Two-part definition emerges in N.H. independent contractor debate

By Deutsch Fetisch (Own work) [CC BY-SA 3.0 ( or GFDL , via Wikimedia Commons

From New Hampshire Business Review, Bob Sanders writes about a new proposed definition of independent contractor that is being considered by the New Hampshire legislature.  He reports that the bill was the effort of trying to merge definitions.  He writes about the criteria and opinions in favor of and opposed to the new definition.  He says:

The criteria

In order not to be considered an employee, an independent contractor would have to: control the manner of work; have the opportunity for profit and loss; perform services customarily engaged in as an independent established trade; hire and pay his own assistant; and get paid based on the agreed scope of work performed. Under the bill, all of those criteria would have to be met.

But, in addition, a contractor would have to satisfy three of the following six criteria: have substantial investments in facilities; own tools and instruments; be held to a satisfactory completion of work; have a written contract; perform work outside the usual course of business of the hiring unit; work outside the hiring unit’s place of business; or the Internal Revenue Service has classified him or her as an independent contractor.

But the three-of-six criteria troubled Sen. Dan Feltes, D-Concord, who testified against the bill.

The bill would mean that one of the three criteria for unemployment compensation would now be optional, and as a result, “More people will signed as independent contractors. And that means more people who lose their job won’t get unemployment insurance.”

Feltes cited a recent report on the Maine law on which HB 450 is based that shows that the law resulted in more misclassification of workers since it went into effect.

But the report said that increase could be partly due to tougher federal enforcement requirements resulting in more misclassified workers being caught.

Misclassifying workers certainly wasn’t the intent, said Labor Commissioner Jim Craig. “We are not trying to make it more difficult to chase down people who misclassify employers.”

Jenkins said that the important things were not optional. “Who controls the work – that’s the biggest test and that is still required in all cases,” he said. Later, he added, “We wanted to make sure we caught the same people.”

Bruce Berke, state director of the National Federation of Independent Business, thought the agencies succeeded, and supported the bill because “we need consistence across agencies,” not because there was any interest in misclassifying workers.

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