As Vermont Legislators return to Montpelier this week after the Town Meeting Day break, there are a number of items on the docket.  I, for one, am hopeful that one of them is going to be significant progress on the important issue of independent contractors.  Specifically, I would like to see progress on H. 119, a bill I introduced with a bipartisan group of cosponsors.

 

As Vermonters know very well, our state has a long tradition of independence.  One manifestation of that independence throughout the years has been in work. 

 

For greater flexibility and autonomy, and greater control over their destinies, many Vermonters have chosen to work for themselves, and be what we now call independent contractors.

 

Over the course of the years, conflict has arisen with our worker’s compensation and unemployment insurance laws.  In the past, this conflict has mostly been in the construction industry – with general contractors hiring sub contractors to do specific parts of the job.  The Department of Labor or insurance companies themselves then determine through an audit that a subcontractor should have been classified as an employee.

 

This conflict has now reared its head in our new economy as well.  This new 21st century economy is fast growing, but is very different.  Instead of the traditional economy of an employer with many employees, in many ways it is an independent workforce coming together to collaborate on projects.

Couple this with the sharing economy, and we’ve got a new kind of independent workforce around which we must tailor our laws. 

 Every state in the country is trying to address this issue, but I have fought for years to have Vermont lead the charge.  If we can position ourselves as the place to come to work both independently and collaboratively, and do so successfully, we can attract this new workforce and start to address our significant demographic challenges.

One critical way to do this is to establish a common definition for independent contractor under both workers compensation and unemployment insurance.  This would do three things:  1) alleviate some of the incredible confusion among employers surrounding the various definitions and bring absolute clarity to the definition; 2) encourage and grow the independent workforce; and 3) ensure that those who should be classified as employees are classified as such by their employers.

 

So, what would H. 119 do?

It would explicitly define an independent contractor by requiring that six criteria be met by the individual:

1.     He/she has the essential right to control the means and progress of the work except as to the final results;

2.     He/She is customarily engaged in an independently established trade, occupation, profession, or business;

3.     He/She has a substantive investment in the facilities, tools, instruments, materials, and knowledge used by him or her to complete the work;

4.     He/She has the opportunity for profit and loss as a result of the services being performed for the employer;

5.     He/She hires and pays his or her employees, if any, and supervises the details of the employees’ work; and

6.     He/She makes his or her services available to the general public and is able to accept work for entities other than the employer, whether or not he or she chooses to do so.

In addition, at least two of the following five criteria have to be met as well:

1.     The individual is responsible for satisfactory completion of the work and may be held contractually responsible for failure to complete the work;

2.     The parties have a written contract that defines the relationship and gives the individual contractual rights in the event the contract is terminated by the employer prior to completion of the work;

3.     Payment to the individual is based on factors directly related to the work performed and not solely on the amount of time expended by him or her;

4.     The work is outside the usual course of business for which the service is performed;

5.     The individual has elected to file taxes as an independent contractor with the federal Internal Revenue Service.

I know this has been a tough row to hoe over the years, but I am hopeful there will be a different outcome this year.  It is far too important an issue to not see common sense changes to our labor laws.