According to Vermont independent news outlet Seven Days, The Vermont Department of Labor is pushing for a crack down on businesses it suspects of avoiding unemployment tax payments by misclassifying workers, particularly couriers and delivery drivers and independent contractors.  That includes investigation of Seven Days, own distribution drivers, which the company is appealing. There is no indication that courier software companies are part of the investigation.  Most courier software companies manufacture the systems used by courier companies to manage their drivers and bike couriers, so they would likely not be considered.

Officials in Vermont’s DOL, according to Seven Days, are investigating companies who they suspect may be trying to avoid making payments into the state unemployment insurance fund for individuals who aren’t on the payroll — self-employed “1099” workers who get paid for their services.  These businesses, according to Seven Days, “ are also being investigated for workers’ compensation coverage.  In the case of Seven Days, the contested workers are delivery people who drop bundles of the weekly paper and other products around the state.  

The 1099 or contracted worker issue had centered on the construction industry primarily until recently, however, State Labor Commissioner Patricia Moulton Powden has expressed publically her concerns about contracted workers, stating that  misclassification of workers as contracted is “widespread across many sectors.”
 
FedEx Ground division one of the more prominent companies at the center of the controversy, and is being investigated in several states. Last year, Vermont Attorney General William Sorrell joined other attorneys general around the country in calling on FedEx to cooperate with reviews that could lead to reclassification of drivers that the company now treats as independent contractors. A month before the notification from Sorrell and the other attorneys general, a federal appeals court overturned a National Labor Relations Board ruling that certain FedEx workers should be classified as company employees, according to Seven Days.

As healthcare costs and the lack of job perks decline, more independent contractors, couriers and delivery company workers alike, find they like the freedom and tax benefits to being “self-employed.  They can deduct their home office, mileage, education and other expenses on federal tax returns, and of course there’s personal freedoms that come with being a ‘contractor’ you don’t get when you punch someone else’s clock.
 
But, as Seven Days points out, not all self-employed workers are interested in contracting, despite a move in that direction by many companies who, in response to the slumping economy have laid off workers only to rehire them as freelancers.  They save money by not having to offer contractors benefits or make payments into the state’s unemployment and workers’ compensation insurance funds.  It is estimated that up to one-quarter of the U.S. workforce is now self-employed. Earlier this year, Time magazine cited predictions that by 2019 as many as 40 percent of American workers will be operating as independent contractors.

Vermont officials are having a heck of a time estimating the exact number of workers in the state who currently fall into the independent-contractor category. The federal government says more than 32,000 residents (roughly 9.4 percent of the state labor force)  held more than one job in 2007.  Seven Days says Andy Condon, chief information officer for the Vermont Labor Department, reports that “moonlighting Vermonters surely work as independent contractors, but the state has no way of calculating their numbers.”  Deputy Labor Commissioner Tom Douse says projections made on the basis of audits for unemployment insurance coverage suggest that as many as 14 percent of businesses in the state misclassify one or more workers as independent contractors.