IC Alert: Maine, Mississippi and Virginia

The Independent Contractor Monitor

[Reprinted with permission from Contractor Management Services, LLC]

Due to the rising concern and growing attention to the Independent Contractor (IC) model, CMS will begin sending, on a semi-regular basis, e-mail updates of legislation and other key developments.  CMS maintains a comprehensive database of IC compliance rulings, regulations, court decisions and laws covering local, state and federal agencies.  We also regularly monitor proposed legislation and other developments, across the country, that may have an impact, directly or indirectly, favorable or unfavorable, on the use of independent contractors.  Many of you probably already monitor what is happening in your own states, however, it is important that we all keep informed of the trends and happenings across the country. Through regular newsletters, CMS is taking the lead in making sure that everyone is aware of the issues, nationwide, regarding the use of independent contractors because with awareness comes the appropriate action. 

If you would like others to receive these updates, please use the following link: http://www.icadvantage.com/Email.asp.  [Editor’s note: Courier Magazine will also publish these updates on our website as they become available.]

Maine

In Maine, 2005 ME House Paper 1287 (involving unemployment compensation claims) was recently introduced.  This proposal (2005 H.P. 1287) flattens the traditional ABC test.  In order to qualify as an IC under H.P. 1287, the worker must still be free from control and direction over performance of the work (the A factor).  However, unlike the traditional ABC test that requires compliance with all three factors, H.P. 1287 only requires the worker be free from direction and control and (1) the service performed is either outside the usual course of the business for whom the services are provided or is performed outside all places of the business for whom the service is provided (the B factor), or (2) the worker is customarily engaged in an independently established trade, occupation, profession or business.

Those who operate in Maine should contact their state legislatures and voice support for H.P. 1287.  And, those who do not operate in Maine, but know others who do, should encourage those operating in Maine to actively support H.P. 1287.  It may only be one state, but each state counts

Mississippi

In Mississippi, Senate Bill No. 2181 (2006 S.B. 2181) was recently introduced.  The title of 2006 S.B. 2181 is encouraging: An Act ... to Provide that Certain Owner/Operators of Motor Vehicles are Independent Contractors and are Exempt from the Provisions of the Workers’ Compensation Law.  If approved, this bill will expressly provide that the term employee does not include an owner/operator of a motor vehicle who leases his vehicular equipment with a driver to a motor carrier under a written contract.  Such owner/operators will be considered independent contractors exempt from the provisions of the workers’ compensation statutes.

S.B. 2181 recognizes the need for workers operating as independent contractors to be protected in the event of injuries incurred while being self-employed.  S.B. 2181 will require owner/operators to provide for himself and his employees or drivers coverage under a workers’ compensation insurance policy or an authorized occupational policy.  The bill expressly states that the motor carriers utilizing the services of an owner/operator are not liable for an owner/operator’s failure to provide coverage for himself or his employees or other drivers.  This Bill deserves the industry’s full support.

Virginia

In Virginia, House Bill No. 168 (2006 Session) was submitted on December 29, 2005.  House Bill 168 will make it a criminal offense for any person to knowingly coerce, induce, or threaten an individual falsely to declare himself to be an independent contractor or falsely to claim that an individual employed by such person is an independent contractor in order to avoid or evade the withholding or payment of taxes required by law to be paid for employees.  The penalty, in addition to any other penalty available for a class one misdemeanor offense (jail time of less than one year), shall be the greater of (1) the taxes that would have otherwise been due for the person wrongly classified as an independent contractor or (2) $10,000.

The criminalization of what, in most cases, is merely a misunderstanding or lack of understanding of the laws surrounding the use of independent contractors is overkill.  The penalties (assessment of back taxes, interest and fines) already available are sufficient to penalize those who erroneously, and usually unintentionally, labeled their workforce as independent contractors when they should have been labeled and reported as employees.  Anyone who uses, has ever used, or thinks they may use, the services of an independent contractor in Virginia should be concerned about this bill.


Dennis P. Roccaforte
President - Contractor Management Services, LLC.

If you would like to speak to a CMS representative you can contact us at (800) 742-7508 or visit our website at www.ICTheRightWay.com.