Transcript: Remarks by Sen. Johnny Isakson on the use of independent contractors & payroll fraud – Nov. 12, 2013

Partial transcript of remarks by Sen. Johnny Isakson (R-Georgia) on misclassifying employees as independent contractors and payroll fraud. The Senate Health, Education, Labor & Pensions subcommittee on employment and work place safety hearing was held on Nov. 12, 2013:

Well, thank you, Sen. Casey. This is an important subject, and I’m delighted to have the chance to participate in the hearing with you.

I want to compliment you on the differentiation between intentional and unintentional in your opening remarks and in your closing paragraph to talk about the people who play by the rules. Because there are rules in the IRS tax code, in the labor laws of the United States of America that clearly identify what is a legal independent contractor by designation, and we all know what they are. And we’re focusing on the people who are intentionally disobeying those laws and those standards, not the people who are willfully obeying by those laws.

I was one of them. I ran a company for 22 years that had 800 independent contractors and 200 employees.

Almost every one of my independent contractors was a second career or a divorced woman because there were very few job opportunities for them outside a real estate brokerage company.

By working as an independent contractor, they had flexible hours so they can pick up their kids from school, they can be sure dinner was prepared, they can work some days and not work other days. They can not do things you would have to do if you were working for an employer and were in an employee status.

So, I want to point out there are meaningful jobs that provide jobs to people in need of those jobs where the independent contractor status fits the situation and the circumstances.

Ironically, our witness for the minority, Mr. [Chris] MacKrell and I had not met until about an hour and a half ago, so this is not a pre-planned plug. But when I was asking him about his business, which is specialized delivery by truck and a delivery service – the last mile delivery service, if you will – last Christmas, I ordered my wife’s Christmas present from a company in New Jersey. It was delivered to my house by a last mile trucking delivery system, who in his truck had everything from my wife’s present to probably 100 other wives’ presents and other things on the truck, delivered each on individual [sic] – something somebody for an employer never could have afforded to do from New Jersey to Atlanta.

So, there are perfectly good legitimate reasons for independent contractor status to exist, perfectly good companies who are around obeying by those laws and producing employment and opportunities for American workers. And I think it’s clear that we understand the difference between intentional and unintentional, those playing by the rules and those who are not.

To make that point, I have letters to introduce for the record of support of the independent contractor status from the following organizations: The National Association of Home Builders; Jim Mark, President of the Private Care Association of America; Zane Kerby, the President and CEO of the American Society of Travel Agents; the American Trucking Association; Lisa van Kesteren, the CEO of Mystery Researchers; and Russell Hollrah, the Executive Director of the Coalition to Promote Independent Entrepreneurs…

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