AUGUSTA — Maine Labor Commissioner Laura Fortman utilized the recent Labor Day holiday to discuss the full-court press she and the administration of Gov. John Baldacci are using to reduce the number of misclassified workers in the Maine labor force — workers the state feels should be employees of a business rather than independent contractors.

The Maine Merchants Association had previously commended Commissioner Fortman and Gov. Baldacci for the time and energy devoted to a single effort, but suggested that the same strategy might be used to reduce business regulations and promote job growth. In effect, Maine Merchants praised the game plan, not necessarily the final score.

Misclassification is an issue that’s been around for decades and always seems to mystify and polarize. The state historically contends that workers will pay more in taxes if they are employees of a company, and that they will also receive more benefits such as workers compensation and unemployment.

This, state bureaucrats argue, will make it less likely that government will have to pick up that tab. Some workers counter that the ability to function as an independent agent is traditional in Maine.

Also, some small businesses say they often can’t afford to hire a full-time employee and using independent contractors is the only way they can survive. Some individuals see it as another way to find work.

More than a year ago, Gov. Baldacci formed an interdepartmental task force to combat misclassification.

The task force, composed of top officials from several state departments, held formal meetings, conducted research, appointed subcommittees and eventually issued a report that included proposed legislation to permit the executive director of the Workers’ Compensation Commission to shut down a work site that employs a misclassified independent contractor.

The legislation became law in the most recent legislative session. The task force also acted on its own to install a “hotline” where employees and other businesses can report firms believed to be inappropriately using independents. State agencies have been instructed to share business information that will help identify violators.

The Maine Merchants Association, long a staunch defender of small businesses and free enterprise, lauded Commissioner Fortman and Gov. Baldacci for the focus they managed to bring to a single issue, and for combining the talents of officials and experts from several different departments and agencies.

In 30-plus years in and around state government, I have never seen an administration devote so much time and talent to a single-purpose goal or to assemble such a broad and diverse group of state leaders to focus on a single problem, and I said as much when I testified to the Regulatory Fairness Board.

However, at times during the long debate over the “shutdown” legislation it appeared that this was the only business issue being addressed. It caused some to wonder why such a seemingly inordinate amount of time was being spent by state agencies and the Legislature to police existing workers instead of exploring new ways to create new jobs, especially during a recession.

I also suggested to the board that the ability of a bureaucrat to shut down a job site and encourage businesses to “rat” on each other did little to improve Maine’s image as a state unfriendly to business.

In addition to securing passage of the shutdown legislation, installation of the hotline, department sharing of business information and the hiring of more investigators, the Department of Labor is touring the state this fall to “highlight legal implications of worker misclassification,” which it describes as a “practice that occurs when employers hire workers as independent contractors when legally they should be classified as employees.”

Before the tour ends Nov. 16 at the Civic Center in Augusta, the department will most likely have heard from both supporters and detractors of the time and attention being devoted to the matter.

One thing is already clear. There is often a fine line between an independent contractor and a regular employee. Crossing that line is potentially more dangerous than it once was.

The Maine Merchants Association asked the Regulatory Fairness Board to “recommend to the current chief executive and to the next governor that they assemble the same sort of Cabinet-level task force to find ways to limit undue business regulation, and to make Maine more attractive to business.”

Whether or not the present governor or the new one elected in November chooses to seize the moment, the alleged misclassification of employees will likely be debated when the new Legislature convenes in January. It always is.

 

– Special to The Press Herald