Simplifying independent contractors rules helps workers, businesses, taxpayers

This is the latest edition of the weekly Legislative Update newsletter from the Washington State Labor Council, AFL-CIO. If you didn’t receive it via email, subscribe to The Stand and you’ll get the Legislative Updates and all of the WSLC’s other legislative reports. 

OLYMPIA (Jan. 25, 2019) — When are workers considered employees, and when can they be considered independent contractors? The answer is complicated, but a lot is at stake in the question.

Employees who are wrongly classified as independent contractors have a lot to lose, including minimum wage protections, overtime pay, unemployment insurance if they get laid off, workers’ compensation coverage if they are injured at work, and other protections that most of us take for granted.

Employers that misclassify workers — either intentionally or unintentionally — shift their labor costs onto other businesses, taxpayers, and the workers themselves. This harms businesses that pay proper employment taxes, it weakens the middle class by denying workers access to basic job protections and social safety nets, and it robs the state of much-needed revenue.

The Washington State Labor Council, AFL-CIO is strongly supporting legislation to simplify and clarify our state’s employee classification system and those companion bills will get public hearings on Monday, Jan. 28. SB 5513, sponsored by Sen. Karen Keiser (D-Kent), will be heard at 10 a.m. in Senate Labor and Commerce Committee. HB 1515, sponsored by Rep. Marcus Riccelli (D-Spokane), will get a hearing at 1:30 p.m. in the House Labor & Workplace Standards Committee.

SB 5513/HB 1515 would create one clear test to determine who is truly an independent contractor so that the rules are the same for the minimum wage, prevailing wage, workers’ compensation, and unemployment insurance, which currently use differing tests to answer the question. These bills also create enforcement provisions so workers who are misclassified as independent contractors can more easily correct their status.

Independent contractor misclassification has become a pernicious problem across the United States. The U.S. Department of Labor has found that as many as 30 percent of firms misclassify their employees as independent contractors, and studies commissioned by state governments often cite estimates that are even higher. Misclassification is common in occupations ranging from transportation/delivery to home care, from janitorial to technology, and in countless other industries. These arrangements — in some cases presented to workers as “take it or leave it” propositions — strip workers of all labor rights. Many service industry jobs affected by this practice are disproportionately held by workers of color.

This legislation would NOT eliminate independent contractors. It simply clarifies that to classify workers as independent contractors, that contractor must truly be independent.

Some choose to work as independent contractors by selling products to friends and family from their home, or by renting booths in a salon or a barbershop. SB 5513/HB 1515 ensures they could continue to do so. The legislation explicitly carves out their arrangements as legal, as it does for people who work independently selling products from Mary Kay, Avon, Vector, Rodan+Fields, and other network marketing companies. Under the bills, the classifications of such workers as independent contractors would stay the same.

SB 5513/HB 1515 specifically addresses workers who are wrongly classified as independent and therefore have the worst of both worlds. They lack the freedom to set their own rates and choose their own customers that is the hallmark of a truly independent business. But they also lack access to the rights and benefits traditionally associated with employment.

The WSLC urges all state legislators to support these important bills.

A ‘right-to-work’ bill we can support

Conservatives bent on undermining and destroying unions call the legislation intended to accomplish those goals “right to work.” Of course, it has nothing to do with granting someone the ability to work. Who doesn’t have the right to work?!

Well, actually, there are people denied the right to work in their chosen professions by pernicious “non-competition agreements.” These contracts, often signed by workers as a condition of their hiring, restrict them from finding better jobs in their industry.

Originally intended to protect a company’s “investment” in executives or highly paid managers who might unfairly take their knowledge to a rival company, these contracts have proliferated in recent years and are now required of many middlle-class and low-wage workers. A New York Times exposé found they were required in professions “from event planners to chefs to investment fund managers to yoga instructors.” Even fast-food employees.

The state of New York had to take the Jimmy John’s sandwich chain to court over its requirement that employees not take jobs for rival fast-food companies. New York’s attorney general said it was “unconscionable (to) limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued.”

SB 5478/HB 1450 would regulate non-competition agreements in Washington state to ensure they aren’t being used to exploit workers and deny them the opportunities to find better jobs. SB 5478 will be heard at 8 a.m. Tuesday, Jan 29 in Senate Labor & Commerce, and HB 1450 will be heard at 8 a.m. Thursday, Jan. 31 in House Labor & Workplace Standards.

The WSLC supports these bills that are truly about the right to work.

AAG! Don’t deny their right to join together.

Under current law, assistant attorneys general are denied the right to join together and collectively negotiate a fair return for their work. Appointed by the state Attorney General who sets their compensation, these AAGs are explicitly excluded from state civil service laws.

HB 1299/SB 5297 would grant AAGs collective bargaining rights, an idea supported by Attorney General Bob Ferguson. These companion bills, sponsored by Rep. Laurie Dolan (D-Olympia) and Sen. Sam Hunt (D-Olympia), were heard in their respective labor committees this week.

The Washington Federation of State Employees, AFSCME Council 28 and the Office of the Attorney General testified in support of both bills. The WSLC urges passage of this legislation.

Last chance to sign up for WSLC’s Jan. 30-31 events

All union leaders, staff, and especially rank-and-file members are invited to attend the WSLC’s 2019 Legislative Reception and Lobbying Conference, which is set for Jan. 30-31 at the Hotel RL (Red Lion), 2300 Evergreen Park Dr. SW, in Olympia. Join us to learn more about the issues important to Washington’s working families and the state’s labor movement.

The Legislative Reception will be Wednesday, Jan. 30 from 6:30 to 8:30 p.m. at the hotel. This is a great opportunity for union members to meet and mix with legislators, other elected state officials, and agency directors and staff in an informal setting.

The following morning, Thursday, Jan. 31, the WSLC Lobbying Conference begins at the hotel at 8:30 a.m. — registration opens at 7:30 a.m. — with a brief legislative lobbying training and review of the most pressing issues facing working families, then delegates will take buses to the Capitol to meet with their legislators on these issues. Buses will bring delegates back to the hotel for lunch and a quick debriefing and be finished by about 2 p.m.

Register online. The $110 registration fee covers admission, drinks and hors d’oeuvres at the WSLC Legislative Reception on Wednesday night, plus lunch and materials for the WSLC Legislative Lobbying Day on Thursday. You can also register guests for only the Reception for $20/person. Preregistration is especially important because the WSLC will be making Thursday’s appointments with state legislators in advance, so if you plan to attend, sign up now!

If you have any questions, email Willa Kamakahi or call her at 206-254-4913.

The WSLC Legislative Update is a weekly newsletter of the Washington State Labor Council, AFL-CIO. It describes legislation of particular concern to Washington’s working families during throughout the state legislative session. Links to previous editions are available here. Additional legislative news is posted at The Stand’s State Government section.