Bill H.B. 2131
This bill would amend the Kansas Income Tax Act and create a section on misclassification of workers such that an individual performing services (which, for purposes of this bill, is defined as performance of any construction) for a contractor is deemed to be an employee of the contractor unless it is shown that the:
(1) individual has been and will continue to be free from control or direction over the performance of the service for the contractor, both under the contract of service and in fact;
(2) service performed by the individual is outside the usual course of services performed by the contractor; and
(3) individual is engaged in an independently established trade, occupation, profession or business, or is deemed a legitimate sole proprietor or partnership under subsection (c).
Subsection (c) provides that the sole proprietor or partnership performing services for a contractor as a subcontractor is deemed legitimate if it is shown that:
(1) The sole proprietor or partnership is performing the service free from the direction or control over the means and manner of providing the service, subject only to the right of the contractor for whom the service is provided to specify the desired result;
(2) the sole proprietor or partnership is not subject to cancellation or destruction upon severance of the relationship with the contractor;
(3) the sole proprietor or partnership has a substantial investment of capital in the sole proprietorship or partnership beyond ordinary tools and equipment and a personal vehicle;
(4) the sole proprietor or partnership owns the capital goods and gains the profits and bears the losses of the sole proprietorship or partnership;
(5) the sole proprietor or partnership makes its services available to the general public or the business community on a continuing basis;
(6) the sole proprietor or partnership includes services rendered on a federal income tax schedule as an independent business or profession;
(7) the sole proprietor or partnership performs services for the contractor under the sole proprietorship’s or partnership’s name;
(8) when the services being provided require a license or permit, the sole proprietor or partnership obtains and pays for the license or permit in the sole proprietorship’s or partnership’s name;
(9) the sole proprietor or partnership furnishes the tools and equipment necessary to provide the service;
(10) if necessary, the sole proprietor or partnership hires its own employees without contractor approval, pays the employees without reimbursement from the contractor and reports the employees’ income to the internal revenue service;
(11) the contractor does not represent the sole proprietorship or partnership as an employee of the contractor to its customers; and
(12) the sole proprietor or partnership has the right to perform similar services for others on whatever basis and whenever it chooses.
The bill would make it unlawful for an employer or entity to designate an individual as an employee, unless the employer or entity shows the provisions above.
The bill would allow interested parties to file complaints with the Department of Labor or to file suit in court. Civil penalties for a first violation would be up to $2,000 for each violation, with a separate violation consisting of each person and for each day the violation continues. Civil penalties for subsequent violations within a five-year period would be up to $3,000 for each violation.
Willful violations or knowingly conspiring with, aiding, abetting or assisting another entity or employer in misclassifying workers would be punishable as a Class C nonperson misdemeanor.
