilitates collection of taxes.
04/11/2012           By Order of Resolution - Reintroduced and retained in present status.
 
WA S 5599           Kohl-Welles (D)
Title:                       Misclassification of Contractors
Summary:             Addresses the loss in state revenue through misclassification of workers as independent contractors in the construction industry.
04/11/2012           By Order of Resolution - Reintroduced and retained in present status.
 
WA S 6072           Kline (D)
Title:                       Retaliation for Conduct that Promotes Public Policy
Summary:             Protects employees from retaliation for conduct that promotes public policy; provides for the creation of a cause of action to protect employees or independent contractors from materially adverse actions in retaliation for conduct that promotes local, state, or federal public policy; provides that protected conduct includes refusing to commit an illegal act, performing a legal duty or obligations, exercising a legal right or privilege, and reporting employer misconduct and whistleblowing.
04/11/2012           By Order of Resolution - Reintroduced and retained in present status.
 
Source: StateNet legislative bill tracking database, year-end search, Nov. 19, 2012.