President’s Blog: NAHB Also Leading on Independent Contractor Issue

HBA President Matt Bailey

HBA of Greater Springfield President Matt Bailey

Note: This is part two of a two-part blog on this subject. To read part one, click here.

As part of its advocacy program on your behalf, the National Association of Home Builders (NAHB) is monitoring issues surrounding the status of independent contracting at the national level. There have been several federal developments on independent contractor status recently. While it is imperative we classify workers in accordance with the law – the law is certainly a moving target at this point.  The continuation of the independent contracting model is very important to the housing industry’s survival.

Legislation has been introduced in the House and Senate which would repeal the Section 530 safe harbor protections and would impose new reporting requirements on employers who do business with independent contractors.  The Fair Playing Field Act of 2012S.2145 and H.R. 4123, was introduced on March 1, 2012, by Senator John Kerry and Rep. Jim McDermott, respectively.  Each bill has gained a respectable number of co-sponsors and has been supported by key pro-labor Members of Congress and advocacy organizations.

NAHB has been working with the Coalition to Preserve Independent Contractor Status to combat the increased misclassification efforts.  NAHB Government Affairs is also working with Rep. Erik Paulsen on legislation which would codify the Section 530 safe harbor protections—legislation which is meant to serve as a counterpoint to the pro-labor/pro-enforcement efforts currently underway. Other organizations, such as the Marketing Research Association, contend that removing the 530 protections will hurt jobs and will not result in deficit reduction.

Additionally, the Obama Administration’s 2013 budget contains several proposals that would affect worker classification, including a repeal of Section 530, as well as a $14 million appropriation request for the Department of Labor to pursue worker misclassification efforts.  The $14 million appropriation proposal includes $10 million for grants to states to identify misclassification and recover unpaid taxes within the unemployment insurance system and $3.8 million for the Wage and Hour Division to detect and deter misclassification.  This appropriation request represents a 23% funding increase from the 2009 funding level.

With this in mind, the narrative indicates that the Wage and Hour Division has shifted away from complaint-directed audits to more directed investigations of companies.  The Wage and Hour Division intends to target, to some degree, the janitorial, construction, hotel and agricultural industries.

Thirteen states have also partnered with the Department of Labor through memorandums of understanding to “remedy misclassification” and collect unpaid taxes. Those states include Louisiana, California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington.