Lawmakers bow to privileged special interests
A bipartisan bill that would have done something to curb the illegal practice of unscrupulous North Carolina employers misclassifying their employees as independent contractors to avoid payroll taxes and insurance and undercut their law-abiding competition - a so-called "Contract to Cheat" that was exposed in a series of reports last year by the News & Observer and the Charlotte Observer - failed to pass before the General Assembly adjourned this week.
Ironically, the bill, HB 482, died after intense lobbying by the North Carolina Press Association, which objected to what they saw as a "poison pill" amendment added by Sen. Bob Rucho that would have required newspapers to pay for workers' compensation and unemployment benefits on their paper carriers.
Mandy Locke, whose reporting prompted lawmakers to introduce legislation to stop illegal worker misclassification, a practice that cheats the government out of $467 million a year in lost tax revenue and deprives workers of any insurance when they are hurt at work or laid off, reported on the failure of HB 482:
Rep. Gary Pendleton, a Raleigh Republican who sponsored the bill, said he had to admit defeat when many of his colleagues said they were getting pressure from their hometown publishers. He reluctantly agreed to send the bill to the House Rules Committee, where it could be revived next year.
Newspaper executives “wanted to keep their turf and, in turn, effectively killed a bill that would have done a lot of people a lot of good,” Pendleton said. Last week, he said that the state Department of Revenue would not single out carriers because “they are clearly independent contractors.”
The passage of legislation to end the Contract to Cheat was a major legislative priority of the North Carolina State AFL-CIO, one that showed promise when the bill garnered support from Republican lawmakers and businesses.
“We are deeply disappointed but not entirely surprised by the legislature's failure to protect workers from misclassification," said state AFL-CIO secretary-treasurer MaryBe McMillan in a statement:
"Yet again, legislators have chosen to protect the interests of well-heeled lobbyists at the expense of workers. Because of the legislature's inaction, workers will continue to lose wages and benefits, companies that abide by the law will continue to lose business to their unscrupulous competitors, and our state will continue to lose over $400 million in lost revenue. The cheaters win while the rest of us lose.”