Maine’s new definition of an independent contractor applies to unemployment, wage and hour and worker’s compensation cases according to the State Department of Labor Press Release
The new independent contractor definition goes into effect Dec. 31, 2012, replacing the current definitions under both the Workers’ Compensation Act and the Maine Department of Labor. Both agencies will operate under the same definition for all cases originating after the effective date.
This new law clarifies the conditions under which a worker should be classified as an employee or as an independent contractor. The independent contractor standard will be applied uniformly in the unemployment, wage and hour and worker’s compensation laws.
Under the new law, both the Maine Workers’ Compensation Board and the Maine Department of Labor will use the new standard to determine whether a person who performs services for payment is an employee or an independent contractor. Independent contractors must be free from the essential direction and control of the employing party and meet several other criteria.
Also included in this new law are clear penalties to deter the intentional misclassification of workers as independent contractors when they are employees per the standard. This practice not only creates a competitive disadvantage for those employers who correctly classify their workers but also increases unemployment tax premiums because fewer employers are paying appropriate taxes. Therefore, the new law includes penalties ranging up to $10,000 to deter this practice.
The criteria of the new law: Continue reading