Policy & Politics: Summer Recap

The main political events this summer are the races for Governor and for control of the state legislature -- both of which will be decided in November. For the first time in decades, Democrats have a legitimate chance of winning a legislative majority, with the House more likely to flip than the Senate. Congressional District 1,  a contest between Amish Shah and Jay Feely, may be the most competitive race in the country.

Understandably, little policy work has moved forward in July and August. However, one issue is nearing resolution. As you may recall, the Industrial Commission proposed a rule a few months ago that would change how independent contractors are treated under Arizona law.

The proposed rule would have replaced the clear standards in the Declaration of Business Status law with an "economic reality" test, classifying a worker as an employee if his or her "dependency" on the business met that standard. This vaguer standard would have invited far more litigation and challenges against businesses currently using independent contractors. The likely effect would have been to reclassify many independent contractors as employees, requiring businesses to pay FICA, unemployment insurance, workers' compensation, payroll taxes, wage-and-hour costs, and related penalties and interest.  

At the board's request, I met with senior Commission officials to do some fact-finding. My role in this process was not advocacy just information gathering. Staff told me that, given the controversy the proposal generated, the Commission will be withdrawing it from consideration. Given this timing of this newsletter, we'll provide a full update at the next board meeting.