Exclusion of certain independent contractors from coverage under the worker's compensation law and the unemployment insurance law

Currently, under the unemployment insurance (UI) law, coverage for services performed by an individual is dependent in part upon whether the individual is an "employee," which the UI law defines as any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit, subject to certain exceptions. One such exception is that an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker is not considered an employee if the individual meets the following criteria: 1) the services of the individual are performed free from control or direction by the employing unit over the performance of his or her services, as determined by considering various factors, including five specified in current law; and 2) the individual meets six or more of nine specified conditions related to the nature of his or her work. An employing unit is not required to pay UI contributions (taxes) on wages earned by an individual not considered an employee under the UI law, and the individual's wages may not be counted as base period wages for purposes of determining eligibility for UI benefits.

This bill creates another exception from the definition of employee under the UI law, which applies to an individual performing services for an employing unit other than a government unit, nonprofit organization, or Indian tribe in a capacity other than as a logger or trucker if all of the following apply to the individual: 1) the individual performs the services pursuant to a written agreement with the employing unit under which the individual or an entity owned by the individual has agreed or represented that the services are being performed as an independent contractor; 2) the individual performs the services primarily at the individual's residence and primarily using the individual's own tools and equipment; and 3) the individual performs the services free from control or direction of the employing unit, other than initial training and quality control. The bill provides that, for purposes of the bill, "primarily" means 75 percent or more. If an individual is not covered under the exception created in the bill, the individual may still be covered under the exception under current law if it is satisfied.