Bill would define independent contractors, reform worker’s compensations system (AK)


The state is trying to combat employee misclassification by tightening the reins on definitions of independent contractors versus employees.

Independent contractors work on a freelance basis for employers, but the relationship can flirt with the line between contractor and employee. Some companies intentionally call their employees independent contractors to avoid paying payroll taxes and worker’s compensation insurance premiums for them. Some employers also avoid the costs by reporting employees in lower-paying job categories.

House Bill 79, an omnibus worker’s compensation reform bill sponsored by Gov. Bill Walker, would outline an 11-point litmus test for independent contractors, defining when misclassification amounts to fraud. It also makes it the employee’s duty to report work and receipt of other wage-loss replacement benefits, according to Walker’s transmittal letter with the bill.

During an initial hearing on the bill Monday, Department of Labor and Workforce Development Commissioner Heidi Drygas and Division of Worker’s Compensation Director Marie Marx explained the details of the bills to the House Labor and Commerce Committee. The Worker’s Compensation Board, a citizen board advising the state on worker’s compensation issues, has been tackling the misclassification problem for some time, Marx said.

“We do not want to prevent true independent contractors from operating – we want them to operate,” she said. “We just want to make sure that those employers who are following the law operate on the same level playing field as those that do not.”

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