Let’s make employee misclassification legal!

Senate Bill 0645 is a gift to the trucking industry and why it must be opposed.

We have previously blogged about employee misclassification and fraud. How it improperly shifts medical costs to other payers. This ends up increasing taxes and insurance premiums for everyone.

Some of the worst offenders are in the trucking industry. Drivers are called independent contractors and paid with a Form 1099. It does not matter whether they are truly employees under Michigan law.

By deliberately misclassifying employees as independent contractors, trucking companies avoid having to purchase mandatory workers’ compensation insurance. This has a real human cost when drivers get hurt and cannot support their families.

Our experience shows that trucking companies intentionally structure their businesses to avoid having to purchase workers’ compensation insurance. Drivers are told to incorporate their own companies as a legal fiction. Complicated lease agreements are drafted to give the appearance of an independent contractor relationship. This occurs despite the trucking company having almost total control of the driver and his or her livelihood.

Legislation was introduced in 2012 that would have institutionalized this practice. It did not get much traction and was ultimately shelved. Unfortunately, Senate Bill 0645 has now been introduced with some of the same ideas.

Michigan law provides that all services are employment if performed by an individual whom the Michigan Administrative Hearing System (MAHS) determines to be in an employer-employee relationship using the 20-factor test contained in IRS revenue ruling 87-41.

Senate Bill 0645 would carve out an exception for people in the trucking and messenger courier industries. It would make it easier to make drivers independent contractors.

Why do we need a special exemption for trucking companies? Should other employers get similar treatment? Where does the slippery slope end? Senate Bill 0645 should be opposed.

Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 35 years. Call (855) 221-2667 for a free consultation today.

Related information:

Senate Bill 0645 (2015)

Photo courtesy of Creative Commons, by Brickset.

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