Federal and state legislative initiatives to curtail misclassification of Independent Contractors began in the second half of 2007, as noted in an early article on the topic co-authored by one of the publishers. Cities have also enacted ordinances related to independent contractors. The municipal laws are found after the state laws below.
Some links to the federal bills and state and local laws may no longer be active. If you find that a link is no longer active, kindly advise the publishers of this legal blog so we can update the link.
Federal IC Bills Proposed Since July 2007
There have been no federal laws enacted during this time due to an absence of Congressional consensus. See related blog post published on Nov. 26, 2012. The following are all of the IC bills proposed by members of Congress over the past decade:
- Independent Contractor Tax Fairness and Simplification Act of 2015 (HR 2483)
- Payroll Fraud Prevention Act of 2014 (H.R. 4611)
- Fair Playing Field Act of 2013 (S.1706)
- Payroll Fraud Prevention Act of 2013 (S.1687)
- Independent Contractor Tax Fairness and Simplification Act of 2012 (H.R. 6653)
- Fair Playing Field Act of 2012 (H.R. 4123)
- Employee Misclassification Prevention Act of 2011 (H.R. 3178)
- Payroll Fraud Prevention Act of 2011 (S. 770)
- Fair Playing Field Act of 2010 (H.R. 6128)
- Employee Misclassification Prevention Act of 2010 (S. 3254) and (H.R. 5107)
- Taxpayer Responsibility, Accountability, and Consistency (TRAC) Act of 2009 (S. 2882 and H.R. 3408)
- Employee Misclassification Prevention Act of 2008 (H.R. 6111) and (S.3648)
- Independent Contractor Proper Classification Act of 2007 (S. 2044)
The above list is not a statement of the governing tests for IC status under federal laws, such as the Fair Labor Standards Act (FLSA), the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act (ERISA), the Family and Medical Leave Act (FMLA), and Title VII of the Civil Rights Act of 1964. Those tests are well defined, and can be found in many places. See, e.g., Appendix IV to a July 2006 GAO Report on worker classification.
Court decisions interpreting such IC tests have evolved in the past ten years and been applied in a host of emerging work scenarios including the on-demand industry. Many of our blog posts address important court decisions under various federal laws.
Selected State IC Laws Enacted Since July 2007
The list below of new state laws is a compendium of legislation passed in the last 10 years addressing IC misclassification and the status of ICs. Most of these state laws are intended to create greater penalties for IC misclassification or to curtail the use of independent contractors, especially in selected industries where IC misclassification is regarded as prevalent by state legislatures. Some of the state laws create misclassification task forces at the state level among workplace, tax, and law enforcement agencies. Not all of the state laws seek to curtail the use of ICs; a few provide safe harbors for businesses using legitimate ICs.
Notably, although more than two dozen states have enacted laws pertaining to independent contractors since July 2007, all of those statutes permit the continued use of legitimate independent contractors – provided the IC relationship is structured, documented, and implemented in a compliant manner. See discussion in our White Paper at Section VIII.A.
The list below is not a substitute for thorough research about IC laws that existed in each state before the crackdown on independent contractor misclassification commenced in 2007. All states have long had laws governing the status of workers as independent contractors.
We have chosen not to provide readers of this blog with a listing of all existing state IC laws because such a list is not often a worthwhile or reliable guide to determining whether a worker is an independent contractor or employee.
Why? Because a test for IC status under a state’s wage and hour laws may differ from the test under the same state’s unemployment or workers’ compensation laws. Some states have statutory (legislative) definitions of employee vs. independent contractor status, other states use judicial tests. One of the most common statutory standards is an “ABC” test. Under those statutes, all of the prongs of a three-part test must be satisfied for a business to legally establish that a worker is an independent contractor.
To make matters a bit more challenging, it is not uncommon for one state to have an “ABC” test with language very comparable, if not identical, to another state’s “ABC” test, yet be interpreted by the courts in each state dramatically differently. This can lead to differing results as to whether a particular worker is an independent contractor or not from one state to another. At least one state’s “ABC” law – Massachusetts – is particularly challenging to meet, although there are ways to satisfy even that state’s onerous IC test. Because state law tests for IC status vary so much, we have referred to them in some of our blog posts as a ”crazy quilt set of state IC laws.”
These types of state statutory tests for IC status are generally regarded as more worker-friendly and more onerous to businesses than the “common law” or “economic realities” tests used by judges in interpreting and applying state IC laws in those states that do not have a statutory test.
Almost all state labor departments also place their tests for IC status on their websites, and these can be found rather quickly on the Internet. However, while some workforce agency websites set forth their state IC test in a way that is genuinely consistent with the governing statute or court decisions, other state regulatory agencies simply set forth their enforcement policy in a way that varies considerably from the applicable law. Further, in practice, it is not uncommon for regulators in some states to disregard their published standards when determining IC status.
Where a new IC law has changed an existing test for independent contractor status, the IC relationship may need to be re-examined. In some instances, there may be cause to restructure, re-document, and/or re-implement the IC relationship in a manner that complies with a new statutory scheme. Some businesses have used IC Diagnostics™ to enhance their level of IC compliance, as noted in Section VIII.A of our White Paper .
Below is a state-by-state listing of new IC laws enacted during the past decade. Several states have enacted more than one such law in the past 10 years:
- AR: Act to Regulate Motor Carriers in Relation to Workers’ Compensation Laws (S.B. 802) (enacted April 12, 2013)
- AZ: Act Defining “Indications of Control” (H.B.2150) (enacted 3/29/12)
- AZ: Law Creating Declaration of Independent Business Status (H.B. 2114) (eff. 8/6/16)
- CA: Independent Contractor Willful Misclassification Law (S.B.459) (enacted 10/9/11)
- CA: Law Requiring the Sharing of Civil Legal Responsibility and Liability with Labor Contractors (A.B. 1897) (enacted 9/28/14)
- CA: Law Prohibiting Cheerleaders in Professional Sports from Being Classified as Independent Contractors (A.B. 202) (eff. 1/1/16)
- CA: Act Offering Motor Carriers Employer Amnesty (A.B. 621) (enacted 10/10/16)
- CO: Misclassification of Employees as Independent Contractors Law for Purposes of the Colorado Employment Security Act (H.B. 09-1310) (enacted 6/09)
- CT: Act Concerning Employee Misclassification (S.B. 454) (eff. 7/1/08)
- CT: Act Implementing the Recommendations of the Joint Enforcement Commission on Employee Misclassification (H.B. 5204) (enacted May 5, 2010)
- CT: Act Concerning Certain Operators of Motor Vehicles and Eligibility for Unemployment Benefits (H.B. 06151) (eff. 10/1/13)
- DC: Wage Theft Prevention Amendment Act of 2014 (Act 20-426) (eff. 2/26/15)
- DE: Workplace Fraud Act (Title 19, Section 3501 et seq.) (enacted 7/31/09)
- FL: Act Defining the Term “Independent Contractor” (H.B. 311) (enacted 5/4/11)
- IL: Employee Classification Act (820 ILCS 185) (eff.1/1/08)
- IL: Act Amending Portions of the Employee Classification Act (H.B. 923 and H.B. 2649) (eff. 1/1/14)
- IN: Independent Contractor Information Sharing Law (S.B. 0478) (eff. 7/1/09)
- KS: Misclassification of Employees to Avoid Tax Withholding, Contributions and Reporting Requirements (H.B. 2135) (enacted May 12, 2011)
- LA: Act Providing Graduated Penalties for Misclassification (S.B. 472) (eff. 8/1/12)
- MA: Independent Contractor Misclassification Law (enacted 1990, as amended 1992, 1993, 1998, 2004) [Editors’ Note: Included here but passed prior to July 2007]
- MD: Workplace Fraud Act of 2009 (S.B. 909) (enacted May 7, 2009)
- MD: Amendments to Workplace Fraud Act (S.B. 272) (enacted 5/2/12)
- ME: Act to Ensure that Construction Workers are Protected by Workers’ Compensation (LD 1456, HP1008) (eff. 1/1/10)
- ME: Independent Contractor Status of Truckers and Couriers (LD 1099, SP 332) (eff. 5/31/11)
- ME: Uniform Definition of Independent Contractor for Unemployment Purposes (LD1420, HP437) (eff. 6/10/11)
- ME: Act Standardizing the Definition of Independent Contractor (PUBLIC Law, Chapter 643, LD 1314) (eff. 1/1/13)
- MN: Act Clarifying Definition of Independent Contractor and Creating Pilot Project for Construction Contractors (S.F. 1653) (enacted 5/14/12)
- MN: Independent Contractor Law (MN Stat. 181.723) (eff. 7/1/08)
- NE: Employee Classification Act (for Construction and Delivery Services) (LB 563) (eff. 7/15/10)
- NH: Act Relative to the Definition of Employee (S.B. 92) (eff. 1/1/08)
- NJ: Construction Industry Independent Contractor Act (N.J.S.A. 34:20-1 et seq.) (enacted 7/13/07)
- NY: Construction Industry Fair Play Act (S 5847C) (A 8237A-2010) (enacted 8/27/10)
- NY: Commercial Goods Transportation Industry Fair Play Act (A. 8451-2013) (eff. 4/10/14)
- NV: Act Establishing Uniform Definition of Independent Contractor (S.B. 224) (enacted 6/2/15)
- PA: Construction Workplace Misclassification Act (H 400) (enacted 10/13/10; eff. 2/10/11)
- RI: Suspected Misclassification Information Sharing Law (H 7564) (enacted 6/25/12; eff. 6/25/12)
- TN: Misclassification of Employees in Construction Services (HB833) (eff.7/1/13)
- TX: Proper Classification of Workers Performing Services in Connection with Governmental Contracts (H.B. 2015) (eff. 1/1/14)
- UT: Independent Contractor Database Act (S.B. 189) (2008)
- UT: Amendments to Workers Compensation Laws Regarding Independent Contractor Misclassification (S.B. 159) (2008)
- UT: Worker Classification Coordinated Enforcement (S.B. 11) (enacted 3/7/11)
- UT: Construction Licensees Related Amendments (S.B. 35) (enacted 3/30/11)
- VA: Amendment to Workers’ Compensation Law Increasing Penalties for Failure to Cover Employees (H. 458) (eff. 7/1/14)
- WA: Determination of Independent Contractor Status Law (H.B. 1701) (eff. 6/12/08)
- WI: Worker Classification Compliance Law (S.B. 672) (eff. 1/1/11)
Selected City IC Laws Enacted Since 2015
In addition to state legislatures enacting new IC laws in the past decade, some municipalities, beginning in 2015, have enacted local ordinances governing independent contractors. Those laws are as follows:
- New York City, NY: Freelance Isn’t Free Act (No. 1017-2015) (enacted 11/16/16)
- Seattle, WA: Ordinance Permitting Ride-Hailing Drivers to Unionize (C.B. 118499, Version 2) (approved 12/14/15) (under court challenge)