House Bill No. 252
Introduced By molnar, vick, prouse, tash, boharski, sliter, bankhead, miller, beaudry, wells, arnott, orr, jore, holland, devaney, mcgee, curtiss, keenan, bitney, baer, estrada, gage
A Bill for an Act entitled: "An Act generally revising the laws governing contractors and independent contractors;
repealing contractor registration requirements; eliminating bonding requirements for contractors;
requiring the refund of
contractor registration fees; ELIMINATING INVESTIGATORY, ENFORCEMENT, NOTICE AND APPEAL
PROCEDURES, AND PENALTY PROVISIONS RELATING TO CONTRACTOR REGISTRATION; DECREASING
THE FEE FOR THE ISSUANCE OF THE INITIAL CERTIFICATE TO A MAXIMUM OF $50 AND THE FEE FOR
THE RENEWAL OR REINSTATEMENT OF A CERTIFICATE TO A MAXIMUM OF $50; PROVIDING AN
EXEMPTION FOR FIRE SUPPRESSION OR PROTECTION LICENSEES, FOR CONTRACTORS IN THE LOGGING
INDUSTRY WHO BUILD FOREST ACCESS ROADS, AND FOR INDEPENDENT CONTRACTORS WHO HAVE
NO EMPLOYEES; PROVIDING THAT AN INDEPENDENT CONTRACTOR EXEMPTION REMAINS IN EFFECT
FOR 3 YEARS; PROVIDING FOR A $25 FEE FOR THE INITIAL EXEMPTION APPLICATION AND FOR EACH
SUBSEQUENT RENEWAL; amending sections 39-71-118, 39-9-101, 39-9-102, 39-9-201, 39-9-204, 39-9-206, 39-9-207,
39-9-211, 39-9-301, 39-9-303, 39-9-401, 39-71-120, AND 39-71-401, and 39-71-405, MCA; repealing sections 39-3-701,
39-3-702, 39-3-703, 39-3-705, 39-3-706, 39-9-101, 39-9-102, 39-9-103, 39-9-201, 39-9-202, 39-9-203, 39-9-204,
39-9-205, 39-9-206, 39-9-207, 39-9-211, 39-9-301, 39-9-302, 39-9-303, 39-9-304, 39-9-401, 39-9-402, 39-9-403,
39-9-404, 39-9-405, 39-9-406, 39-9-407, 39-9-408, 39-9-409, and 39-9-410, MCA; and providing an effective date."
WHEREAS, THE CONTRACTOR REGISTRATION PROGRAM AFFECTS AN INDUSTRY IN MONTANA THAT HAS A HIGH NUMBER OF ACCIDENTS, RESULTING IN WORKERS' COMPENSATION RATES THAT ARE HIGHER THAN OTHER INDUSTRIES' AND CREATING A SITUATION THAT OFTEN RESULTS IN NONCOMPLIANCE WITH THE REQUIREMENTS OF THE WORKERS' COMPENSATION ACT AND THE UNEMPLOYMENT INSURANCE LAW; AND
WHEREAS, THE CONTRACTOR REGISTRATION PROGRAM PROVIDES NEEDED STRUCTURE TO THE CONSTRUCTION INDUSTRY BY PROVIDING A MEANS TO DISTINGUISH, PRIOR TO AN ACCIDENT, THOSE PERSONS WHO QUALIFY AS INDEPENDENT CONTRACTORS AND THOSE EMPLOYERS WHO ARE REQUIRED TO PROVIDE WORKERS' COMPENSATION COVERAGE FOR THEIR EMPLOYEES; AND
WHEREAS, THE CONTRACTOR REGISTRATION LAW PROTECTS A CONTRACTOR FROM THE LIABILITIES FOR WORKERS' COMPENSATION AND UNEMPLOYMENT INSURANCE OBLIGATIONS THAT EXIST FROM CONTRACTING WITH A CONTRACTOR WHO IS NOT IN COMPLIANCE WITH THOSE LAWS BY REMOVING THOSE LIABILITIES WHEN A CONTRACTOR CONTRACTS WITH A REGISTERED CONTRACTOR.
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 39-71-118, MCA, is amended to read: "39-71-118. Employee, worker, volunteer, and volunteer firefighter defined. (1) The term "employee" or "worker"
means: (a) each person in this state, including a contractor other than an independent contractor, who is in the service of an
employer, as defined by 39-71-117, under any appointment or contract of hire, expressed or implied, oral or written. The
terms include aliens and minors, whether lawfully or unlawfully employed, and all of the elected and appointed paid public
officers and officers and members of boards of directors of quasi-public or private corporations, except those officers
identified in 39-71-401(2), while rendering actual service for the corporations for pay. Casual employees, as defined by
39-71-116, are included as employees if they are not otherwise covered by workers' compensation and if an employer has
elected to be bound by the provisions of the compensation law for these casual employments, as provided in 39-71-401(2).
Household or domestic employment is excluded. (b) any juvenile performing work under authorization of a district court judge in a delinquency prevention or rehabilitation
program; (c) a person receiving on-the-job vocational rehabilitation training or other on-the-job training under a state or federal
vocational training program, whether or not under an appointment or contract of hire with an employer, as defined in this
chapter, and whether or not receiving payment from a third party. However, this subsection does not apply to students
enrolled in vocational training programs, as outlined in this subsection, while they are on the premises of a public school or
community college. (d) an aircrew member or other person employed as a volunteer under 67-2-105; (e) a person, other than a juvenile as defined in subsection (1)(b), performing community service for a nonprofit
organization or association or for a federal, state, or local government entity under a court order, or an order from a
hearings officer as a result of a probation or parole violation, whether or not under appointment or contract of hire with an
employer, as defined in this chapter, and whether or not receiving payment from a third party. For a person covered by the
definition in this subsection (1)(e): (i) compensation benefits must be limited to medical expenses pursuant to 39-71-704 and an impairment award pursuant to
39-71-703 that is based upon the minimum wage established under Title 39, chapter 3, part 4, for a full-time employee at
the time of the injury; and (ii) premiums must be paid by the employer, as defined in 39-71-117(3), and must be based upon the minimum wage
established under Title 39, chapter 3, part 4, for the number of hours of community service required under the order from
the court or hearings officer. (f) an inmate working in a federally certified prison industries program authorized under 53-1-301; and (g) a person who is an enrolled member of a volunteer fire department as described in 7-33-4109 or a person who provides
ambulance services under Title 7, chapter 34, part 1. (2) The terms defined in subsection (1) do not include a person who is: (a) participating in recreational activity and who at the time is relieved of and is not performing prescribed duties,
regardless of whether the person is using, by discount or otherwise, a pass, ticket, permit, device, or other emolument of
employment; (b) performing voluntary service at a recreational facility and who receives no compensation for those services other than
meals, lodging, or the use of the recreational facilities; or (c) performing services as a volunteer, except for a person who is otherwise entitled to coverage under the laws of this
state. As used in this subsection (2)(c), "volunteer" means a person who performs services on behalf of an employer, as
defined in 39-71-117, but who does not receive wages as defined in 39-71-123. (3) With the approval of the insurer, an employer may elect to include as an employee under the provisions of this chapter
any volunteer as defined in subsection (2)(c). (4) (a) The term "volunteer firefighter" means a firefighter who is an enrolled and active member of a fire company
organized and funded by a county, a rural fire district, or a fire service area. (b) The term "volunteer hours" means all the time spent by a volunteer firefighter in the service of an employer, including
but not limited to training time, response time, and time spent at the employer's premises. (5) (a) If the employer is a partnership, sole proprietor, or a member-managed limited liability company, the employer
may elect to include as an employee within the provisions of this chapter any member of the partnership, the owner of the
sole proprietorship, or any member of the limited liability company devoting full time to the partnership, proprietorship, or
limited liability company business. (b) In the event of an election, the employer shall serve upon the employer's insurer written notice naming the partners,
sole proprietor, or members to be covered and stating the level of compensation coverage desired by electing the amount of
wages to be reported, subject to the limitations in subsection (5)(d). A partner, sole proprietor, or member is not considered
an employee within this chapter until notice has been given. (c) A change in elected wages must be in writing and is effective at the start of the next quarter following notification. (d) All weekly compensation benefits must be based on the amount of elected wages, subject to the minimum and
maximum limitations of this subsection. For premium ratemaking and for the determination of weekly wage for weekly
compensation benefits, the electing employer may elect not less than $900 a month and not more than 1 1/2 times the
average weekly wage, as defined in this chapter. (6) (a) If the employer is a quasi-public or a private corporation or a manager-managed limited liability company, the
employer may elect to include as an employee within the provisions of this chapter any corporate officer or manager
exempted under 39-71-401(2). (b) In the event of an election, the employer shall serve upon the employer's insurer written notice naming the corporate
officer or manager to be covered and stating the level of compensation coverage desired by electing the amount of wages to
be reported, subject to the limitations in subsection (5)(d). A corporate officer or manager is not considered an employee
within this chapter until notice has been given. (c) A change in elected wages must be in writing and is effective at the start of the next quarter following notification. (d) All weekly compensation benefits must be based on the amount of elected wages, subject to the minimum and
maximum limitations of this subsection. For premium ratemaking and for the determination of the weekly wage for weekly
compensation benefits, the electing employer may elect not less than $200 a week and not more than 1 1/2 times the
average weekly wage, as defined in this chapter. (7) (a) The trustees of a rural fire district, a county governing body providing rural fire protection, or the county
commissioners or trustees for a fire service area may elect to include as an employee within the provisions of this chapter
any volunteer firefighter. A volunteer firefighter who receives workers' compensation coverage under this section may not
receive disability benefits under Title 19, chapter 17. (b) In the event of an election, the employer shall report payroll for all volunteer firefighters for premium and weekly
benefit purposes based on the number of volunteer hours of each firefighter times the average weekly wage divided by 40
hours, subject to a maximum of 1 1/2 times the average weekly wage. (8) Except as provided in chapter 8 of this title, an employee or worker in this state whose services are furnished by a
person, association, contractor, firm, limited liability company, or corporation, other than a temporary service contractor, to
an employer, as defined in 39-71-117, is presumed to be under the control and employment of the employer. This
presumption may be rebutted as provided in 39-71-117(3). (9) For purposes of this section, an "employee or worker in this state" means: (a) a resident of Montana who is employed by an employer and whose employment duties are primarily carried out or
controlled within this state; (b) a nonresident of Montana whose principal employment duties are conducted within this state on a regular basis for an
employer; (c) a nonresident employee of an employer from another state engaged in the construction industry, as defined in
39-71-116, within this state; or (d) a nonresident of Montana who does not meet the requirements of subsection (9)(b) and whose employer elects
coverage with an insurer that allows an election for an employer whose: (i) nonresident employees are hired in Montana; (ii) nonresident employees' wages are paid in Montana; (iii) nonresident employees are supervised in Montana; and (iv) business records are maintained in Montana. (10) An insurer may require coverage for all nonresident employees of a Montana employer who do not meet the
requirements of subsection (9)(b) or (9)(d) as a condition of approving the election under subsection (9)(d)."
SECTION 1. SECTION 39-9-101, MCA, IS AMENDED TO READ:
"39-9-101. Purpose. It is the purpose of this chapter to ensure that all construction contractors are competing fairly and in compliance with state laws."
SECTION 2. SECTION 39-9-102, MCA, IS AMENDED TO READ:
"39-9-102. Definitions. As used in this chapter, the following definitions apply:
Contractor Construction contractor" means a person, firm, or corporation that:
(a) in the pursuit of an independent business, offers to undertake, undertakes, or submits a bid to construct, alter, repair, add to, subtract from, improve, move, wreck, or demolish for another a building, highway, road, railroad, excavation, or other structure, project, development, or improvement attached to real estate, including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works, or the installation or repair of roofing or siding; or
(b) in order to do work similar to that described in subsection (1)(a) upon the construction contractor's property, employs members of more than one trade on a single job or under a single building permit, except as otherwise provided.
(2) "Department" means the department of labor and industry.
(3) "General contractor" means a contractor whose business operations require the use of more than two unrelated
building trades or crafts that the contractor intends to supervise or perform in whole or in part. (4) "Specialty contractor" means a contractor whose operations do not fall within the definition of general contractor. (5) "Verification" means the receipt and duplication by a political subdivision of a contractor registration card that is
current on its face."
SECTION 3. SECTION 39-9-201, MCA, IS AMENDED TO READ:
"39-9-201. Registration required --
prohibited acts -- criminal penalty application. (1) On or before July 1, 1996,
each Each construction contractor shall register with the department.
It is a misdemeanor for a contractor to: (a) advertise, offer to perform work, submit a bid, or perform work as a contractor: (i) without being registered as required by this chapter; or (ii) when the contractor's registration is suspended; (b) use a false or expired registration number in purchasing or offering to purchase an advertisement for which a contractor
registration number is required; or (c) transfer a valid registration to an unregistered contractor to work under a registration issued to another contractor. (3) The department may cause the criminal proceedings for a misdemeanor action under this chapter to be initiated for
prosecution in the lowest court of concurrent jurisdiction in the county where the infraction occurs An applicant for
registration as a construction contractor shall submit an application under oath on a form to be provided by the department
that must include the following information:
(a) the applicant's social security number;
(b) proof of compliance with workers' compensation laws;
(c) the I.R.S. employer identification number, if any; and
(d) the name and address of:
(i) each partner if the applicant is a firm or partnership;
(ii) the owner if the applicant is an individual proprietorship;
(iii) the corporate officers and registered agent if the applicant is a corporation; or
(iv) the manager of a manager-managed limited liability company or the members of a member-managed limited liability company and the registered agent if the applicant is a limited liability company."
SECTION 4. SECTION 39-9-204, MCA, IS AMENDED TO READ:
"39-9-204. Certificate of registration -- issuance -- duration
-- renewal -- suspension. (1) The department shall issue
to the applicant a certificate of registration upon compliance with the registration requirements of this chapter.
If the department approves an application, it shall issue a certificate of registration to the applicant. The department
shall place the expiration date on the certificate. Except as provided in subsection (3), the The certificate is valid until the
earliest date of: (a) 1 year for 3 years ; or (b) the date the bond expires; or (c) the date the workers' compensation or unemployment insurance expires or any applicable exemption terminates. (3) The certificate issued under this section to an independent contractor is invalid on the date the contractor hires
employees unless the contractor provides proof to the department of workers' compensation coverage for those employees. (4) A contractor may supply a short-term bond or insurance policy to bring its registration period to the full 1 year. (5) If a contractor's surety bond or other security has an unsatisfied judgment against it or it is canceled, the contractor's
registration is automatically suspended on the effective date of the impairment or cancellation. The department shall give
notice of the suspension to the contractor."
SECTION 5. SECTION 39-9-206, MCA, IS AMENDED TO READ:
"39-9-206. Fees -- education program. (1) The department shall charge fees for:
(a) issuance, renewal, and reinstatement of certificates of registration; and
(b) changes of name, address, or business structure.
(2) The department shall set the fees by administrative rule. The fees shall cover the full cost of issuing certificates, filing papers and notices, and administering and enforcing this chapter. The costs include reproduction, travel, per diem, and administrative and legal support costs.
(3) The fees charged in subsection (1)(a) may not exceed
(a) $50 for the initial registration certificate; or
(b) $50 for the renewal or reinstatement of a registration certificate.
(4) The fees collected under this section must be deposited in the state special revenue account to the credit of the department for the administration and enforcement of this chapter.
(5) The department shall establish, cooperatively with representatives of the building industry, an industry and consumer information program, funded with 15% of the fees, to educate the building industry about the registration program and to educate the public regarding the hiring of building construction contractors.
(6) The fee for a joint application for a certificate of registration and an independent contractor exemption may not exceed the fee charged for a certificate of registration."
SECTION 6. SECTION 39-9-207, MCA, IS AMENDED TO READ:
Registration prerequisite to suit or lien claim Contractor registration -- limiting liability. (1) A person
engaged in the business or acting in the capacity of a contractor may not bring or maintain an action in any court of this
state for the collection of compensation for the performance of any work or for breach of contract for which registration is
required under this chapter without alleging and proving that the contractor was a registered contractor and held a current
and valid certificate of registration at the time the contractor entered the contract for the performance of work. (2) For the purposes of this section, the court may not find a contractor in compliance with the registration requirements of
this chapter unless: (a) the department has on file the information required by 39-9-202; and (b) the contractor has a current bond or other security as required by 39-9-203. (3) In determining whether a contractor is in compliance with the registration requirements of this chapter, the court shall
consider the length of time during which the contractor did not hold a valid certificate of registration. (4) A contractor may not bring or maintain a lien claim under Title 71, chapter 3, part 5, unless the contractor is registered
at the time of entering into a contract. (5) A person, including a construction contractor, engaging the services of another a registered construction contractor is
not liable as an employer under 39-71-405 for workers' compensation and unemployment insurance coverage or for wages
and fringe benefits for the other registered construction contractor or for any employee of the other construction contractor
if the contractor verifies with the department that the other contractor with whom the contractor is contracting for services
is registered as provided under this chapter."
SECTION 7. SECTION 39-9-211, MCA, IS AMENDED TO READ:
"39-9-211. Exemptions. This chapter does not apply:
(1) to an authorized representative of the United States government, the state of Montana, or any incorporated municipality, county, alternative form of local government, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state;
(2) to an officer of a court acting within the scope of office;
(3) to a public utility operating under the regulations of the public service commission or to a rural cooperative utility operating under Title 35, chapter 18, in construction, maintenance, or development work incidental to its own business;
(4) to the repair or operation incidental to the discovery or production of oil or gas or incidental to the drilling, testing,
abandoning, or other operation of an oil or gas well or a surface or underground mine or mineral deposit
by an owner or lessee;
(5) to the sale or installation of finished products, materials, or articles of merchandise that are not actually fabricated into and do not become a permanent fixed part of a structure;
(6) to the construction, alteration, improvement, or repair carried on within the limits and boundaries of a site or reservation under the exclusive legal jurisdiction of the federal government;
(7) to a person who only furnished materials, supplies, or equipment without fabricating them into or consuming them in the performance of the work of the construction contractor;
(8) to work or operation on one undertaking or project considered of a casual, minor, or inconsequential nature, by one or
more contracts, the aggregate contract price of which, for labor and materials and all other items, is less than
$500 $2,500 a
job. The exemption prescribed in this subsection does not apply when the work or construction is only a part of a larger or
major operation, whether undertaken by the same or a different construction contractor, or in which a division of the
operation is made into contracts of amounts of less than $500 $2,500 a job for the purpose of evasion of this chapter or
otherwise. The exemption prescribed in this subsection does not apply to a person who advertises or puts out any sign or
card or other device that might indicate to the public that the person is a contractor or is qualified to engage in the business
of a contractor.
except when work is performed by a registered contractor, to a construction or operation incidental to the construction
or repair: farmer or rancher while engaged in a farming, dairying, agriculture, viticulture, horticulture, or stock or poultry
operation; (a)(10) of irrigation and drainage ditches of to an irrigation district or reclamation district; (b) of a farming, dairying, agriculture, viticulture, horticulture, or stock or poultry operation; or (c)(11) to an operation related to clearing or other work upon land in rural districts for fire prevention purposes; (10)(12) to an owner who contracts for a project with work to be performed by a registered construction contractor, but this
exemption does not apply to an owner who is otherwise covered by this chapter who constructs a residence on the owner's
property with the intention and for the purpose of promptly selling the improved property; (11)(13) to a person an owner working on the person's owner's property, whether occupied by the person owner or not, and
a person working on the person's residence, whether owned by the person or not, but this exemption does not apply to a
person an owner who is otherwise covered by this chapter who constructs an improvement on the person's owner's property
with the intention and for the purpose of promptly selling the improved property, unless the owner has continuously
occupied the property as the owner's primary residence for at least the last 12 months; (12)(14) to owners of commercial properties who use their own employees to do maintenance, repair, and alteration work in
or upon their own properties; (13)(15) to a licensed an architect, or civil or professional engineer, or professional land surveyor, licensed in Montana and
acting solely in a professional capacity; (14)(16) to an electrician or plumber, licensed in Montana, operating within the scope of the license; (15)(17) to a contract security company, licensed under Title 37, chapter 60, operating within the scope of the license; or (16)(18) to a person who engages in the activities regulated as an employee of a registered construction contractor with
wages as the sole compensation or as an employee with wages as the sole compensation;
(19) to a person or entity licensed under Title 50, chapter 39, to sell, install, or service fire suppression or fire protection equipment;
(20) to a water well contractor licensed under Title 37, chapter 43, performing the work of a water well contractor;
(21) to an enrolled tribal member or an association, business, corporation, or other entity, at least 51% of which is owned by an enrolled tribal member or members and whose business is conducted solely within the exterior boundaries of an Indian reservation;
(22) to a contractor engaged in the logging industry who builds forest access roads for the purpose of harvesting and transporting logs from forest to mill;
(23) to a person working on the person's own residence, if the residence is owned by a person other than the resident; or
(24) to an independent contractor who has no employees. However, an independent contractor may voluntarily elect to register under this chapter."
SECTION 8. SECTION 39-9-301, MCA, IS AMENDED TO READ:
"39-9-301. Business practices --
advertising -- penalty. (1) Except as provided in 39-9-205, a person who has registered
under one name as provided in this chapter may not engage in the business or act in the capacity of a construction
contractor under any other name unless that name also is registered under this chapter. (2) Except for telephone books, all advertising, contracts, correspondence, cards, signs, posters, papers, and documents that
show a contractor's name or address must show the contractor's name and address as registered under this chapter. (3) (a) The alphabetized listing of contractors appearing in the advertising section of directories, excluding telephone
books, and all advertising must show the contractor's current registration number. However, signs on motor vehicles and
on-premises signs do not constitute advertising under this section. (b) All materials used to directly solicit business from retail customers who are not businesses must show a contractor's
current registration number. A contractor may not use a false or expired registration number in purchasing or offering to
purchase an advertisement. Advertising by radio or television is not subject to this subsection. (4) A contractor may not advertise that the contractor is bonded because of the bond required to be filed provided in 39-9-203. (5)(2) A construction contractor may not falsify a registration number and use it in connection with a solicitation or
identification as a construction contractor. An individual construction contractor, partner, associate, agent, salesperson,
solicitor, officer, or employee of a construction contractor shall use a true name and address at all times while engaged in
the business or capacity of a construction contractor or in activities related to a construction contractor. (6)(3) (a) The finding of a violation of this section by the department at a hearing held in accordance with the Montana
Administrative Procedure Act subjects the person who commits the violation to a penalty of not more than $5,000, as
determined by the department. The required hearing may be held by telephone or by videoconference. A penalty collected
under this section must be deposited in the state special revenue account to the credit of the department for administration
and enforcement of this chapter.
(b) Penalties under this section do not apply to a violation that is determined to be an inadvertent error."
SECTION 9. SECTION 39-9-303, MCA, IS AMENDED TO READ:
"39-9-303. Department to compile and update list of registered construction contractors -- availability -- fee. (1) The department shall compile a list of all construction contractors registered under this chapter and update the list at least bimonthly. The list is public information and must be available to the public upon request for a reasonable fee.
(2) The department shall inform a person, firm, or corporation whether a construction contractor is registered. The department shall provide the information without charge, except for a reasonable fee for any copies made."
SECTION 10. SECTION 39-9-401, MCA, IS AMENDED TO READ:
"39-9-401. Violation -- infraction.
(1) It is a violation of this chapter and an infraction for any construction contractor
to: (a)(1) advertise, offer to perform work, submit a bid, or perform work as a construction contractor without being registered
as required by this chapter; (b)(2) advertise, offer to perform work, submit a bid, or perform work as a construction contractor when the construction
contractor's registration is suspended; or (c)(3) transfer a valid registration to an unregistered construction contractor or allow an unregistered construction
contractor to work under a registration issued to another construction contractor. (2) Each day that a contractor works without being registered as required by this chapter, works while the contractor's
registration is suspended, or works under a registration issued to another contractor is a separate infraction. Each worksite
at which a contractor works without being registered as required by this chapter, works while the contractor's registration is
suspended, or works under a registration issued to another contractor is a separate infraction."
Section 11. Section 39-71-120, MCA, is amended to read:
"39-71-120. Independent contractor defined. (1) An "independent contractor" is one who renders service in the course of an occupation and:
(a) has been and will continue to be free from control or direction over the performance of the services, both under the contract and in fact; and
(b) is engaged in an independently established trade, occupation, profession, or business
; and (c) has received an exemption granted under 39-71-401(3).
(2) An individual performing services for remuneration
who represents to the public that the individual is an independent
contractor is considered to be an independent contractor and not an employee under this chapter unless the requirements of
subsection (1) are met UNLESS THE REQUIREMENTS OF SUBSECTION (1) ARE MET. An individual representing to
the public that the individual is an independent contractor may not make claims against an employing unit ANY PERSON
FOR WHOM THE INDEPENDENT CONTRACTOR RENDERS SERVICE IN EXCHANGE FOR PAY OR ANY
OTHER CONSIDERATION. The department may not take action against a person relying on a claim of independent
contractor status pursuant to this subsection. (3) The department may not adopt rules to implement this section."
Section 12. Section 39-71-401, MCA, is amended to read:
"39-71-401. Employments covered and employments exempted. (1) Except as provided in subsection (2), the Workers' Compensation Act applies to all employers, as defined in 39-71-117, and to all employees, as defined in 39-71-118. An employer who has any employee in service under any appointment or contract of hire, expressed or implied, oral or written, shall elect to be bound by the provisions of compensation plan No. 1, 2, or 3. Each employee whose employer is bound by the Workers' Compensation Act is subject to and bound by the compensation plan that has been elected by the employer.
(2) Unless the employer elects coverage for these employments under this chapter and an insurer allows an election, the Workers' Compensation Act does not apply to any of the following employments:
(a) household and domestic employment;
(b) casual employment as defined in 39-71-116;
(c) employment of a dependent member of an employer's family for whom an exemption may be claimed by the employer under the federal Internal Revenue Code;
(d) employment of sole proprietors, working members of a partnership, or working members of a member-managed limited liability company, except as provided in subsection (3);
(e) employment of a broker or salesman performing under a license issued by the board of realty regulation;
(f) employment of a direct seller as defined in 26 U.S.C. 3508;
(g) employment for which a rule of liability for injury, occupational disease, or death is provided under the laws of the United States;
(h) employment of a person performing services in return for aid or sustenance only, except employment of a volunteer under 67-2-105;
(i) employment with a railroad engaged in interstate commerce, except that railroad construction work is included in and subject to the provisions of this chapter;
(j) employment as an official, including a timer, referee, or judge, at a school amateur athletic event, unless the person is otherwise employed by a school district;
(k) employment of a person performing services as a newspaper carrier or free-lance correspondent if the person performing the services or a parent or guardian of the person performing the services in the case of a minor has acknowledged in writing that the person performing the services and the services are not covered. As used in this subsection, "free-lance correspondent" is a person who submits articles or photographs for publication and is paid by the article or by the photograph. As used in this subsection, "newspaper carrier":
(i) is a person who provides a newspaper with the service of delivering newspapers singly or in bundles; but
(ii) does not include an employee of the paper who, incidentally to the employee's main duties, carries or delivers papers.
(l) cosmetologist's services and barber's services as defined in 39-51-204(1)(l);
(m) a person who is employed by an enrolled tribal member or an association, business, corporation, or other entity that is at least 51% owned by an enrolled tribal member or members, whose business is conducted solely within the exterior boundaries of an Indian reservation;
(n) employment of a jockey performing under a license issued by the board of horseracing from the time the jockey reports to the scale room prior to a race through the time the jockey is weighed out after a race if the jockey has acknowledged in writing, as a condition of licensing by the board of horseracing, that the jockey is not covered under the Workers' Compensation Act while performing services as a jockey;
(o) employment of an employer's spouse for whom an exemption based on marital status may be claimed by the employer under 26 U.S.C. 7703;
(p) a person who performs services as a petroleum land professional. As used in this subsection, a "petroleum land professional" is a person who:
(i) is engaged primarily in negotiating for the acquisition or divestiture of mineral rights or in negotiating a business agreement for the exploration or development of minerals;
(ii) is paid for services that are directly related to the completion of a contracted specific task rather than on an hourly wage basis; and
(iii) performs all services as an independent contractor pursuant to a written contract.
(q) an officer of a quasi-public or a private corporation or manager of a manager-managed limited liability company who qualifies under one or more of the following provisions:
(i) the officer or manager is engaged in the ordinary duties of a worker for the corporation or the limited liability company and does not receive any pay from the corporation or the limited liability company for performance of the duties;
(ii) the officer or manager is engaged primarily in household employment for the corporation or the limited liability company;
(iii) the officer or manager owns 20% or more of the number of shares of stock in the corporation or owns 20% or more of the limited liability company; or
(iv) the officer or manager is the spouse, child, adopted child, stepchild, mother, father, son-in-law, daughter-in-law, nephew, niece, brother, or sister of a corporate officer who owns 20% or more of the number of shares of stock in the corporation or who owns 20% or more of the limited liability company.
(3) (a) A sole proprietor, a working member of a partnership, or a working member of a member-managed limited liability company who represents to the public that the person is an independent contractor shall elect to be bound personally and individually by the provisions of compensation plan No. 1, 2, or 3 but may apply to the department for an exemption from the Workers' Compensation Act.
(b) The application must be made in accordance with the rules adopted by the department. There is
no A $25 fee for the
initial application. Any subsequent application RENEWAL must be accompanied by a $25 application fee. The application
fee must be deposited in the administration fund established in 39-71-201 to offset the costs of administering the program.
(c) When an application is approved by the department
or when the contracting parties agree to an independent contractor
status, it is conclusive as to the status of an independent contractor and precludes the applicant from obtaining benefits
under this chapter.
The exemption, if approved, remains in effect for 1 year following the date of the department's approval. To maintain
the independent contractor status, an independent contractor shall annually submit a renewal application. A renewal
application must be submitted for all independent contractor exemptions approved as of July 1, 1995, or thereafter. The
renewal application and the $25 renewal application fee must be received by the department at least 30 days prior to the
anniversary date of the previously approved exemption. When an election of an exemption is approved by the department,
the election remains effective and the independent contractor retains the status of an independent contractor until the
independent contractor notifies the department of any change in status and provides a description of the independent
contractor's present work status THE EXEMPTION, IF APPROVED, REMAINS IN EFFECT FOR 3 YEARS
FOLLOWING THE DATE OF THE DEPARTMENT'S APPROVAL. TO MAINTAIN THE INDEPENDENT
CONTRACTOR STATUS, AN INDEPENDENT CONTRACTOR SHALL EVERY 3 YEARS SUBMIT A RENEWAL
APPLICATION. A RENEWAL APPLICATION MUST BE SUBMITTED FOR ALL INDEPENDENT CONTRACTOR
EXEMPTIONS APPROVED AS OF JULY 1, 1995, OR THEREAFTER. THE RENEWAL APPLICATION AND THE
$25 RENEWAL APPLICATION FEE MUST BE RECEIVED BY THE DEPARTMENT AT LEAST 30 DAYS PRIOR
TO THE ANNIVERSARY DATE OF THE PREVIOUSLY APPROVED EXEMPTION.
(e) A person who
purposely makes a false statement or misrepresentation concerning that person's status as an exempt
independent contractor is subject to a civil penalty of $1,000. The department may impose the penalty for each false
statement or misrepresentation. The penalty must be paid to the uninsured employers' fund. The lien provisions of
39-71-506 apply to the penalty imposed by this section.
(f) If the department denies the application for exemption, the applicant may contest the denial by petitioning for review of the decision by an appeals referee in the manner provided for in 39-51-1109. An applicant dissatisfied with the decision of the appeals referee may appeal the decision in accordance with the procedure established in 39-51-2403 and 39-51-2404.
(4) (a) A corporation or a manager-managed limited liability company shall provide coverage for its employees under the provisions of compensation plan No. 1, 2, or 3. A quasi-public corporation, a private corporation, or a manager-managed limited liability company may elect coverage for its corporate officers or managers, who are otherwise exempt under subsection (2), by giving a written notice in the following manner:
(i) if the employer has elected to be bound by the provisions of compensation plan No. 1, by delivering the notice to the board of directors of the corporation or to the management organization of the manager-managed limited liability company; or
(ii) if the employer has elected to be bound by the provisions of compensation plan No. 2 or 3, by delivering the notice to the board of directors of the corporation or to the management organization of the manager-managed limited liability company and to the insurer.
(b) If the employer changes plans or insurers, the employer's previous election is not effective and the employer shall again serve notice to its insurer and to its board of directors or the management organization of the manager-managed limited liability company if the employer elects to be bound.
(5) The appointment or election of an employee as an officer of a corporation, a partner in a partnership, or a member in or a manager of a limited liability company for the purpose of exempting the employee from coverage under this chapter does not entitle the officer, partner, member, or manager to exemption from coverage.
(6) Each employer shall post a sign in the workplace at the locations where notices to employees are normally posted, informing employees about the employer's current provision of workers' compensation insurance. A workplace is any location where an employee performs any work-related act in the course of employment, regardless of whether the location is temporary or permanent, and includes the place of business or property of a third person while the employer has access to or control over the place of business or property for the purpose of carrying on the employer's usual trade, business, or occupation. The sign must be provided by the department, distributed through insurers or directly by the department, and posted by employers in accordance with rules adopted by the department. An employer who purposely or knowingly fails to post a sign as provided in this subsection is subject to a $50 fine for each citation."
Section 4. Section 39-71-405, MCA, is amended to read: "39-71-405. Liability of employer who contracts work out. (1) An employer who contracts with a contractor or an
independent contractor to have work performed of a kind which that is a regular or a recurrent part of the work of the trade,
business, occupation, or profession of such the employer is not liable for the payment of benefits under this chapter to the
employees of the contractor or to the independent contractor if the contractor or independent contractor has not properly
complied with the coverage requirements of the Worker's Compensation Act. Any insurer who becomes liable for payment
of benefits may recover the amount of benefits paid and to be paid and necessary expenses from the contractor primarily
liable therein. (2) Where When an employer contracts to have any work to be done by a contractor other than or an independent
contractor, and the work so contracted to be done is a part or process in the trade or business of the employer, then the
employer is not liable to pay all benefits under this chapter to the same extent as if the work were done without the
intervention of the contractor, and the work so contracted to be done shall not be construed to be casual employment even if
the work contracted to be done is a part or process in the trade, business, occupation, or profession of the employer. Where
When an employer contracts work to be done as specified in this subsection, the contractor and the contractor's employees
shall may not come under that plan of compensation adopted by the employer. (3) Where When an employer contracts any work to be done, wholly or in part for the employer, by an independent
contractor, where and the work so contracted to be done is casual employment as to such the employer, then the contractor
shall become the is not an employer for the purposes of this chapter." NEW SECTION. Section 5. Fee refund. The department of labor and industry shall refund all fees collected under the
provisions of former 39-9-206.
NEW SECTION. SECTION 13. SEVERABILITY. IF A PART OF [THIS ACT] IS INVALID, ALL VALID PARTS THAT ARE SEVERABLE FROM THE INVALID PART REMAIN IN EFFECT. IF A PART OF [THIS ACT] IS INVALID IN ONE OR MORE OF ITS APPLICATIONS, THE PART REMAINS IN EFFECT IN ALL VALID APPLICATIONS THAT ARE SEVERABLE FROM THE INVALID APPLICATIONS.
NEW SECTION. Section 14. Repealer. Sections 39-3-701, 39-3-702, 39-3-703, 39-3-705, 39-3-706,
39-9-103, 39-9-201, 39-9-202, 39-9-203, 39-9-204, 39-9-205, 39-9-206, 39-9-207, 39-9-211, 39-9-301, 39-9-302,
39-9-303, 39-9-304, 39-9-401, 39-9-402, 39-9-403, 39-9-404, 39-9-405, 39-9-406, 39-9-407, 39-9-408, 39-9-409, and
39-9-410, MCA, are repealed.
NEW SECTION. Section 15. Effective date. [This act] is effective July 1, 1997.