Missed opportunity: H.I.R.E. program

In the latest update from FSSA, Indiana missed out on the opportunity to put as many as many as 10,000 Hoosiers to work at half the cost to employers between April and September 2010. The H.I.R.E. program approved in March never moved forward because the agency spent April through June of this year holding “several discussions regarding implementation.”

Meanwhile, Illinois moved forward with the Put Illinois to Work program and helped 26,000 otherwise unemployed workers bring home paychecks during that period. Read an earlier post on programs in Illinois and other states>>

The federal funds – and the state’s opportunity – expired on October 1.

The update was made available at the request of the State Budget Committee. Read earlier entry from that meeting>>

Study committees hit wrap-up stage

Look for legislative study committees to be active this week giving final approval to findings and recommendations on a variety of issues. Most committees are due to wrap up work before a Nov. 1 deadline for reporting back to the Legislative Council. Recommendations by the committees will often become bills to be considered during the 2011 legislative session.

Final reports are expected in the following committees this week:

• Interim Study Committee on Gaming
• Environmental Quality Service Council
• Interim Study Committee on School Funding Formula
• Child Custody and Support Advisory Committee
• Rail Corridor Safety Committee
• Criminal Law and Sentencing Policy Study Committee
• Commission on State Tax and Financing Policy

See the complete committee schedule>>

Read more about the this year’s committees and their assigned topics in our June 2 post “Summer study committees announced”>>

How employers determine worker classification

On October 8 we posted an update from Sen. Karen Tallian about the state’s activity to reduce employer misclassification of workers. The article “Worker misclassification costs state big bucks” published on Sunday in The Times of Northwest Indiana (nwi.com)  provides a nice summary of how employers are to make the correct determination:

For your information

The Internal Revenue Service suggests employers determine whether a worker should be classified as an employee or an independent contractor based on a worker’s genuine independence from the employer.

In general, the more control an employer has over the worker, the more likely it is that worker should be paid as an employee and not an independent contractor.

The IRS recommends employers use the following questions to determine their level of control over their workers:

Does the company control or have the right to control what the worker does and how the worker does his or her job?

Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Read the more from the nwi.com article>>

Update: For more information on this topic, download the November 2010 NCSL Legisbrief on Employee Misclassification (PDF).

Fighting meth through ephedrine restrictions

State Senator Bob Deig of Mount Vernon joined a panel of experts to discuss Indiana’s growing methamphetamine problem on a recent episode of INFocus, a monthly show produced and aired by WTIU. Discussed on this episode, “Meth and Its Correlation to Over the Counter Drugs,” was whether Indiana law should be changed making the key ingredient in meth, ephedrine, available by prescription only.

Deig, who is a member of the Criminal Law and Sentencing Policy Study Committee that has been studying this issue this interim, explains that everything they’ve learned in the past two years tells him that making ephedrine a prescription drug is the most comprehensive way to address the problem. Although the electronic tracking systems that pharmaceutical companies have proposed would be more effective than the paper logging system now used in Indiana, Deig believes the tracking system leaves too many loopholes for “smurfers” and other criminals.

Also featured in the show is Rob Bovett, District Attorney of Lincoln County in Oregon. Oregon was the first state to make the change to prescription-only, and Bovett says since the change meth arrests have decreased 20 percent and meth lab busts have decreased 90 percent.

Watch the INFocus episode:

InFocus is a live, 30 minute monthly production, airing on WTIU and WFIU. Each show includes a panel of experts, discussing the proposed topic of the month. The focus of this program is to highlight issues or concerns in the state. See http://indianapublicmedia.org/infocus for more info and to watch past episodes.

Misclassification of workers under review

The Pension Management Oversight Committee took up the issue of worker misclassification during a Statehouse meeting on Wednesday, September 29. The committee heard from Dept of Labor Commissioner Lori Torres about guidelines and procedures for investigating misclassification questions and complaints.

Download the Indiana Department of Labor Report to Pension Management Oversight Commission on Employee Misclassification (PDF)>>

Watch a video update from the meeting by committee member Sen. Karen Tallian of Portage:

The Dept of Labor was required to make the presentation under Senate Enrolled Act 23 approved in 2010. The Act required Dept of Labor to develop “guidelines and procedures for investigating questions and complaints concerning employee classification and a plan for implementation of those guidelines and procedures” and to implement and adopted rule by August 1, 2011.

Information from the Dept of Labor 9/29/10 Report:

Definition of the Issue

States across the country have identified the misclassification of employees as independent contractors as a problem from multiple perspectives. Workers, businesses and government are all disadvantaged in varying degrees and ways by worker misclassification. Worker misclassification occurs when a worker who meets the statutory or common law definition of an employee is treated as a self employed worker or independent contractor. Whether by agreement, out of ignorance or misunderstanding, or intentionally, there are employers who fail to properly claim a worker as an employee. An employer does not avoid its obligation by failing to acknowledge a worker as an employee, but enforcing compliance with the law can be made more difficult.

Workers are disadvantaged when they are deprived of minimum wage or overtime pay and are forced to pay the employer’s portion of withholding taxes. Furthermore, they are left with no recourse if they are injured on the job, as they have no worker’s compensation coverage, and are not protected by occupational safety and health rules which also cover only employees. Those same workers have no access to the protection of the Americans with Disabilities Act, Age Discrimination in Employment Act and Family Medical Leave Act, among others. Some misclassification is discovered only when a worker is injured and seeks worker’s compensation coverage, only to find that none exists. Other misclassification is an intentional act on behalf of both the employer and the employee to avoid the reporting of wages and payment of tax obligations. Less sophisticated workers may not understand that despite an employer’s attempt to characterize them as non-employees, if they meet the definition, the employer is required to meet its obligations for them.

Employers are disadvantaged when competitors misclassify employees and accordingly have lower labor costs. They lose work to these employers who are seemingly rewarded for their misclassification. These employers generally fail to keep records required of employers in Indiana. Additionally, those same employers avoid the need to document a worker’s right to work legally in the U.S. and Indiana.

Governments are disadvantaged when employers fail to pay premiums to the Unemployment Insurance Trust Fund for individuals deemed employees by UI law. Governments also are harmed by the failure of an employer to withhold taxes on an employee, particularly due to the increased challenges of recovering taxes due directly from an individual. Furthermore, those individuals that are injured on the job without the workers compensation safety net to which they are entitled often becomes users of other social services as a result of those injuries and their inability to work.

Real Ideas, Real Jobs: Proposals for Indiana’s new economy

INDIANAPOLIS –Senate Democrats released a package of proposals today aimed at spurring business activity and creating new jobs in Indiana. Focused on fostering entrepreneurial ventures and leveraging small business investments, members of the Senate Democratic Caucus believe the proposals would improve Indiana’s job market and generate income to support families and communities.

A recent report from the U.S. Bureau of Economic Analysis indicated that Indiana is ranked 45th among the states in personal income growth.

In fact, Hoosiers have experienced a negative average quarterly growth rate over the past two years when adjusted for inflation, with earnings falling 3.5 percent.

The package calls for a redirection of resources from ineffective programs to those that better serve Indiana’s employers and workers. The proposals require no new state funding or new taxes.

Included in the “Real Ideas, Real Jobs” proposal announced today:

Fast-track for small business: To help Indiana entrepreneurs and small businesses, the caucus wants to create a “Small Business Concierge Team” to provide one-stop service for Indiana start-ups and businesses looking to expand. The team of specialists from various state agencies would be dedicated to assisting small businesses by fast-tracking applications for state licensing and regulatory approval, as well as helping to identify capital and other growth resources. Critical to this service is that the state help entrepreneurs become “capital-ready” by connecting them with regional networks, universities, Certified Technology Parks, and small business incubators that offer management training and low-cost facilities.

Improve access to capital: Indiana scores poorly in small businesses’ ability to access capital, a critical factor for a state’s economic performance. Recent reports on Indiana’s ability to provide an attractive business environment indicate not only that the state ranks in the bottom half of states on access to capital, but that the state has lost ground over the past decade.

The plan calls for a revision of the defunct Capital Access Fund to provide low-interest loans to Indiana businesses. Funded through dollars redirected from failing economic incentives, the program would operate as a revolving loan fund for start up and expansion costs. Management of the program would be moved from the Indiana Economic Development Corporation (IEDC), where it has languished, to the Indiana Finance Authority which manages other state revolving funds.

New hire tax credit: Providing Indiana’s small businesses the same benefit now available to larger companies, this plan would increase access to a new hiring incentive created earlier this year. The program approved under Senate Enrolled Act 23 provides a tax credit for 10 percent of the wages paid to qualified new hires during a two-year period, lowering an employer’s labor costs for those new employees.  The Senate Democrats’ plan removes an existing requirement that a business hire at least 10 new employees to qualify for the tax credit, opening the program to small employers. Other eligibility requirements would be maintained.

Review and reinvest state dollars – beginning with job creation incentives: Senate Democrats want to re-establish the legislative Sunset Evaluation Committee to annually review state programs and suggest potential cuts from ineffective programs, beginning with a focus on identifying IEDC job incentives that have not produced jobs and reinvesting in those that are successful. This committee would ensure that our limited state dollars are directed at the most effective programs benefiting job creation and income generation.

Preference in state contracts to companies that use Indiana labor and Indiana materials: Taxpayer money spent on state contracts should help put Hoosiers to work, not profit out-of-state companies. By requiring state contracts to contain a guarantee that at least 80 percent of the people working on those contracts will be Indiana residents, we can make the most of state projects by reinvesting in Indiana businesses and workers. The requirement would also be applied to professional services contracts that are not competitively bid, such as consultants hired by state agencies.

Additionally, the proposal would mandate that any state contract bid selection process give preference to a company when the principal office is located within the state. Current administrative practice allows the director of a project to take into account the distance to the principal office from the job site, but does not require that the office be located in Indiana.

Release state infrastructure project funds: Finally, Senate Democrats restated their call for the state to immediately begin work on planned construction projects, state universities capital projects, roads and highways and other state infrastructure investments. Many projects have already been authorized by the General Assembly under the state budget signed into law by Governor Daniels in 2009, but have not been put out for bids.

In September Senate Democrats pushed the State Budget Agency to release bonding authority for five university projects that would create as many as 3,000 jobs. Those jobs would have translated into as much as $100 million in personal earnings by Hoosier workers, benefiting local economies. The Democrats emphasized that the projects would not require the state to incur immediate costs, as they will be funded through bond issuances. They also pointed out that bond interest rates are at a historic low, making it less expensive to borrow money.

Resources:

• Indiana Economic Dashboard (Council of State Governments – Midwestern Office)
• Indiana Economic Report Card (Council of State Governments – Midwestern Office)
• Report on State Personal Income Growth (U.S. Bureau of Economic Analysis)

Learn more about Senate Democrats’ economic development priorities at senatedemocrats.in.gov>>

School funding, absenteeism under review

Two education-related committees met last week – the Interim Study Committee on the School Funding Formula and the Interim Study Committee on Education.

The Committee on the School Funding Formula was formed in 2009 at the request of Senate Democrat Leader Vi Simpson. The two-year committee is reviewing the existing school funding formula and is expected to file a report with any recommendations on how the formula could be adapted to better meet the needs of Indiana’s schools and students by November 1, 2010. Video archives of this committee’s webcast meetings are available>>

The primary charge for the Committee on Education is a study of the causes and effects of K-12 absenteeism and potential solutions. This committee is also expected to file a report with any recommendations by November 1.

Watch an update from Sen. Tim Skinner of Terre Haute:

Skinner is a member of both interim committees and is the Ranking Minority Member of the Senate Tax and Fiscal Policy Standing Committees.

Watch an update from Sen. Earline Rogers of Gary:

Rogers is a member of both interim committees and is the Ranking Minority Member of the Senate Education & Career Development Standing Committee.