IC Laws: State and City Laws Enacted and Federal Bills Proposed (Since July 2007)

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 If you find that a link is no longer active, kindly advise the publishers of this legal blog so we can update the link.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:

  • Portable Benefits for Independent Workers Pilot Program Act of 2017 (S. 1251)
  • Independent Contractor Tax Fairness and Simplification Act of 2015 (H.R. 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:

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: