NFIB/RI Urges Lawmakers to Reject Massachusetts Model for Independnet Contractor Reform

Date: April 07, 2014

Providence (April 7, 2014)Bill Vernon
of the National Federation of Independent Business (NFIB),
which represents
roughly 1,000 small businesses in Rhode Island, today joined the Providence Chamber of Commerce at a
press conference calling on lawmakers to reject a measure that they say will
make it much harder for local independent contractors to remain competitive and
find work.  Below is his statement:

“In 2004, to clean up widely recognized
abuses in construction contracting, the Mass legislature attempted to amend its
independent contractor law. At the time Massachusetts had the toughest
Independent Contractor law in the country, but employees were still being
forced by some abusive construction firms to work as independent contractors
when they were actually employees, that is, working under the direction and
control of the firm that used their services.

“But at the last minute, the agreed to
changes to the independent contractor law – agreed to by the legislature and
the governor – were removed and the substituted harsher text reached the
governor’s desk and was signed into law. The current law essentially prohibits
companies from ever using independent contractors to do service work in their
“usual course of business,” a broad phrase that Massachusetts courts
interpret broadly.

“For example, accountants cannot
currently hire additional independent contractor accountants at tax time, law
firms cannot engage specialized lawyers or court stenographers as independent
contractors for specific needs on a case, manufacturers cannot sub out
engineering design problems to consulting engineers. These workers are properly
classified as employees under Massachusetts law no matter how short a period of
time they are employed.

“In practical effect, the existing
Massachusetts independent contractor law prohibits new service businesses in
400 occupations from forming and growing. The law hurts 1.4 million people in
the 400 occupations, and, according to statistics from the Kaufmann Foundation
in Kansas City and New Jobs for Massachusetts in Boston, the Massachusetts
independent contractor law prevents the creation of 43,400 new service jobs
every year.

“The law hurts older workers trying to
use their experience and earn more money, mothers with children returning to
the labor force, recent graduates with marketable skills who cannot find
salaried work in Massachusetts, and anyone who wants to contract to do work
they find at the online project referral websites such as eLance and oDesk,
among 70 such sites.

“In Massachusetts, NFIB is actively
working on behalf of small business owners and entrepreneurs to change the law
and boost the economy. In Rhode Island, where we cannot afford to lose one job
or fail to create another, NFIB is opposed to efforts to change the definition
of an independent contractor and retain the definition consistently followed by
the IRS, the RI Department of Revenue and other state RI state agencies, and in
48 other states.”

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