Legislation that Can’t be Ignored
For the last ten years I have avoided jumping into the legislative process. Like most of our shop leaders, I view my job is to work hard and get the best results possible in the environment that surrounds us. When legislation would change matters, my job would be to adjust and figure out how to succeed and represent our members with the best results possible. I think that’s probably what most of our shop managers do. However, things change and all of a sudden it appears that we have no choice but to be more involved.
As I look at the legislative changes for our shops in just the last eight months, there have been dramatic shifts in policy that effects our businesses. As many of you are aware, we have been active partners with the Michigan Manufacturers Association. They have a strong legislative arm. MTM is also a member of the Insurance Alliance of Michigan (IAM). That is a group of insurance companies that also has a legislative presence. For the most part MTM and myself individually have attended but not been active in those legislative efforts. With the introduction of House Bill 4390, it is obvious to me that we must be more involved and encourage our members to be involved also.
House bill 4390 states: “to regulate the time and manner of payment of wages and fringe benefits to employees; to prescribe rights and responsibilities of employers and employees, and the powers and duties of the Department of Labor; to require keeping of records to provide for the settlement of disputes regarding wages and fringe benefits; to prohibit certain practices by employers; to prescribe penalties and remedies; and to repeal certain acts and parts of the act.” All that is about nearly eliminating the use of independent contractors. Not only does it end the use of nearly all independent contractors, but it prescribes penalties that are severe if a violation of this act is found. As I visit with most of our shop owners, they have designers, IT people, sales representatives, , engineers that for one reason or another are independent contractors. We at MTM have the same independent contractor issue. We use investigators, case managers, auditors, and I.T. specialists. These people are hired to do a three-hour task or a two-week project when requested. None of them are “employees”. These contractors fill a void when we as a small employer do not have a regular need.
While your shop and my shop have different “products”, the business needs are the same—a short term project that requires assistance with outside skills that we do not have internally. Because of this and the ability of the Michigan legislature to move things quickly through the process, I am adding MTM’s weight to the effort. We should all be contacting our legislators to weigh in on this topic. If we do not, we will be living with something that makes our life much more difficult.
The present house bill has scary words like: 1) The department may assess a civil fine of not more than $10,000 against an employer who violates this act. BTW – the current fine limit is $1,000. 2) A person who is ALLEGED to have violated this section has the burden of proving by a “preponderance of the evidence”…….that they are innocent. Forget innocent until proven guilty.
From my 50 years of insurance experience, I have many friends around the United States that run insurance companies. I contacted two of my colleagues in California. They had a bill like House Bill 4390 that did the same thing about two and a half years ago. The result was the legislation passed and became law. It was then fought in court and ultimately moved to a statewide voter initiative which was passed to amend it significantly and reduce the scope of the law. While it was in effect, there was turmoil and uncertainty about how employers should proceed on a daily basis. The law in part is still effective in California, but there have been multiple adjustments to add specific job titles that were exempt from the act. The exemptions now total more than 100 job types. And there is a backlog of other job types that are being considered as excluded.
So, in the end, the restrictions on independent contractors have been greatly watered down but the process was, and remains, ugly. Because of this, I am writing to my legislative member to weigh in using much of the format that was provided by MMA. I have attached a link to the MMA form and its guidance. Like me, this is not something in our normal wheelhouse. However, from talking with my out of state colleagues and seeing what has happened so far in 2023, I see that we have no choice. I hope that you will take the time to click on the link and use the format that has been provided to help us reduce the impact that House Bill 4390 will have on each of our shops.
https://mimfg.org/Advocacy-Issues/Action-Center?vvsrc=%2Fcampaigns%2F107051%2Frespond
Until next time, John
