Michigan’s House Labor Committee last week held its first hearing on a package of bills aimed to redefine who counts as an independent contractor, increase wage transparency and limit the use of non-compete clauses, Michigan Radio reported.
There are 16 total bills in the package aimed at wage theft and payroll fraud.
Business organizations’ concerns include the three criteria for deciding whether someone falls under the category of “independent contractor.” Under HB 4390, an independent contractor is someone who is “free from control and direction of the payer,” “performs work that is outside the usual course of the payer’s business,” and “is customarily engaged in an independently established trade.”
Wendy Block, senior VP of business advocacy and member engagement for the Michigan Chamber of Commerce, compared the Michigan proposal to California’s AB 5 independent contractor law and said it would have a negative effect on a wide range of gig workers like Lyft and Uber drivers.
“It is somewhat of a difficult test for employers because it does severely restrict the use and ability for people to use independent contractors and for individuals to be independent contractors if they enjoy and like the flexibility that goes along with that,” Block said.
However, supporters say the system needs to change, arguing some employers abuse the current rules to wrongly classify someone as an independent contractor to avoid paying them full benefits and other perks.
Block also took issue with some of the punishments laid out for violating the policies. For example, employers would be required to let workers know how much their peers are making upon request, and two of the bills would make it a felony punishable by up to two years in prison and/or a $10,000 fine to refuse to provide that information more than once.
Labor committee leadership has not yet publicly set a timeline for getting these current bills to the full floor.
Read more from Michigan Radio.