Office of Professional Regulation (OPR)

Discussion of Sunrise Assessment: Home Improvement and Construction Contractors

The Sunrise Review from the Secretary of State’s Office of Professional Regulation has been completed on the home improvement/builder industry. It recommends mandatory registration for providers of home-improvement services, which include work done in or on residential homes, and voluntary state-backed certification. The yearly fee for registration would be $100. Certification standards will have to be developed. Registration licenses are “licenses” and consequently could be publicly warned, conditioned or revoked by the Office of Professional Regulation in the event of misconduct: “Registrants are answerable to civil and criminal process, are insured, and are compliant with other state law and obligations, such as child-support, taxes, judgment orders and, where applicable, the presence of workers’ compensation insurance.”

Witnesses:

    Colin Benjamin, Director, Office of Professional Regulation, Secretary of          State's Office 

Gabe Gilman, General Counsel, Secretary of State's Office

  Christopher Curtis, Chief, Public Protection Division, Attorney General's Office

    Representative Mark Higley, House Committee on Agriculture and Forestry

  William Badger, AIA Vermont

  Sandra Vitzthum, self

  Maureen Connolly, Executive Officer, Home Builders Association of Northern Vermont

        Jim Bradley, HBRA

        Robyn Steward, Director, Building Trade Association of Vermont

        Carol Miklos, Executive Director, AIA Vermont

Maureen Connelly and Jim Bradley spoke on behalf of HBRA in support of voluntary certification and registration, but opposed the notion that a builder would be forced to register. They also offered the much needed perspective of the homebuilder who is taken advantage of by a home owner, and brought up the possibility that education, not registration, would be key to mitigating harm in this area.

Rep. Mark Higley testified in opposition of mandatory registration, calling it a “slippery slope toward full licensure”.

Some key arguments by witnesses in support of mandatory registration:

            - The report from the AGs office states that the program “received 587 consumer complaints about home-improvement services, with claimed losses exceeding $3.1 million.”

            - AIA representatives testified to the damage they have seen left by sloppy home builders. Most of the complaints they spoke of either fell well below the threshold and would be small claims, OR were of a criminal nature.

NEXT STEPS:

We are working with HBRA National to offer the educational component of certification in Vermont.

We will continue to monitor and weigh in when necessary.

The Sunrise is not slated for discussion this week.

Priorities, Analysis

Misclassification

This remains a huge issue for legislative and executive branch officials as the 2018 legislative session begins to unfold.  Ellis Mills, along with a summer working group, assisted the Vermont Department of Labor (VTDOL) and the Vermont Department of Financial Regulation (VTDFR) in drafting guidance regarding misclassification, which was finally issued late last month. The guidance extends the ruling for the Bourbeau case (which determined a single member LLC qualifies as an independent contractor for purposes of unemployment insurance) to include workers’ compensation insurance. VTDFR has issued this guidance to insurance carriers across the state.

Even though the guidance is an encouraging interim fix for our members and allies, there is still a desire among legislators and relevant state agencies (and certainly among Vermont homebuilders/remodelers) for a clear and emphatic legislative “fix” for the misclassification issue.

BILL	BILL STATUS	SPONSOR	NOTES
H.119	https://legislature.vermont.gov/bill/status/2018/H.119	Scheurmann	This bill proposes to establish a common definition of “independent contractor” for the workers’ compensation and unemployment insurance statutes. Doesn’t use the totality of the circumstance, instead it allows for any two circumstances out of the list to qualify someone as an I.C
H.223	https://legislature.vermont.gov/assets/Documents/2018/Docs/BILLS/H-0223/H-0223%20As%20Introduced.pdf	Poirier	This bill proposes to amend the definitions related to independent contractors in the workers’ compensation and unemployment insurance laws. Tracks closely with FLSA.
H.323	https://legislature.vermont.gov/bill/status/2018/H.323	Hooper	This bill proposes to amend definitions related to independent contractors in the workers’ compensation and unemployment compensation statutes.
H.574	https://legislature.vermont.gov/bill/status/2018/H.574	Poirier	This bill proposes to amend definitions related to independent contractors in the workers’ compensation and unemployment compensation statutes. Track closely with FLSA and attempts to close the person vs individual LLC loophole.
H.681	https://legislature.vermont.gov/bill/status/2018/H.681	O’Sullivan	This bill proposes to provide for notice at worksites of the requirements regarding employee classification; permit the Department of Labor to enter an employer’s premises for the purposes of investigating compliance with the workers’ compensation and unemployment compensation laws; permit the Department to obtain an injunction to enforce a stop-work order related to a violation of the workers’ compensation law; It also transfers misclassification enforcement to the Attorney General’s office.
S.73	https://legislature.vermont.gov/bill/status/2018/S.73	Sirotkin	This bill proposes to create an interagency commission to investigate, evaluate, and address the negative impacts from employee misclassification in Vermont on workers’ compensation rates, unemployment insurance contributions, and State tax revenues.
S.141	https://legislature.vermont.gov/bill/status/2018/S.141	Rodgers	This bill proposes to establish a common definition of “independent contractor” for the workers’ compensation and unemployment insurance statutes. Tracks closely with FLSA.

It’s worth highlighting a couple of the bills listed above.  H.574 is the newest iteration of a misclassification bill, introduced by Rep. Paul Poirier (I-Barre). It tracks closely with pending misclassification bills that use the FLSA standard but it also attempts to close the LLC loophole exposed by the Bourbeau Supreme Court case.

H.681 is also a bill that would provide even more potent enforcement powers to the VTDOL.  In addition, H.681 proposes to spread enforcement power to the Vermont Attorney General’s office.  The AG’s consumer protection office has increasingly focused on contractors/homebuilders in recent years and H.681 is yet another chance for them to scrutinize Vermont small businesspeople (the AG’s office was the driving force behind the Sunrise Review discussed later in this report).

In addition to misclassification, HBRANVT will be actively engaged in the following issues before the Vermont General Assembly:

Sunrise Review, Contractor Certification

Senate Committee on Government Operations reviewed a preliminary sunrise assessment for identifying the need to regulate home improvement and construction contractors. The Office of Professional Regulation (OPR) did not recommend full licensure, but does recommend the following:

1) Mandatory, minimally intrusive registration for providers of residential home-improvement services, that work above a specified monetary level, and

2) Voluntary, State-backed certification, benefitting those practitioners wishing to distinguish themselves in the marketplace, and those consumers seeking verified skills.

The recommended registration fee is $100 per year. Registration requirements would be the same requirements that all professionals must comply with (taxes, child support) but would not attach a level of qualification to perform the work.  In addition, the recommendation to include a voluntary State-backed certification that would add another level of confidence for consumers seeking information on who they hire to work on their home.

Stormwater

Last year, the bill to reduce the threshold on operational stormwater permits (H.39) made it out of the House Natural Resources Committee in time for the cross-over deadline on a 7-3-1 vote. Because it involves revenue, it was then committed to the House Ways and Means Committee. They discussed it only briefly and it squeaked by with a 6-5 vote. The decision was made not to release it to the floor with such a weak committee vote, so it's fate is now uncertain. It is not slated for discussion in the next couple of weeks, but we are monitoring it closely as water quality remains a major focus of the Vermont legislature.  

The past 3-4 years of efforts from the Vt Homebuilders has aidied in providing all Small Buisnesses in VT favorable new Guidelines regarding Workers' Comp requirments. 

You can view the Guidelines Here. 

The press release below has been released this week.

Vermont Builders Association Welcomes New State Workers’ Comp Guidelines

Burlington, Vt. –– The Home Builders & Remodelers Association of Northern Vermont (HBRANV) is celebrating new state guidelines issued to help employers understand the difference in workers’ compensation coverage requirements for employees and those for independent contractors.

The new “guidance,” as the document is called, follows a major victory for the association – and all small businesses in Vermont – embodied in a June 2017 ruling by the state Supreme Court. In that ruling, the court voted unanimously that a worker with a Limited Liability Company (LLC) could not legally be considered an individual, and therefore could not be an employee.   That decision applied to unemployment insurance for contract employees. The new guidance, which was jointly issued by the Department of Labor (DOL) and the Department of Financial Regulation (DFR), extends the court’s decision to apply to workers’ compensation for contract employees.

The DOL ensures employers have coverage for their employees and adjudicates disputes between injured workers and workers’ comp insurers. The DFR regulates workers’ comp policies and rates.

“The collaborative work of DOL and DFR, and the guidance we authored, will go a long way to providing clarity in the often-complex area of independent contractors,” said Michael Pieciak, Commissioner of DFR.

DOL Commissioner Lindsay Kurrle said the new guidance would help businesses understand a “confusing and cumbersome” law. “The department believes it is important that workers who ought to be covered are covered, without discouraging the use of true independent contractors and entrepreneurs,” she said.

Maureen Cregan Connolly, executive officer for the HBRANV, said that the Association, with the help of the Legal Action Fund of the National Association of Homebuilders, has taken the lead on the independent contractor issue. “We are proud to work to protect Vermont's small businesses, which makeup a vast majority of HBRANV membership.

The final public hearing was held on Tuesday Dec 12 th 2017 at the State House. The HBRA had Denis Bourbeau , Chair of Legislative Committee and Maggie Lenz, HBRA lobbiest from Ellis Mills attended the meeting via phone conference.

Denis spoke of the importance of clear language that will define who is a Contractor for the purpose of potential licensing or registration requirements.

Cost of no more than $100 per year to register is another vital consideration as we can not make participation in a program be cost prohibitive for a worker that wants to move up and become an independent.

The recent survey sent out to HBRA returned 75% votes in favor of Licensing or Registration and Denis clarified that the current position of the Home Builders of Vt is that the majority of Home Builders are in favor of some type of registration program.

Denis also stated to the committee that HBRA is in support of continuing education that will go along with a registration or Licensing program and HBRA will want to be a core provider of this education.

The remaining testimony from the hearing  was to have Registration as a preferred tool not Licensing.The main goal is to limit consumer fraud and improve accountability for the Home Construction and Remodling industry.

The committee will now be preparing a report to the legislature due Jan 1st. We will provide an update of the report when it is released.

The Legislature has put together a Committee to Review and recommend to the full Legislature the position that the State will take on if we should or should not have Contractor Licensing or overview in Vt. 

The first meeting of the Sunrise Review Committee, (this is the name of the Committee that is doing the review), will be at the State House on 10/24/2017. There will be several other meetings in the future that will allow the public and our HBRANV lobbyist and representatives to express their opinions on how the State should proceed.        

HBRANV will be sending out a survey to the membership to determine what position the membership of the organization wants to support. There are pros and cons to both sides of the issue. 

Pros:

·         Licensing may help the legitimate fully insured contractor to be more competitive when bidding against non-licensed and noninsured contractors.

·         Licensing will also help protect the public consumer, so they can be assured that when they hire a Licensed contractor that they are educated, experienced and fully insured. 

·        Continuing education if imposed will insure that all Licensed Contractors will have the up to date knowledge of all the new building systems and building codes as they continual change in the construction environment.

Cons:

·        State will have the ability to implement more requirements over time for all contractors that may be more than the original intent of protecting the consumer

·        State will have control of requirements to obtain a license to be able to operate as a legal Contracting Business. 

HBRANV will be representing our members position in these hearings and will be your voice to insure that Contractors rights and benefits are protected. Further updates as this review progresses will posted on this Blog. 

PLEASE post your COMMENTS on this issue below.

HBRA

FINAL LEGISLATIVE REPORT 2017

What a difference an election makes.

When Republican Phil Scott sailed into the governor’s office with a strong 52-44 win over Democrat Sue Minter, it set the stage for the current political environment we see today.

The Governor demanded a no new taxes budget from the Democratically-controlled legislature. He got it. Why? Because Scott has made an impressive case that Vermonters are with him and NOT the Democrats who want to raise taxes to increase social services.

If the election had been closer, Scott could not have driven such a hard bargain.

Now the governor is pushing his advantage. He is picking a fight with the Democrats over his proposal to remove health care negotiations from local schools and have it done at the state level. It was a skilled move, forcing Democrats to choose between their loyalty to the teachers union or their loyalty to Vermonters wanting a property tax cut.

Governor Scott has pledged to veto the budget over this standoff and so far Vermonters are with him. Even if he backs off at the last minute and does NOT veto the budget, he has won. He has made his point. And right now, Governor Scott is in control of Vermont politics and policy in Vermont.

What does this mean in a larger context? It means a more business friendly state government. It means the legislature will be less brazen in their attempt to control the business climate. It means the legislature will be looking for ways to work with Scott to get things done.

The other major reason for Scott’s political advantage besides the election is the inexperience of the legislative leadership. Senate President Tim Ashe and House Speaker Mitzi Johnson are new to their jobs and have been out-maneuvered by the Governor at every turn.

This will change as these leaders find their footing next year. But for now, there is a major opportunity for the business community to turn this political environment into a business opportunity.

H.39

Patrick O'Brien testified against H.39, the bill that lowers the threshold for operational stormwater permits. House Natural Resources Chair Rep. David Deen, D-Putney, the lead sponsor of this bill, consented to only one change recommended by the Agency of Natural Resources, which was the exclusion from this bill of redevelopments or expansions. The agency had also asked for a delay in implementation until 2020, but that request was denied. It passed out of House Natural Resources Committee in time for the crossover deadline on a 7-3 vote. Because it involved revenue, it was then committed to the House Ways and Means Committee. They discussed it only briefly and it squeaked by with a 6-5 vote. Chairwoman Rep. Janet Ancel, D-Calais, made the decision not to release it to the floor with such a weak committee vote. We have successfully lobbied Ways and Means to ensure the vote for H.39 remained weak, essentially buying time to work on the bill’s next stop, Senate Natural Resources. The makeup of that committee is more conservative than its House counterpart, and we have a much better chance at affecting the outcome with this committee.

ACT 250

The Senate and House supported a bill to review the state’s land use law, Act 250. The bill, H.424 will create a group called the “Commission on Act 250: the Next 50 Years” composed of seven legislators — three from each of the Legislature’s chambers, and one member of either chamber who is appointed jointly by the Committee on Committees and the House speaker.

The commission will be charged with three tasks:

1) Review Act 250’s goals while considering a variety of information and statistics to evaluate how well the law has worked since its passage in 1970.

2) Seek input from Vermonters “on their priorities for the future of the Vermont landscape, including how to maintain Vermont’s environment and sense of place.”

After that, the panel will write a report recommending changes to improve the law.

3) Receive advice from a group of executive branch members, including representatives of the Agency of Commerce and Community Development; the Agency of Agriculture, Food and Markets; and the Agency of Transportation. 

This group will deliver a report on its recommendations for Act 250 by October 2017.

Another group would also attend the commission’s meetings and offer advice. It would consist of planners, a professor, an environmental advocate, a developer, an environmental attorney.

S.135

The Miscellaneous Economic Development passed the Senate and the House on the last day of session. S.135, which has more than a dozen sections, creates a legislative study committee to review raising the minimum wage and what impacts it would have on the so-called benefits cliff, in which low-income people are discouraged from getting raises if it means losing benefits like subsidized health care and child care. Lawmakers agreed to allow six additional tax increment financing (TIF) districts, a tool that allows towns and cities to keep some property tax revenue to pay for public improvements. The new rules limit the number of new TIF districts to two per county.

The $35 Million Housing Bond was folded into the budget bill that the governor is threatening to veto. This way, in order to veto the budget, the Governor will be "killing his own puppy". 

The housing conferees agreed to extend for 10 years an existing property transfer tax that funds water-quality efforts. The first $1 million of next year’s revenue from the tax will pay the debt service on the housing bond. 

S.136

Senate Finance built a committee bill that, among other provisions, attempted to make contracts for commercial construction work worth more than $5,000 mandatory. Bart Frisbie from the Home Builders testified in front of House Commerce against this provision, and we successfully removed this section in its entirety from their version. After a week of fraught conference committee discussions, we remained firm and the bill finally passed the Senate and the House with this language removed.

SUNRISE REVIEW, INDEPENDENT CONTRACTOR LEGISLATION

HBRA met at the  VT DOL offices with Commissioner Lindsay Kurrle and her senior staff followed by a meeting with the Speaker of the House.  Attended:  Maureen Connolly, Denis Bourbeau, Bob Schwartz, Ellis Mills team.  The group was also able to meet informally with Chair of House Commerce, Rep. Bill Botzow, D-Bennington, while in the State House.

We briefed the Commissioner and Speaker about HBRA stance on pending employee misclassification legislation. Both meetings succeeded in laying the groundwork for a successful relationship between the Homebuilders and lawmakers/influencers. Both the Commissioner and the Speaker were sympathetic to the burdens created by a lack of clarity in the current employment classification statutes.

The media blitz created by HBRA’s press release and media pitches about the Vermont Supreme Court win for Great Northern Construction directly resulted in House Commerce taking up three pending independent contractor bills and scheduling two days of testimony. 

H.119, H.223, H.323

Employee misclassification bills were being discussed concurrently within House Commerce.  Denis Bourbeau testified on behalf of the HBRA. He advocated for language similar to last year’s H.867, clarification of independent contractor criteria in statute, and against the concept of a so-called tech/construction carve out. Mike Plageman of Structural Energy Corporation testified in favor of a carve out between tech and construction. He also encouraged the committee to delay their decision making on such a complex issue. David Mickenberg, a lobbyist for Working VT and Dan Barlow, Director of Public Policy at Vermont Businesses for Social Responsibility were among others who testified generally to the problems that workers potentially face when employers misclassify them.  They were both supportive of the language in H.223 and H.323 that tracks the Fair Labor Standards Act criteria for determining employee status. As none of these bills passed before the crossover deadline, the committee began work on a committee bill to define independent contractors for the purposes of unemployment insurance and workers compensation claims.

The committee bill was taken off the table abruptly after Cathy Lamberton testified against a carve out for mandatory workers comp on construction sites. Chairman Rep. Botzow had grown frustrated with the stakeholders inability to compromise and scrapped the entire thing. Rep. Poirier, I-Barre, threw a fit upon hearing that work was over, stormed out of committee, asked for reassignment, and never returned. We are supporting his request for reassignment.

We met with Tayt Brooks, now the Governor's Director of Affordability and Economic Initiatives, to go over our position on independent contractor legislation, the sunrise review, etc. We have followed up with him since re: the Sunrise Review, and our work on independent contractor bills. He is hoping to begin some rule writing this year to circumvent the legislature altogether. We have promised him a summary of recent incidents with the DOL harassing Home Builder’s, and await that information from your association to pass along to him.

At the request of the Attorney General’s office, Senate Finance sent a letter to the Secretary of State’s office requesting a Sunrise Review of Home Improvement Contractors this summer. A Sunrise Review is an investigation into a particular occupation or industry to evaluate whether or not there is a need for licensing and/or regulations. It’s conducted by Professional Regulation within the Secretary of State’s office, and it MUST go forward once the report is requested.  The AG’s office had their sights on this from the beginning, and we weren't able to prevent the request. However, the process begins by assuming said industry doesn’t need regulating, and the burden of proof is on those who will try to prove that it does. We met with the man in charge of this review, Colin Benjamin, and he has agreed to work closely with us during this process. We will have the chance to weigh in with our concerns over the summer. Both Colin Benjamin and Secretary of State Jim Condos have told us that they have no desire to take on this review.

CANNABIS

A Senate proposal of an amendment to a fentanyl bill legalizing home cultivation of marijuana and creating a commission to create tax and regulate legislation passed both the Senate and the House. It legalizes the cultivation of two mature marijuana plants and possession of up to an ounce, beginning in July, 2018. The commission must have their legislative language reported to the general assembly by November of this year. Whether or not the Governor will veto, sign, or let pass without his signature remains to be seen.

NEXT STEPS:

Legislative meeting with HBRA and Ellis-Mills set for Tuesday, May 23.