Alaska Gov. Bill Walker is sponsoring workers’ compensation legislation aimed at making it easier to determine whether someone is an employee or an independent contractor.
Walker’s bill creates a new definition for independent contractors to determine if employers have to pay to insure against on-the-job injuries, KTOO-FM reported.
The legislation has drawn criticism from Alaska’s Small Business Association, which says the new definition is too narrow for industries that rely heavily on independent contractors, such as construction.
But construction workers spoke in favor of the bill during a House committee hearing last week, saying it’ll prevent employers from misclassifying workers to lower their cost of labor and gain an unfair competitive advantage in the bidding process.
“I’ve been working in the painting and drywall finishing trade my entire adult life, and have never seen the abuse of this so high,” Charlie Young testified on March 20. “More and more, these cheating contractors are winning the bids on projects, as I watch the amount of work for me get less and less.”
This type of activity has been seen by Rhonda Gerharz, who handles cases involving employers that fail to pay workers’ compensation insurance.
“There are some who are very well versed and are deliberately trying to save money and trying to underbid their competitors,” said Gerharz, chief investigator for the Alaska Division of Worker’s Compensation Special Investigations Unit. “And there are others who are just not, perhaps not savvy business people and they think that they can just call someone an independent contractor and issue them a 1099. and that’s not how it works.”
The Small Business Association is concerned that the new way of defining independent contractors would increase the cost of business and eventually apply in cases regarding other benefits such as unemployment insurance and minimum wage.
Gerharz said the new definition serves to make it clear to both employers and workers who is an independent contractor and who is not.
Walker’s legislation passed out of the House committee but still faces several more votes.
The legislative session is scheduled to end April 16, but the workers’ compensation issue has led to special sessions in the past.
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