“IC-Neutral” legislation, rule-making and court decisions refers to new and proposed laws and regulations and new judicial rulings that do not penalize legitimate independent contractor (IC) relationships or alter the test for IC status, but are intended to focus on the misclassification of employees as ICs and, in particular, intentional IC misclassification. Such laws would include those that deter or discourage IC misclassification by, among other things, increased penalties or other sanctions for improper classification of employees as ICs.
“IC-Minus” legislation, rule-making and court decisions refers to new and proposed laws and regulations and new judicial rulings that are intended to or will result in curtailing legitimate IC relationships by, among other things, altering existing tests for IC status so that those who would otherwise qualify as ICs under the common law or other existing legal tests for IC status will now become “employees” and the maintenance of previously lawful IC relationships will become unlawful.
“IC-Neutral” and “IC-Minus” legislation and rule-making is often a result of political and economic interests being articulated through legislative or administrative change.
Certain of the state laws enacted since July 2007 (as catalogued in the preceding page under Resources / Links) are IC-Neutral while others are IC-Minus.
The following are selected articles, blog posts, and publications that address the issue of IC-Neutral or IC-Minus laws, rule-making and judicial decisions:
- “The Labor Department’s Latest Independent Contractor Misclassification Web Page,” issued on December 19, 2016, was the subject of a post by one of the publishers of this blog, noting that the new web page is likely to confound viewers in its imprecise references to the tests for IC status under federal laws governing independent contractors. (Publishers’ note: The incoming Wage and Hour Administrator under the new President is likely to remove this web page or modify it to ensure it is less likely to confound viewers. The web page was modified once before, apparently in response to an August 22, 2016 blog post pointing out that it contained misleading information.
- “New York’s Highest Court Issues IC-Friendly Ruling,” analyzes an October 25, 2016 decision by the New York Court of Appeals affirming that New York’s highest court supports the use of properly classified independent contractors and recognizes that some facts that are just as readily required of an IC as of an employee cannot be used by administrative agencies and lower courts in New York to defeat a worker’s classification as an independent contractor.
- “NLRB General Counsel Creates a ‘Misclassification-Plus’ Unfair Labor Practice,” comments on a Advice Division memorandum released on August 26, 2016, where the General Counsel of the NLRB concludes that IC misclassification is a violation of the National Labor Relations Act, particularly when accompanied by other alleged labor law violations. See also “Is the NLRB Trying to Make Independent Contractor Misclassification an Unfair Labor Practice?” (Publishers’ note: The General Counsel’s term expires in 2017 and his successor is unlikely to take the same view of IC misclassification as a violation of the NLRA.)
- Administrator’s Interpretation No. 2015-1, a 15-page Interpretation addressing the misclassification of employees as independent contractors under the federal Fair Labor Standards Act (FLSA). The Interpretation set forth the test to be used by the Labor Department in enforcing its wage and hour laws against companies that classify workers as independent contractors. The publishers of this blog commented that it was nothing new, different, or dramatic, and was inconsistent with the test used by the federal courts in interpreting and applying the FLSA in many cases.
- “Misclassification of Independent Contractors: The Crackdown, Its Costs, and How to Minimize or Avoid Its Risks,” a three-part series published by Law 360 on July 7-9, 2015, authored by the publishers of this legal blog. The series was based on the publishers’ 2015 Update to their White Paper, which included an analysis of legislative initiatives since 2007 and noted that no state or federal laws prohibit the use of independent contractors who are properly classified in accordance with applicable laws.
- “(In)dependent Contractor Misclassification,” a working paper issued on June 8, 2015 by The Economic Policy Institute, a nonpartisan think tank, whose author assails the use of independent contractors but recognizes that one of the causes of IC misclassification is “ignorance” of the laws and can be the result of “honest mistakes on the part of businesses.” The working paper, which was the subject of a blog post on June 12, 2015, advocates an increase in fines for intentional independent contractor misclassification rather than a wholesale change in the legal tests for determining independent contractor status, which, the author notes, differ considerably under various federal and state laws.
- “Why We’re All Becoming Independent Contractors,” a blog post by Robert Reich in the Huffington Post on February 22, 2015 (former U.S. Secretary of Labor proposes that federal agencies such as the Labor Department and the IRS exercise their power to engage in rule-making would effectively overturn most court cases and administrative determinations in favor of companies found to have properly classified individuals as 1099ers, requiring them to abandon their lawful enterprises after years of being in full compliance, or face IC misclassification liability if they wished to continue their business).
- “New Jersey Supreme Court Sets Low Bar for Workers Who Sue for Independent Contractor Misclassification,” Pepper Hamilton Client Alert, January 15, 2015 (commenting on court adopting a statutory test for IC status in New Jersey that may render illegal under the state’s wage and hour laws many previously permissible IC relationships).
- New California Law Imposes Costly Risks to Companies Using Independent Contractors Supplied by Staffing and Recruiting Firms – But Risks Can Be Minimized, blog post on this site on October 1, 2014.
- Major Change in Law of Independent Contractors: The New York Commercial Goods Transportation Fair Play Act, New York Law Journal, November 27, 2013 (commenting on law changing common law test for IC status in commercial goods transportation industry in New York to a statutory test that rendered unlawful many previously lawful IC relationships with independent drivers).
- New Jersey Governor Vetoes Truck Operator Independent Contractor Act, But Misclassification Remains a Concern for Businesses in that State, blog post on this site on September 9, 2013 (vetoed law would have changed the test for IC status of truck operators in New Jersey).
- Illinois Governor Signs Two New Independent Contractor Laws to Deter Misclassification, blog post on this site on July 23, 2013.
- Comments Submitted on Worker Classification Study to U.S. Department of Labor, blog post on this site on March 19, 2013.
- Fair Playing Field Act of 2012: Congress Trying Again to End ‘Safe Harbor’ for Businesses that May Have Misclassified Employees as Independent Contractors, Pepper Hamilton Client Alert, March 5, 2012.
- Congress Reintroduces the Employee Misclassification Prevention Act that Would Make Misclassification of Employees as Independent Contractors a Federal Offense, Pepper Hamilton Client Alert, October 17, 2011.
- California Joins Growing Number of States to Enact Independent Contractor Misclassification Legislation: State adds new, costly penalties for willful misclassification, but protects the right of businesses to continue to legitimately use independent contractors, blog post on this site on October 12, 2011.
- The Payroll Fraud Prevention Act: New Congressional Bill Seeks to Crack Down on Independent Contractor Misclassification Pepper Hamilton Client Alert – April 14, 2011.
- Congressional Research Service: Tax Gap: Misclassification of Employees as Independent Contractors, by James M. Bickley (Mar. 10, 2011) at pages 6-8 (benefits and costs of proposed IC legislation).
- “Maine Governor Takes Positive Step to Clarify State Independent Contractor Laws,” blog post on this site on January 25, 2011.
- “Congressional Bills Intended to Clarify Independent Contractor Status Would Instead Create Confusion for Employers Seeking to Avoid Misclassification Liability,” Pepper Hamilton, November 3, 2010.
- Pennsylvania Cracks Down on Independent Contractor Misclassification in the Construction Industry: Governor Signs Law that Imposes Strict Standards, Substantial Fines and Criminal Penalties . Pepper Hamilton Client Alert, October 14, 2010.
- Fair Playing Field Act of 2010 Would End ‘Safe Harbor’ for Businesses Misclassifying Employees as Independent Contractors Pepper Hamilton Client Alert, September 17, 2010.
- “NYS Construction Industry Fair Play Act: An End to Independent Contractors?” New York Law Journal, September 09, 2010.
- Senate Committee Moves Ahead with Federal Bill Outlawing Misclassification of Employees as Independent Contractors, blog post on this site on June 25, 2010.
- GAO 2009 Report: GAO-09-717: Employee Misclassification, August 2009, at pages 37-39 (benefits and drawbacks of GAO options, including IC legislation)
- Congress Moves to Make Employee Misclassification a Federal Labor Law Violation: In Response, Pepper Creates Independent Contractor Compliance Practice Group, Pepper Hamilton Client Alert, April 26, 2010.