BY Colleen Quinn, State House News Service
BOSTON, STATE HOUSE, NOV. 3, 2011…Dozens of self-employed workers urged lawmakers Thursday to change the state’s independent contractor law, arguing it prevents them from getting work in an already tough economy.
The 2004 independent contractor law – aimed at preventing companies from outsourcing work to skirt paying payroll taxes and other benefits – created unintended consequences in a range of fields, from hairdressers and artists, to graphic designers and accountants, advocates to change the law said during a hearing Thursday before the Joint Committee on Labor and Workforce Development.
But workers in lower-wage jobs said the law protects them by ensuring they are provided benefits, and asked legislators to think twice before they undo it.
The definition of independent contractor is too restrictive, and makes it nearly impossible for anyone to meet the criteria, several people who testified said. So, in order to avoid breaking the law, many companies just steer clear of hiring independent contractors who live in Massachusetts.
Sen. Michael Rodrigues (D-Westport), who is co-sponsoring a bill to change the law, said the current law is “overly broad.”
To be considered an independent contractor, state law requires the person meet three criteria. The person must operate free from control and direction from the hiring company; the work or service is performed outside the usual course of business of the employer; and the individual is customarily engaged in an independently established trade, occupation, profession of the same nature as that involved in the service they are performing.
Rep. Martha Walz (D-Boston), who filed the legislation (H 1412), said the law drives business out of the state, and she has talked to many independent contractors who say they lose work frequently to people in other states. Advocates for changes to the law have waged a fight for the past five years.
“The way the law is written now, it is almost impossible for anyone to be an independent contractor in Massachusetts,” Walz said.
Sen. Daniel Wolf (D-Harwich), who co-chairs the committee along with Rep. Cheryl Coakley-Rivera, said he would form a working group with people from both sides of the issue.
The hearing became charged on a few occasions, when workers told stories of being turned away from jobs because of the state’s law, while others described working for one company for years only to find out they were classified as independent contractors and denied benefits when they needed them.
Scott Cook, of Malden, drove a cab and a school van for a transportation company for 25 years. He was getting luggage out of his cab one day for a passenger when the car was rear-ended, with him standing behind it. He lost his leg.
“When I applied for workmen’s comp, I was denied because they said I was an independent contractor,” he said. “I had no insurance. No money coming in. I was appalled the cab company would deny me after all those years.”
Harold Lichten, an employment attorney, urged committee members not to change the law, and said the crux of the problem is faced by people in lower-paying jobs who often have no choice but to take jobs where they were defined as independent contractors. Companies in the cleaning industry, transportation businesses, and delivery services -who often hire immigrants – are the biggest corporate culprits in cases he has litigated, Lichten said.
“In all these cases, hundreds of people we have represented, they didn’t want to work as independent contractors, they were told they had to be, or they could not work,” Lichten said.
Changing the law would “throw the baby out with the bath water” by eliminating the safeguards in place for people in low-paying positions, Lichten said.
Attorneys on the flip side of the argument said the law is confusing, and does not prevent all the abuses it was designed to eliminate. Robert Shea, an employment lawyer who represents companies, called the law “the harshest law in the country.”
“The law has caused serious problems and confusion for businesses,” Shea said.
One out of three workers is self-employed, according to the Associated Industries of Massachusetts, which is pushing for changes to the law. Independent or freelance jobs continue to grow, rising by 156,000 nationally in 2011, according to AIM.
Candi Laura, a Taunton resident, said she decided to become an independent contractor working out of her home when she became a mother. She worked for a call center that employed 20,000 people from their homes. Years later, she looked for another job, but couldn’t find one, she said.
“None of the other companies would hire me because I reside in the state of Massachusetts,” Laura said, becoming choked up.
“At a time when unemployment is so very high, it is very hard to know why my government is holding me back from being a productive citizen,” she said. “This law is an injustice that needs to be changed.”
Sen. Kenneth Donnelly (D-Arlington) cautioned committee members to “be careful with this law.”
“We can’t get back to where we were before when companies were avoiding their payroll taxes,” he said. “Even though we want to make sure we are competitive, we don’t want that to tilt the other way where it becomes an advantage not to have employees, and to hire independent contractors.”
BY Colleen Quinn, State House News Service