NU Online News Service, July 14, 3:36 p.m. EDT
The National Conference of Insurance Legislators has agreed to delay a review of model legislation dealing with employers who misclassify employees to dodge workers' compensation insurance.
NCOIL said it would defer until November consideration of the model act concerning businesses that falsely list workers as independent contractors.
A delay in action on the measure was agreed to after interested parties argued that the current language could unintentionally sweep up more people than intended.
At the NCOIL Summer Meeting in Philadelphia, legislators formed a subcommittee to discuss a model that would address the problem where employers exploit a loophole to avoid workers' compensation requirements by intentionally misclassifying employees as independent contractors.
According to NCOIL, the draft model "would set up a strict nine-point test to clearly define an independent contractor and mandate workers' compensation coverage in the construction industry, with certain exceptions.
"It would create clear procedures for insurer application, disclosure and auditing and provide civil and criminal penalties for employee misclassification and insurance fraud. It also would establish strict enforcement authority including, among other items, power to temporarily shut down job sites when employers don't comply."
The model is based on Florida and Wisconsin statutes, said NCOIL.
Howard Goldblatt, director of government affairs for the Coalition Against Insurance Fraud, who spoke at the meeting, said he believed it was always NCOIL's intention to defer consideration until November. The summer meeting, he explained, was intended to be a first presentation of the model to allow for public comments.
Mr. Goldblatt said no one at the meeting objected to the spirit of the NCOIL model. Disguising employees as independent contractors, he noted, gives certain unscrupulous businesses an unfair advantage over companies that "do things on the up and up."
The sense among those that commented, Mr. Goldblatt said, is that everyone simply wants to make sure the model act is worded properly. He said concerns were voiced that definitions in the model act, particularly when defining independent contractors, were oversimplified. Speakers wondered if the very people NCOIL was looking to protect would be swept up by the current wording.
NCOIL agreed to produce a revised discussion draft by the end of July and hold conference calls in advance of November's Annual Meeting in New Orleans.
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