From the Denver Business Journal, Ed Sealover reports that a bill to define an independent contractor was passed by the Colorado Senate. The proposed legislation sets forth 11 factors to be considered in determining whether a worker is an employee or independent contractor. If the worker satisfies 6 of the 11 factors, the worker can be classified as an independent contractor. Ed writes:
A late-session bill moving through the Legislature attempts to define parameters for Colorado Department of Revenue auditors who are investigating whether employers have given the proper pay and benefits to workers.
But while business groups back Senate Bill 269 as an overdue set of guidelines that will help company officials ensure they don’t mis-categorize their labor force, unions and left-leaning policy groups are fighting the measure by saying it will empower employers to cheat workers out of their earning to boost profits, and will reduce money that is going into the Unemployment Insurance Trust Fund.
The entire discussion around clarification of rules regarding independent contractors is tinged with accusations and distrust. Several attorneys who back SB 269, sponsored by Republican Sen. Ellen Roberts of Durango, described DOR auditors as state workers who target as many businesses as possible and acknowledge openly that they are looking to generate money for Colorado in whatever way they can.
“I don’t think Senate Bill 269 makes it easier to mis-classify someone as an independent contractor,” Roberts said, trying to prevent a calm voice in the sometimes emotional debate. “It gives better guardrails to businesses.”
Colorado currently has nine factors it considers in determining whether someone should be considered an independent contractor or an employee of a company who is eligible for unemployment insurance and receives protections under national labor laws, among other benefits.
But it leaves it up to state workers to determine how to weigh the factors in determining if businesses broke the law by classifying someone wrongly as a contractor.
SB 269 replaces that vague set of rules with 11 factors and declares that if an employee meets six of those 11, they are an independent contractor.
Colorado SB 269 provides, in part:
A PERSON MAY DEMONSTRATE A DE FACTO INDEPENDENT CONTRACTOR RELATIONSHIP IF THE PERSON ESTABLISHES BY A PREPONDERANCE OF THE EVIDENCE THAT AT LEAST SIX FACTORS LISTED IN SUBPARAGRAPHS (I) TO (XI) OF THIS PARAGRAPH (c) FAVOR A FINDING THAT AN INDIVIDUAL IS AN INDEPENDENT CONTRACTOR. THE FOLLOWING FACTORS FAVOR A FINDING THAT AN INDIVIDUAL IS AN INDEPENDENT CONTRACTOR:
(I) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT require the individual to work exclusively for the person for whom services are performed; except that the individual may choose to work exclusively for the said person for a finite period of time specified in the document;
(II) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT establish a quality standard for the individual; except thatsuch THE person can MAY provide plans and specifications regarding the work but cannot DOES NOT oversee the actual work or instruct the individual as to how the work will be performed;
(III) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT pay a salary or hourly rate; but rather a fixed or contract rate;
(IV) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT HAVE THE RIGHT TO terminate the work during the contract period WITHOUT CAUSE; unless the individual violates the terms of the contract or fails to produce a result that meets the specifications of the contract;
(V) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT provide more than minimal training for the individual;
(VI) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT provide tools or benefits to the individual; except that materials and equipment may be supplied;
(VII) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT dictate the time of performance; except that a completion schedule and a range of mutually agreeable work hours may be established;
(VIII) Pay the individual personally but rather makes checks payable to the trade or business name of the individual THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT PROHIBIT THE INDIVIDUAL FROM USING ASSISTANTS; and
(IX) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT combine his THE INDIVIDUAL’S business operations in any way with the individual’s business but instead maintains such operations as separate and distinct OPERATIONS OF THE PERSON FOR WHOM SERVICES ARE PERFORMED;
(X) THE INDIVIDUAL AND THE PERSON FOR WHOM SERVICES ARE PERFORMED HAVE EXECUTED A CONTRACT IDENTIFYING THE INDIVIDUAL AS AN INDEPENDENT CONTRACTOR; AND
(XI) THE PERSON FOR WHOM SERVICES ARE PERFORMED DOES NOT REQUIRE THE INDIVIDUAL TO PERFORM WORK ON THE PREMISES OF THE PERSON’S PLACE OF BUSINESS.