Senate committee substitute makes the following changes to the 4th edition.
Amends proposed GS 143-763 to state that the director of the Employee Classification Division should ensure that the advisory council meets as often as needed and no less frequently than on a quarterly basis. Makes the statute effective when it becomes law.
Removes the two additional factors included in the 4th edition for proposed GS 143-764, governing determination of independent contractor status. The factors were (1) whether an individual had a substantial investment in equipment or tools required to perform the contracted work and (2) whether the individual had the opportunity for profit or loss. Also removes the phrase "subject to customer requirements" in a factor pertaining to an individual's control of his or her own time.
Reverts to the 3rd edition's statement of intent to comply with specified case law by declaring that other factors consistent with the holding of the case may be considered.
Amends proposed GS 143-765 to state that willful or reckless employee misclassification is a violation of the article. Creates a new process through which an employer may contest the Employee Classification Division's determination that it has committed a violation by providing for appeals to the Industrial Commission and thereafter to the North Carolina Court of Appeals. Requires the Industrial Commission to adopt rules to implement this change.
Requires in GS 95-25.15(c) that certain information required in a poster summarizing the Article be presented in plain language.
Removes from the proposed amendments to GS 87-11 (general contractors), GS 87-23 (plumbing and other contractors), and GS 87-47 (electrical contractors) a requirement that a violation giving rise to license revocation or suspension be willful. Makes a similar adjustment to the proposed amendment to GS 143-59.2, governing actions that disqualify certain vendors from contracting with the State.
Includes certain newspaper, shopping news, and magazine distributors in the definition of employment in GS 96-1, pertaining to unemployment insurance, and removes a rebuttable presumption that these workers are not employees from GS 97-2, pertaining to workers' compensation.
Removes two sections making appropriations from the General Fund to the Department of Revenue.
Makes technical and conforming changes. Moves forward the effective date of proposed sections governing definitions and records confidentiality from January 1, 2016, to the date they become law.
Summary date: Sep 16 2015 - View summary
Summary date: Aug 12 2015 - View summary
House amendment makes the following changes to the 3rd edition.
Includes two additional factors in proposed GS 143-764, governing determination of independent contractor status. The factors are (1) whether an individual has a substantial investment in equipment or tools required to perform the contracted work and (2) whether the individual has the opportunity for profit or loss. Also includes the phrase "subject to customer requirements" in a factor pertaining to an individual's control of his or her own time.
Adds a phrase that prohibits acts taken to comply with laws or regulations from being considered as evidence contrary to an independent contractor determination.
Changes the proposed statute's stated intention to comply with specified case law to remove a sentence declaring that other factors consistent with the holding of the case may be considered. Instead, the amendment states simply that the section intends to comply with the case and its progeny.
Summary date: Aug 4 2015 - View summary
House committee substitute makes the following changes to the 2nd edition.
Deletes language from the definition of the term employee found in proposed GS 143-761, which provided that individuals and entities that provided transportation services or trucking equipment as an owner-operator under a written contract to a common carrier, contract carrier, or exempt hauler were not considered employees.
Enacts new GS 105-259(b)(49) to allow the disclosure of tax information to the NC Department of Labor, NC Division of Employment Security, and the NC Industrial Commission for the purposes of employee misclassification, unless prohibited by law. Makes clarifying changes to the disclosure of records under GS 143-768.
Provides that proposed GS 143-760, GS 143-761, and GS 143-762 are effective when the bill becomes law, with the remainder of Part I of the bill becoming effective on January 1, 2016, applying to instances of employee misclassification occurring on or after that date.
Makes clarifying changes to GS 95-25.15(c), information required on NC Department of Labor posters.
Makes clarifying and technical changes.
Amends the effective date for the bill, making its provisions effective, unless otherwise provided, January 1, 2016 (was, August 1, 2015).
Summary date: Jun 17 2015 - View summary
House committee substitute makes the following changes to the 1st edition.
Deletes all of the provisions of the previous edition and replaces it with the following.
Enacts new Article 81 in GS Chapter 143, Employee Fair Classification Act, clarifying the distinction between employees and independent contractors. Sets out definitions for use in the Article for the terms employ, employee, Employee Classification Division, employee misclassification, employer and secretary. Establishes the Employee Classification Division (Division) in the Department of Revenue and sets out eight powers and duties of the Division, including assessing administrative civil penalties for instances of employee misclassification and developing methods and strategies for information sharing between state agencies in order to identify misclassification. Provides for an informal advisory council to advise the director of the Division. Sets out minimum membership of the council including several state officers. Requires the Division to submit an annual report, no later than October 1 of each year, regarding the administration of this Article, to the Office of the Governor and the Joint Legislative Commission on Governmental Operations. Sets out minimum information requirements for the report.
Specifies the eight factors that are to be considered in the determination of status as an independent contractor, including whether the individual has the freedom to use and independently control his or her own assistants. Prohibits an employer from improperly classifying an individual. Establishes a civil penalty for instances of misclassification, including an assessment of no more than $1,000 per misclassified employee. Provides regulations and factors to be considered in assessing the penalty. Provides a process by which a penalty can be appealed.
Requires the Division to establish a temporary amnesty program to encourage the voluntary self-reporting by employers engaging in employee misclassification. Requires the Division to establish procedures for participation in the temporary amnesty program and sets out minimum requirements of the procedures.
Requires every state occupational licensing board or commission to require its licensees or permittees to certify that they have read and understood the employee misclassification notice in GS 143-763(a)(7). Failure to certify will result in a denial of a license or permit by the board or commission. Provides that any records of the Division that are not civil penalty assessments or final orders are not public records but are subject to inspection by state and federal agencies as specified.
Repeals GS 97-5.1, Presumption that taxicab drivers are independent contractors.
Amends GS 95-25.15(c) to require that an employee misclassification notice be added to NC Department of Labor posters and sets out the information that must be contained, including that any employee that believes they have been misclassified can report the suspected misclassification to the Division. Effective January 1, 2016.
Amends GS 87-11 concerning the State Licensing Board for General Contractors providing that it has the authority to refuse or revoke a license or issue a reprimand if a penalty was imposed pursuant to GS 143-765(b), as enacted in this act, that has been upheld on final adjudication, with the violation being willful with no good faith argument that the individual is an independent contractor. Requires the State Licensing Board for General Contractors to include references to the prohibition of employee misclassification in its guidelines governing the suspension and revocation of licenses.
Amends GS 87-23 to condition the State Board of Examiners of Plumbing, Housing, and Fire Sprinkler Contractors' authority to revoke or suspend the license of, or order the reprimand or probation of, any plumbing, heating, or fire sprinkler contractor on whether a penalty was imposed pursuant to GS 143-765(b), as enacted in this act, that has been upheld on final adjudication, with the violation being willful with no good faith argument that the individual is an independent contractor. Also adds a new subsection (d) to GS 87-23 to provide that the Board may conduct audits of pay and project records of licensee firms in furtherance of Article 2 of GS Chapter 87 or the Employee Fair Classification Act, Article 81 of GS Chapter 143.
Amends GS 87-42 to provide that the State Board of Examiners of Electrical Contractors (Electrical Board) may conduct audits of pay and project records of licensee firms in furtherance of Article 4 of GS Chapter 87 or the Employee Fair Classification Act, Article 81 of GS Chapter 143.
Amends GS 87-47(a1) to add, as an activity prohibited by the enforcement authority of the Electrical Board, the willful engagement in employee misclassification in violation of GS 143-765(b), as specified and enacted in this act.
Amends GS 143-59.2(a) to provide that vendors cannot enter into contracts for goods and services with any state government entity if, within five years prior to the date of bid solicitation, the vendor has been assessed a civil penalty pursuant to GS 143-765(b) that has been upheld on final adjudication, with the violation being willful with no good faith argument that the individual is an independent contractor.
Amends GS 153A-134 and GS 160A-194, concerning permitted regulation and licensing for various occupations, businesses, trades, and entertainment by cities and counties, providing that any applicants subject to regulation and licensure by a city or county under these statutes must certify that they have read and understand the employee misclassification notice in GS 143-763(a)(7).
Amends GS 153A-360 and 160A-420 concerning construction and development inspections, providing that owners of sites with work in progress must certify to the city and county that they have read and understand the employee misclassification notice in GS 143-763(a)(7).
Appropriates $293,000 from the General Fund to the Department of Revenue for the 2015-16 fiscal year and $293,000 for the 2016-17 fiscal year, to support five new positions to carryout the duties of the Division. Requires the Department of Revenue to consult with the Industrial Commission, the Office of State Budget and Management, the Division of Employment Security, and the Department of Labor in hiring staff for these positions.
Appropriates $17,500 for the 2015-16 fiscal year from the General Fund to the Employee Classification Division for non-recurring costs associated with the positions authorized by this section.
Includes a severability clause.
Except as otherwise provided, act is effective August 1, 2015.
Summary date: Apr 2 2015 - View summary
Adds new Article 4, to be known as the Employee Fair Classification Act, to GS Chapter 95. Defines terms as they apply in Article 4. Includes the following definitions: (1)employ--to suffer or permit to work; specifies that an entity or individual is not deemed to be an employer of a person hired or otherwise engaged by the entity's orindividual'sindependent contractor; (2) employee--any person defined as an employee by either GS 95-25.2(4), 95-47.1(6), 95-174, 96-1(10), 97-2(2), or 105-163.1(4); specifies that a person who is an independent contractor under GS 95-280 is not an employee; (3) employee misclassification--inaccurately classifying an employee as an independent contractor, thereby avoiding tax liabilities and other obligations imposed by GS Chapters 95, 96, 97, or 105; and (4) employer--any entity or individual that employs one or more employees as in GS 95-276(a)(2) of this act.
Provides that nothing in new Article 4, GS Chapter 95, is to be construed or intended to alter the definition of employeror employeeunder any other provision of law.
Declares that the provisions of GS 95-280, enacted in this act, are intended to codify the North Carolina Supreme Court's holding inHayes v. Board of Trustees of Elon College,224 N.C. 11 (1994).
Provides the factors to be considered in determining whether an individual is an independent contractor for the purposes of new Article 4. Identifies the factors to be considered in determining independent contractor status. Provides that the presence of one or more factors is not controlling and that the presence of all the identified factors is not required to determine whether an individual is an independent contractor. Declares that other factors that are consistent with the opinion inHayes may also be considered in determining independent contractor status.
Establishes the Employee Misclassification Task Force (EMTF). Directs the Governor to appoint a director, as the chief executive officer of the EMTF, to serve a four-year term and devote full-time effort to the duties of the EMTF. Provides for the authority, duties, and responsibilities of the director. Provides that the director's salary is to be as provided in the Current Operations Appropriations Act. Provides that the appointment of the director is subject to confirmation by the General Assembly by joint resolution. Provides that the EMTF receive adequate funding to provide it with investigators and necessary staff to meet the duties of the EMTF as set out in this Article. Directs the Office of the State Controller to ensure that the EMTF is provided with all necessary access to the Government Data Analytic Center and other information technology services.
Delineates the powers and duties of the EMTF, which include investigating reports of employee misclassification and coordinating with and assisting all relevant state agencies with recovering any back taxes, wages, benefits, penalties, or other money owed as a result of an employer engaging in employee misclassification. Requires the director to appoint an informal advisory council to advise the director on issues within the jurisdiction of the EMTF.
Requires the EMTF to annually publish, no later than October 1 of each year, a report to the Governor and the Joint Legislative Commission on Governmental Operations on the administration of this Article, including any recommendations that the EMTF deems advisable. Provides information that the report must minimally include.
Prohibits employee misclassification. Provides additional civil penalties for repeated instances of employee misclassification. Provides that employers found by the EMTF to have engaged in employee misclassification have the right to appeal the final finding and any accompanying penalty. Employers may appeal either under GS Chapter 150B or by filing a petition in the superior court with jurisdiction over the matter. Declares that nothing in this section is to be construed as creating a private right of action, at law or in equity, for the activities prohibited in this section.
Directs the EMTF to establish and administer a temporary amnesty program to encourage voluntary self-reporting by employers who are currently engaging in employee misclassification. Confers immunity from the civil penalties provided for in GS 95-279 on every employer participating in the temporary amnesty program. Requires the EMTF to establish the procedures for participation in the temporary amnesty program and specifies what these procedures must minimally require.
Includes additional provisions regarding confidentiality and access to records and the responsibilities of occupational and licensing boards to certify that applicants have read and understood the employee misclassification notice set out in GS 95-278(a)(7).
Amends GS 95-25.15(c) to specify the content of the poster summarizing the major provisions of this Article that must be displayed in every establishment subject to this Article.
Amends GS 97-2 to delete the rebuttable presumption that "employee" does not include any person selling newspapers or magazines at a fixed price and amends GS 97-5.1 to delete the rebuttable presumption that taxi drivers are independent contractors.
Amends GS 153A-134 and GS 160A-194 to require that any applicant subject to regulation and licensure by a county or a city must certify that the applicant has read and understood the employee misclassification notice as provided by GS 95-278(a)(7).
Appropriates $293,000 from the General Fund to the Industrial Commission for the 2015-16 fiscal year and $293,000 for the 2016-17 fiscal year to support five new positions whose duties will include reviewing quarterly employer wage and earnings reports and comparing those to the Worker's Compensation insurance policies to detect fraud and employee misclassification. Requires the Industrial Commission to consult with the Department of Revenue, the Division of Employment Security of the Department of Commerce, and the Department of Labor in hiring staff for these positions.
Appropriates $17,500 for the 2015-16 fiscal year from the General Fund to the Industrial Commission for non-recurring costs associated with the positions authorized by this section.
Includes a severability clause to provide that if any provisions of the proposed act or its application are held to be unconstitutional or invalid, the invalidity does not affect other provisions or applications that can be given effect without the invalid or unconstitutional provisions or applications.