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The subjective use of several different definitions of “independent contractor” are producing increased penalties and fines on small business owners. NFIB/VT agrees that businesses should carry workers’ compensation insurance and pay into the unemployment insurance trust fund. However, the appropriate use of independent contractors can be a tool that allows small businesses to grow and expand. Clarity must be achieved so that the rules of business are defined and a level playing field can exist.
NFIB/VT supported a study that would have worked to develop a uniform definition so that small business owners would have clarity in determining whether or not a person would be considered an independent contractor or not. However, legislators rejected the study and instead increased the penalties employers could face, if found guilty of misclassification. Lack of action, was a missed opportunity by the legislature to assist small business owners in better understanding reporting requirements, and has left entrepreneurs vulnerable to extreme penalties, including up to $5,000 in fines or up to 30 days in prison.
NFIB/VT will continue to urge public policy makers to provide one, clear, uniform definition of independent contractors so that the small business owners comply with their workers compensation and unemployment compensation obligations.
More detailed information on the independent contractor issue is available on our website. (The existing link to the article posted needs to be updated, too)