(Michael Chamberlain/Nevada Business Coalition) – Politicians of both parties constantly claim that creating jobs is their primary focus this session. Yet some of them can’t help themselves but to continue to make it more difficult and expensive to hire people.
An example of this is the four new bills in the Nevada Legislature that would change laws regarding the use of independent contractors. As we discussed in a Members Only newsletter last month, SB147, SB148, SB207 and SB208 would, among other things, create additional penalties for companies that misclassify employees as independent contractors and introduce further civil remedies to employees who had been misclassified by employers.
These bills amount to creating new laws to address acts that are already against the law and inventing additional remedies where remedies already exist. Employers are already subject to legal sanction and civil action for misclassifying employees. They would also make it more expensive to hire and place a greater burden on many small companies just starting out or looking to expand.
SB207 would expose employers to fines and possible loss of business license even if the authorities could not prove it was done on purpose. A company could potentially lose its ability to operate for up to 3 years for merely making an error without intending to break the law. When responding to an accusation in an administrative hearing, the burden of proof would be placed on the employer. In addition, the accuser, the Labor Commissioner, would also act as prosecutor, judge and jury.
SB148 creates a new avenue for employees who claim to have been misclassified to sue their employers, despite the fact that an avenue for such suits already exists. The bill would allow a suit to proceed even before the existing process was complete.
SB208 sets up a permanent task force to study and advise on the use of independent contractors. While the governor is looking to pare down the number of bodies and commissions in the state, this creates a brand new one. This one would likely be prone to mission creep. As the very narrow issue for which it was created would likely not require its attention very far into the future, opportunistic members, politicians and regulators may invent new missions for it to devise additional ways to intrude into our lives and pocketbooks.
There are existing laws in place to address abuses of the independent contractor classification. These new proposals will make it more difficult for companies who try to comply with the law while doing little to address those who already ignore it.
The independent contractor model provides flexibility for workers and employers and helps companies to control costs. If these restrictions on the use of independent contractors are implemented it will discourage some companies from hiring. If the Legislature is serious about creating jobs it will kill these bills.
(Michael Chamberlain is Executive Director of Nevada Business Coalition.)