*Red font in the legislation and regulation indicates changes from previous reporting

Missouri- HB 1137 (Independent Contractors)

Issue: Independent Contractor Classification Criteria

Affects:  Those who hire or are classified as independent contractors  

Send comments to: Regan Ratliff, rratliff@phta.org

Summary:  This bill seeks to establish who is classified as an ‘employee’ and who is classified as an ‘independent contractor’. 

An ‘employee’ is defined as any individual who performs services for an employer that would indicate an employer-employee relationship, unless the individual satisfies the independent contractor requirement. 

An ‘independent contractor’ is classified as a person who meets the following criteria:

(1) The person has signed a written contract with the employer that states the employer's intent to retain the services of the person as an independent contractor and contains acknowledgments that the person understands that he or she is:

(a) Providing services for the employer as an independent contractor;

(b) Not going to be treated as an employee of the employer;

(c) Not going to be provided by the employer with either workers' compensation benefits under chapter 287 or unemployment compensation benefits under chapter 288;

(d) Obligated to pay all applicable federal and state income taxes, if any, on any moneys earned pursuant to the contractual relationship, and that the employer will not make any tax withholdings from any payments from the employer; and

(e) Responsible for the majority of supplies and other variable expenses that he or she incurs in connection with performing the contracted services unless:

a. The expenses are for travel that is not local;

b. The expenses are reimbursed under an express provision of the contract; or

c. The supplies or expenses reimbursed are commonly reimbursed under industry practice;

(2) The person has filed, intends to file , or is contractually required to file, in regard to the fees earned from work, an income tax return with the Internal Revenue Service for a business or for earnings from self-employment;

(3) The person provides his or her services through a business entity including, but not limited to, a partnership, limited liability company, or corporation, or through a sole proprietorship;

(4) The person has the right to control the manner and means by which the work is to be accomplished, even though he or she may not have control over the final result of the work, provided that the employer may provide orientation, information, guidance, or suggestions about the employer's products, business, services, customers, and operating systems, and training otherwise provided by law; and

(5) The person satisfies three or more of the following:

(a) The person controls the amount of time personally spent providing services, provided that an agreement may be made with the employer relating to the final completion or final delivery time or schedule, range of hours, or the time entertainment is to be presented if the work contracted for is entertainment;

(b) The person has control over where the services are performed, except in the case of services that can only be performed at certain locations;

(c) The person is not required to work exclusively with one employer, unless:

a. A law, regulation, or ordinance prohibits the person from providing services to more than one employer; or

b. A license or permit that the person is required to maintain in order to perform the work limits the person to working for only one employer at a time and requires identification of the employer;

(d) The person is free to exercise independent initiative in soliciting others to purchase his or her services;

(e) The person is free to hire employees or to contract with assistants, helpers, or substitutes to perform all or some of the work;

(f) The person cannot be required to perform additional services without a new or modified contract;

(g) The person obtains a license or other permission from the employer to utilize any workspace of the employer in order to perform the work for which the person was engaged;

(h) The employer has been subject to an employment audit by the Internal Revenue Service and the Internal Revenue Service has not reclassified the person to be an employee or has not reclassified the category of workers to be employees; and

(i) The person is responsible for maintaining and bearing the costs of any required business licenses, insurance, certifications, or permits required to perform services. 

There have been serval groups that oppose this bill on the basis that it will make misclassification of workers easier and will not hold employers accountable to for certain expenses.  There have also been groups to support this bill on the basis that it will help define who is and who is not an employee. 

APSP members are encouraged to send comments on whether or not the GR team should engage in support of or against the language in this bill. 

Status: This bill has passed the House Workforce Development Committee and the House Legislative Oversight Committee.  No further hearings have been scheduled. 

Bill: https://house.mo.gov/billtracking/bills191/hlrbillspdf/2357H.02C.pdf