Joint Enforcement Task Force on Misclassified Employees
Date: May 28, 2009
Time: 9:00 AM
Location:
Contact:
Joint Enforcement Task Force on Misclassified Employees
Thursday, May 28, 2009
9:00 a.m.
Vinalhaven Conference Room
Maine Department of Transportation – Region II
Central Maine Commerce Center
Present – Maine Department of Labor
Jane Gilbert, Deputy Commissioner
Laura Boyett, Director, Bureau of Unemployment Compensation/Administration
William Peabody, Director, Bureau of Labor Standards
Julie Armstrong, Policy Development Specialist, Bureau of Unemployment
Compensation, Administration
Support Staff
John L. Rioux, Director, Technical Services Division
Lloyd Black, Unemployment Compensation/Tax
Chris Boudreau, Senior Policy Analyst, Center for Workforce Research and
Information
Terry Hathaway, Technical Services Division, Secretary
Workers’ Compensation Board
Paul Dionne, Executive Director
Steve Minkowsky, Deputy Director, Benefits Administration
Maine Department of Professional & Financial Regulation
Eric Cioppa, Deputy Superintendent, Bureau of Insurance
Benjamin Yardley, Staff Attorney, Bureau of Insurance
Attorney General’s Office
Janet T. Mills, Attorney General
Maine Revenue Services
Elaine Corrow, Tax Analyst
Maine Department of Administrative & Financial Services
Chip Gavin, Director, Bureau of General Services
Maine Human Rights Commission
Patricia Ryan, Executive Director
Maine Department of Transportation
Joyce Taylor, Assistant Director, Bureau of Project Development
Maine Housing Authority
Dan Brennan, Director of Development
Interested Party: John Leavitt, Business Manager, New England Regional Council of
Carpenters
Guest: Scott Bickford, Civil Engineer, Project Development, Maine Department of
Transportation
Deputy Commissioner Jane Gilbert, Co -Chair, called the fourth meeting of the Joint Enforcement Task Force on Misclassified Employees to order at 9:04 a.m.
Deputy Commissioner Gilbert had introductions as Julie Armstrong has been hired in the Bureau of Unemployment Compensation, Maine Department of Labor as staff support to the task force. Ms. Armstrong will be meeting with each member of the task force in the near future to discuss various issues regarding employee misclassification.
A couple of changes to the agenda were made. Pat Ryan will talk about the types of misclassification issues that are seen by the Human Rights Commission and how the Commission approaches these. Additionally, there will be discussion about task force activity plans and setting up subgroups to work on specific objectives.
Elations Payroll System – Joyce Taylor and Scott Bickford. Mr. Bickford did a power-point presentation explaining the Elations Payroll System. The MDOT bought this system with federal stimulus money. The benefits of the Elations Payroll System are that it saves staff time, reduces field people by five to ten percent, lists prime contractors, and lists subcontractors. The electronic form provides employee name, hours worked, rate of pay, various deductions, and classification. This system makes it easier to identify subcontractors and monitor contractor payrolls. Payrolls have to be in on time before payment is made.
Mr. Peabody inquired if this system can track workers’ compensation coverage. Mr. Bickford responded by saying that this is handled separately. The prime contractors need to show proof of workers’ compensation coverage before contract is awarded; showing proof of insurance is also part of the subcontractor approval process. Ms. Taylor added that the Civil Rights Office independently checks information; if there is an issue, the system “flags” it and the Civil Rights Office can visit projects.
Mr. Minkowsky asked what MDOT is looking at for proof of coverage. Scott responded that the Department requires a Certificate of Insurance as proof of workers compensation coverage. Should workers’ compensation coverage lapse, then MDOT receives notification from the insurer. Mr. Minkowsky suggested that MDOT should check with the insurer even when provided with the proof of coverage by the contractor. Mr. Dionne added that there is no follow-up on lapsed workers’ compensation coverage and “silos” need to be broken down between State agencies by sharing information.
Ms. Taylor stated that if a person has been misclassified afterwards, then it is difficult to find. This system has proven more timely in picking up problems with contracted services and that it has saved the department a lot of effort.
Child Support Enforcement – Janet Mills. Attorney General Mills explained that the Child Support Enforcement Office has legal rights to collect owed child support from nearly any income source. Currently, there are pending bills in the Legislature that may affect child support collection. Ms. Mills indicated child support collection is not affected by whether or not an individual is in an employee/employer relationship. The child support guidelines are found in the Federal as well as the State law. For child support, both of the parents’ income is considered and a dollar amount per child is determined (which changes at age 12). If a parent is unemployed or underemployed, child support is taken out of unemployment benefits, workers’ compensation payments, and social security disability payments and federal and state income tax refunds. Also, Child Support Enforcement can place a lien on property. They seek tax information from the Internal Revenue Service (IRS), but not Maine Revenue Services (MRS). Ms. Gilbert asked about 1099’s and Ms. Mills responded that they receive a quarterly report from the IRS. Ms. Mills stated that L.D. 300 will require employers to report to DHHS 1099 income paid in an amount of $2500 or more.
Human Rights Commission Case Load – Pat Ryan. Ms. Ryan gave a brief summary of the Human Rights Commission Case Load. She stated that out of 600 to 650 employers, only a small number will say that a person was NOT employed by them, but was contracted. Ms. Ryan handed out a sample memo regarding Human Rights Commission Standards for Determining Employer Status. It states that they “use the common law test to determine whether a respondent is an ‘employer’ as opposed to an ‘independent contractor,’ which considers the following factors:
(1) the existence of a contract for the performance by a person of a certain piece or kind of work at a fixed price;
(2) independent nature of the business or the distinct calling;
(3) the employment of assistants with the right to supervise their activities;
(4) the obligation to furnish necessary tools, supplies, and materials;
(5) the right to control the progress of the work except as to final results;
(6) the time for which the worker is employed;
(7) the method of payment, whether by time or by job;
(8) whether the work is part of the regular business of the employer.
Deputy Commissioner Gilbert asked if the Maine Human Right Commissions was finding in most cases that an employer/employee relationship exists. Ms. Ryan responded “yes”, in most cases the Maine Human Rights Commission finds an employment relationship, and that the Commission does not consider the whether the workers are paid pursuant to a 1099 or whether they are covered by workers’ compensation insurance.
Current Legislative Proposals regarding Independent Contractors and employment matters:
Paul Dionne handed out copies of L.D., 1456, “An Act to Ensure That Construction Workers Are Protected by Workers’ Compensation Insurance”. Mr. Dionne explained the history of this legislation and stated that this bill is a result of interested parties’ efforts to find common ground in defining “independent contractors” in construction occupations. These parties have come a long way, although some differences still remain. The bill proposes using a twelve-factor test to determine if a construction worker is an independent contractor, all of which must be met to be determined to be an independent contractor for workers compensation coverage purposes. Mr. Dionne believes the proposed test is superior to the currently used eight-factor test used for workers compensation coverage determination (as stated in 39-A MRSA §105-A). Mr. Dionne also encouraged the task force to develop a means to invite public input to the work of this group.
Mr. Peabody added that L.D., 1092, An Act To Improve Worksite Accountability for Public Construction Projects by Requiring Subcontractor Identification, is another legislative Bill that would cover all State projects, whether state or federally funded.
Jane Gilbert suggested that the group receive an update of the pending legislation at next month’s meeting.
Task Force Subcommittees:
Jane Gilbert would like to see a process set up that would facilitate task force communication with the public. Other states (Massachusetts, New Hampshire & New York), have had active subcommittees for outreach and communication.. She suggested that all subcommittees set up by the task force include a representative from Labor, Workers’ Compensation, and Maine Revenue Service at a minimum. Any subcommittee set up to look at legal issues needs to have representation from the Attorney General’s office.
A few States have three (3) subcommittees: legal, research and reporting, and outreach and education. Mr. Cioppa suggested that the subcommittees be “mapped” according to the Governor’s Executive Order. Janet Mills suggested that the public be able to provide input to the subcommittees.
Ms. Gilbert said that Ms. Armstrong will gather the information to map out the subgroups and coordinate their activities. It is hoped that by next month’s meeting, information will be sent out and we can establish the subgroups. Education and communication needs to get moving to get information out to the public.
Next Meeting – Thursday, June 25, 2009, 9:00 a.m., Vinalhaven Room, MDOT Region II, Central Maine Commerce Center.
Deputy Commissioner Gilbert adjourned the meeting at 10:19 a.m.
Respectfully submitted,
Terry M. Hathaway, Secretary
