Contractor bill shipped back

Last November, the Office of the Legislative Auditor provided the Legislature a report on the misclassification of employees as independent contractors. The report said that using independent contractors significantly reduces labor costs for companies, but it also means that those workers do not have access to company benefits and protections.

The report went on to recommend that the responsible state agencies work with the Legislature to conduct audits of various companies, and that the Legislature should authorize penalties for repeated misclassification of employees.

A bill sponsored by Rep. Sheldon Johnson (DFL-St. Paul) and Sen. David Tomassoni (DFL-Chisholm), would require the commissioner of employment and economic development to conduct these audits. However, the bill also would have created a problematic exemption to the rules dictating whether certain owner-operators of licensed vehicles could be designated as independent contractors.

During the March 31 floor discussion, House Minority Leader Marty Seifert (R-Marshall) said that he had heard concerns from many of his constituents — mostly small business owners — and that more public testimony was needed. Seifert unsuccessfully made a motion that the bill be re-referred back to the House Commerce and Labor Committee.

Already approved 60-5 by the Senate on March 19, the bill was approved by the House 84-44. It was not, however, approved by the governor.

“The bill singles out owner-operators who ‘deliver shipments less than 250 pounds per parcel’ for different treatment than other carriers. Nothing in connection with the existing criteria would suggest that the criteria are more or less appropriate for the industry on the basis of the size or weight of the individual items being transported,” Gov. Tim Pawlenty said in his April 4 veto letter. He called the weight designation arbitrary, “with no rational basis,” and said it would “certainly create unwarranted confusion in the industry.”

Pawlenty also said that the legislative auditor’s report found that the number of trucking industry cases involving misclassified workers was “no greater than other industries,” and that current law was adequate.

HF3296/SF2688*/CH172