Estimated read time: 3-4 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
Lori Prichard reporting
produced by Kelly JustSALT LAKE CITY -- A bi-partisan group of Utah lawmakers is set to take on a labor practice that reclassifies some workers as owners, allowing certain companies to skirt tax laws and employment protections.
The labor practice was first uncovered in a KSL 5 News investigation last May.
"You exposed the people and your viewing audience to what it really was," Sen. Karen Mayne, D-West Valley, told KSL News.
Mayne is alluding to the work force reclassification process of potentially thousands of Utah construction workers as "owners" under the limited liability corporation business model.
Critics say such a model exploits workers, now owners, who are responsible for covering their own payroll taxes, workers' compensation and employment benefits.
Senate Bill 35 attempts to reign in the reach of some LLCs using the model to reclassify all workers as owners. Mayne is the bill's chief sponsor.
In my mind's eye, this is landmark legislation.
–Sen. Karen Mayne
#mayne_quote
"In my mind's eye, this is landmark legislation," Mayne said. "This is as big as immigration because it has taken some of those people that were disadvantaged, they have put them in this kind of situation with (worker)/owners."
The West Valley senator said she made sure to have the support of the original author of the state's LLC laws, Sen. John Valentine, R-Orem. He serves as the bill's co-sponsor.
"I gathered support. I went to friends. I went to colleagues. I went to those people that are involved," Mayne said. "They came, and we formed a group, and that's where it started."
SB 35 attempts to restrict those who are labeled owners of an LLC by establishing certain criteria:
- The owner must be an active manager
- The owner must hold at least 20 percent ownership interest
- The owner must not be subject to workplace supervision
"We just want to make sure everybody is working for the same goal -- that is a good wage, doing a good job," said David Spatafore, a lobbyist hired by a consortium of construction industry business owners concerned about the effect of the labor practice.
"They want a quote, unquote 'level playing field,'" Spatafore said. "They want everyone in the construction industry to be good Utah citizens: pay good wages, withhold taxes, to pay workers comp for their workers in case of an injury, to pay unemployment compensation."
In a prepared statement, CSG Workforce Services, an LLC that employs the worker/owner model, said, "We support legislation that prevents misclassification of workers, ensures coverage of workers compensation insurance, liability insurance, tax withholding, and other protections for workers. We do not support legislation that would destroy our business model."
Mayne said she feels confident the bill has enough support from business owners, construction industry insiders, workers and legislators for the measure to pass.
The senator said her intent is to send a message: "If you are a rogue construction company owner, this legislation is coming after you."
CLICK HERE to read SB35.
E-mail: iteam@ksl.com
