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March 6, 2013

For small firms

Bill would clarify how workers are classified by employers

Anonymous The Independent The Daily Independent Wed Mar 06, 2013, 06:00 AM EST

ASHLAND — To some readers, this editorial may seem self-serving, and in one sense, it is because newspapers throughout the state stand to directly benefit from the 2013 Kentucky General Assembly’s approval of Senate Bill 89. But much more than just newspapers, the vast majority of small busineses that use contract labor also would benefit from the bill, which passed the Senate last week by the vote of 23-15 that was mostly along party lines.

For the most part, Republican senators supported the bill, while it was opposed by their Democratic counterparts, including both Robin Webb of Grayson and Walter “Doc” Blevins of Morehead, the two senators who represent northeast Kentucky. If the same pattern of voting is repeated in the Democratic-controlled House of Representatives, SB 89 will be rejected by the House, and hundreds of small businesses — not just newspapers of all sizes — will be among the big losers.

Sponsored by Sen. John Schickel, R-Union, SB 89 offers a clear determination on whether or not an employer is correctly classifying workers. It delineates six conditions that must be met to ensure the independent nature of the subcontractor company, including verification that the subcontracting company is complying with current federal immigration statutes.

The bill is in response to a few employers who intentionally misclassify employees in order to avoid paying Social Security taxes, unemployment insurance and worker's compensation by referring to their employees as subcontractors or independent contractors. That practice puts companies that follow the letter of the law and correctly classify all employees at a competitive disadvantage to those that do not.

SB 89 is backed by the Kentucky Small Business Coalition, a group of 43 organizations and associations that represents thousands of local business around the state, and why not? The bill offers a simplified system requiring proof that a subcontractor is truly an independent, legitimate business. Among other reasons, SB 89 is endorsed by the Kentucky Press Association because it would eliminate language in current law that specifically cites newspaper companies. Current law states that all newspaper carriers shall be considered employees, even though many are independent. This unusual clause singles out newspaper companies and deserves to be deleted.

Senate Bill 89 would protect the rights of workers who are properly classified as contract workers and eliminate the unfair competition honest small businesses get from businesses that violate the law. Our elected leaders in Frankfort should support this bill because it makes it more difficult for businesses to avoid paying their fair share in taxes.

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