SENATE BILL No. 645

 

 

December 8, 2015, Introduced by Senator KOWALL and referred to the Committee on Commerce.

 

 

 

     A bill to establish uniform criteria for determining an

 

employee-employer relationship for purposes of the laws of this

 

state; to prohibit misclassification of employees in reports

 

required of employers by this state; and to provide sanctions.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"employee classification act".

 

     Sec. 2. (1) As used in this act, "misclassify" means to fail

 

to properly identify an individual as performing services in

 

employment in an employer-employee relationship with an employer.

 

Except for employment in the trucking and messenger courier

 

industries, an employer-employee relationship is determined using

 

the 20-factor test announced by the Internal Revenue Service of the

 

United States Department of Treasury in Revenue Ruling 87-41, 1987-


1 C.B. 296. In the trucking and messenger courier industries, an

 

individual who is the operator of a vehicle or vessel is an

 

employee, unless all of the following apply:

 

     (a) The individual owns the vehicle or vessel or holds it

 

under a bona fide lease arrangement that is not through an

 

arrangement, loan, or loan guarantee with the contracting entity or

 

any affiliate of the contracting entity. This requirement does not

 

apply to temporary replacement lease agreements.

 

     (b) The individual is responsible for substantially all of the

 

principal operating costs of the vehicle or vessel and equipment,

 

including maintenance, fuel, repairs, supplies, vehicle insurance,

 

and personal expenses. If the contracting entity pays the

 

individual only a fuel surcharge and incidental costs, such as

 

tolls, permits, or lumper fees, the individual meets the

 

requirements of this subdivision.

 

     (c) The individual is responsible for supplying the necessary

 

services to operate the vehicle or vessel and equipment.

 

     (d) The individual's compensation is based on factors related

 

to the work performed, such as a mileage-based rate or a percentage

 

of any schedule of rates, and is not solely based on hours or time

 

expended.

 

     (e) The individual substantially controls the means and manner

 

of performing services in conformance with regulatory requirements

 

and specifications of a shipper.

 

     (f) The contracting entity and the individual sign and date an

 

agreement that the individual will substantially meet the

 

conditions in subdivisions (a) to (e) and that the individual

 


agrees to be an independent contractor and not an employee. The

 

agreement shall be produced on the demand of the director or the

 

director's agent.

 

     (2) An individual from whom an employer is required to

 

withhold federal income tax is prima facie considered to perform

 

services in employment in an employment relationship for purposes

 

of classification as an employee.

 

     Sec. 3. An employer or an agent of an employer shall not

 

misclassify an employee in a report required under the laws of this

 

state. If the misclassification results in a lessening or avoidance

 

of a legal obligation to the employee, another individual, or this

 

state, the employer or agent is subject to the sanctions provided

 

in the statute under which the report was required.