The House Labor Committee discussed changes to workers compensation laws for construction and trucking companies that could ultimately expose companies to jail time and punitive damages.
The proposed changes in HB 5962 would effect cases involving contractors and subcontractors in the trucking and construction industries. It would proscribe that a contractor is an employee of a principal unless the principal shows “to the satisfaction of the director” that:
(A) THE CONTRACTOR, ENCOMPASSING ALL PROVISIONS OF SECTION 161(1)(N), IS NOT AN EMPLOYEE.
(B) THE CONTRACTOR HAS BEEN AND WILL CONTINUE TO BE FREE FROM DIRECTION AND CONTROL OF THE PRINCIPAL, BOTH IN FACT AND PURSUANT TO THE CONTRACT, EXPRESS OR IMPLIED, BETWEEN THE PARTIES.
Particularly interesting is that the penalties for misclassifying and pay benefits to a contractor employee. For knowingly violating the statute, a principal can be sent to jail for 18 months and fined $15,000 for a first offense. A second offense could land the principal in prison for up to seven years and a $30,000 fine.
Even an unintentional violation could land a principal in jail for up to six months, along with a $2,500 fine.
The bill would also give the director the authority to issue an indefinite stop-work order for a work site within 72 hours of the determination that a violation has occurred.
Contractors could also seek civil penalties against the principal outside the worker’s compensation bureau, either on their own, or as a class through a labor union.
Finally, the bill also provides a form of whistleblower protection for contractors who challenge their non-employee designation “in good faith,” creating a rebuttable presumption that their discharge was retaliatory if it was within 90 days of their filing a challenge. A principal who was found to have taken retaliatory adverse action against a person could be found liable for economic and noneconomic losses, including punitive damages.
The committee took no action on the bill during the hearing. It will hear additional testimony during its next session, which will likely be held Wednesday, May 12.