Bill Summary for Bill Number HB09-1310

Date: 04/22/2009

Final
BILL SUMMARY for HB09-1310

SENATE COMMITTEE ON BUSINESS, LABOR AND TECHNOLOGY

Votes: View-->	Action Taken:
Moved prepared Amendment L.011 (Attachment E). Th Moved prepared Amendment L.012 (Attachment F). Th Moved prepared Amendment L.013 (Attachment G). Th Moved to refer House Bill 09-1310 to the Committee	FAIL FAIL FAIL PASS

03:10 PM -- House Bill 09-1310

Senator Heath presented House Bill 09-1310. The bill allows any person to file a written complaint with the Division of Employment and Training in the Colorado Department of Labor and Employment (CDLE) alleging an employer is misclassifying an employee as an independent contractor. The division director may investigate complaints and is required to focus on the most egregious complaints or those acts undertaken to gain a competitive advantage or to avoid the payment of taxes. Upon finding a violation, the director is required to order the employer to pay back taxes owed plus interest. For cases where misclassification was made with willful disregard of the law, the director is authorized to impose a fine, and upon a second or subsequent violation, prohibit an employer from contracting with the state for up to two years.

The bill allows an employer to request, for a fee, a nonbinding advisory opinion from the director as to how an individual employee should be classified. The department is required to conduct a statewide study on the issue of employee misclassification and report those findings in combination with information on complaint investigations to the General Assembly within two years. Senator Heath explained the bill, and Senator Scheffel distributed prepared Amendments L.011, L.012, and L.013 (Attachments E through G, respectively).

The following individuals testified regarding the bill:

03:15 PM -- Dennis Creese, representing the International Union of Painters and Allied Trades, testified in favor of the bill. He described the effect the bill will have on employers, the revenue stream, and workers. Mr. Creese enumerated reasons why the committee should support the bill.

03:18 PM -- Misty Hageman, representing Expert Floor Covering, testified in favor of the bill. She described the types of disadvantages her company faces when competing against companies that use independent contractors. She explained that her company pays benefits and taxes for its employees and cannot compete with bidders who have no other costs outside of wages. Ms. Hageman expressed her hope that the committee viewed a vote for the bill as a "pro-business" vote, protecting businesses that are following the law. She noted that, currently, there is no way to complain if a company has concerns about competitors that use independent contractors.

03:24 PM

Ms. Hageman responded to questions from Senator Harvey concerning what percentage of her company's work contracts are government contracts. Responding to a suggestion from Senator Harvey that government entities verify that employees are classified according to statute, Senator Heath clarified that the bill is aimed at more than government contracts. Senator Veiga added that without an enforcement method, determining whether someone is an independent contractor would not achieve anything. Discussion continued between Senator Heath and Senator Harvey.

03:28 PM

Senator Mitchell expressed his concern that there is no evidence that employee misclassification is an extensive problem requiring greater enforcement. He described a constituent complaint that CDLE may be operating on an agenda rather than as a response to a problem. Discussion continued.

03:32 PM -- Wayne Covillo, representing Gary Leimer, Inc., testified in favor of the bill. He stated that the bill will level the playing field.

03:33 PM -- Don Reeg, representing Tri-Star Masonry, Inc., testified in favor of the bill. He described the disadvantages his business faced when competing against other businesses that do not claim their employees. He responded to questions from Senator Mitchell.

03:35 PM -- Vicki Smith, Director of Unemployment Insurance Integrity, representing the CDLE, testified in favor of the bill. She described the tax auditing unit of the CDLE's Unemployment Insurance program, and stated that the unit currently audits approximately two percent of Colorado employers annually. She explained that many employers have expressed concerns about misclassified employees, and the CDLE wants to study the situation and formalize the reclassification process that currently exists. Ms. Smith stated that the bill will formalize the process for receiving and investigating complaints. She noted that the CDLE does not seek to discourage legitimate independent contractors. She addressed changes that had been made to the bill. Ms. Smith responded to questions from Senator Mitchell clarifying that random audits and specific responses to complaints are already possible, though the bill will clarify the process. Ms. Smith responded to questions from Senator Scheffel.

03:41 PM -- Buck Bailey, representing himself, testified in opposition to the bill. He described his professional background and stated that he is currently an independent contractor. He suggested that the bill revisits conversations that have already been had. Mr. Bailey added that there is no such thing as a level playing field. Mr. Bailey addressed Ms. Smith's testimony regarding the CDLE's existing ability to audit employers and expressed his concern that the bill will force everyone to become employees. He stated that he had a right to be an independent contractor and recommended that the definition of an independent contractor be standardized to make the law easier to follow.

03:50 PM -- Larry Hudson, representing the Colorado Association of Commerce and Industry (CACI), testified regarding the bill. He described his organization and their concerns with the bill. He discussed changes that had been made to the bill and described changes that CACI would support.

03:56 PM

Senator Mitchell commented on CACI's testimony. He asked for clarification from Senator Heath about the provisions of the bill concerning "advisory opinions." Discussion continued between Senator Heath and Senator Mitchell.

03:59 PM -- Greg Fulton, representing the Colorado Motor Carriers Association (CMCA), testified regarding the bill. He discussed the role of independent contractors in the trucking industry and stated that high taxes create a poor business environment for trucking. Mr. Fulton described changes that would make the CMCA more comfortable with the bill. He suggested that it was inappropriate that the enforcement mechanism of the bill begins prior to the completion of a study on the issue of employee misclassification, and noted that amendments had been offered that may address some of CMCA's concerns.

04:08 PM

Senator Heath responded to Mr. Fulton's testimony, explaining that he was not trying to redraft the law pertaining to independent contractors. Senator Heath stated that complaints are currently allowed, but the bill will formalize the process and provide for a study of the problem. Senator Heath said that he will not support the amendments Senator Scheffel had offered. Mr. Fulton responded to Senator Heath's comments.

04:13 PM -- Ted Textor, representing the Teamsters, testified in favor of the bill. He distributed a packet of materials to the committee that illustrated the impact of employee misclassification on communities and on states (Attachment H). He discussed the costs to the state due to employee misclassification.

04:21 PM -- Ernest Adame, representing bricklayers, testified in favor of the bill. He distributed four handouts to the members of the committee (Attachments I through L). Mr. Adame responded to questions from Senator Mitchell.

04:27 PM -- Ralph Lufen, representing the Rocky Mountain Chapter of the National Electrical Contractors Association, testified in favor of the bill. He responded to questions from Senator Mitchell.

04:29 PM -- Jeff Clayton, representing the CDLE, came to the table to respond to Senator Mitchell's concerns. He described an amendment that had been added to the introduced bill removing the requirement for an Office of Employee Classification and the need for any new full time employees. Mr. Clayton responded to questions from Senator Foster pertaining to the effect of the Senator Scheffel's amendments. The committee recessed briefly.

04:40 PM

The committee reconvened. Senator Scheffel described his concerns with the bill and discussed prepared Amendment L.011. Prior to the vote, Senator Heath commented on the amendment and expressed his concerns that it did not fall under the title of the bill. After committee discussion, Senator Veiga allowed a vote to be taken.


BILL:	HB09-1310
TIME:	04:43:13 PM
MOVED:	Scheffel
MOTION:	Moved prepared Amendment L.011 (Attachment E). The motion failed on a 3-4 roll call vote.
SECONDED:
		VOTE
	Foster	No
	Harvey	Yes
	Mitchell	Yes
	Scheffel	Yes
	Tochtrop	No
	Heath	No
	Veiga	No

Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL

04:44 PM

Senator Scheffel explained prepared Amendment L.012. Senator Heath explained his objections to the amendment, and Senator Scheffel responded to his concerns. Senator Veiga explained her vote.


BILL:	HB09-1310
TIME:	04:48:58 PM
MOVED:	Scheffel
MOTION:	Moved prepared Amendment L.012 (Attachment F). The motion failed on a 3-4 roll call vote.
SECONDED:
		VOTE
	Foster	No
	Harvey	Yes
	Mitchell	Yes
	Scheffel	Yes
	Tochtrop	No
	Heath	No
	Veiga	No

Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL

04:49 PM

Senator Scheffel explained prepared Amendment L.013. Senator Heath expressed his concerns about the amendment. Senator Foster suggested that the amendment didn't seem to change anything substantial. Discussion continued among the members of the committee regarding the effect of the amendment and the subjectiveness of the term "competitive advantage."


BILL:	HB09-1310
TIME:	04:51:53 PM
MOVED:	Scheffel
MOTION:	Moved prepared Amendment L.013 (Attachment G). The motion failed on a 3-4 roll call vote.
SECONDED:
		VOTE
	Foster	No
	Harvey	Yes
	Mitchell	Yes
	Scheffel	Yes
	Tochtrop	No
	Heath	No
	Veiga	No

Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	HB09-1310
TIME:	04:59:13 PM
MOVED:	Heath
MOTION:	Moved to refer House Bill 09-1310 to the Committee on Appropriations. The motion passed on a 5-2 roll call vote.
SECONDED:
		VOTE
	Foster	Yes
	Harvey	Yes
	Mitchell	No
	Scheffel	No
	Tochtrop	Yes
	Heath	Yes
	Veiga	Yes

Final YES: 5 NO: 2 EXC: 0 ABS: 0 FINAL ACTION: PASS