- Associated Press - Tuesday, August 4, 2015

RALEIGH, N.C. (AP) - As North Carolina lawmakers grapple with legislation to prevent businesses from misclassifying employees as independent contractors, a House panel voted Tuesday to remove exemptions for courier services such as FedEx.

A House committee removed a provision from the Employee Fair Classification bill that would have exempted the courier services from classifying contract drivers as employees.

Lawmakers had already removed similar exemptions for taxicab companies, and a version of the legislation approved by the Senate earlier this year removed exemptions for newspapers, which consider delivery people contactors.

While those industries would not automatically have to start considering contract workers as employees - and thus having to pay them certain benefits - companies would have to prove their worker’s independent status to a state board set up by the law.

Backers of the legislation say some companies misclassify workers as contractors in an effort to avoid paying taxes and benefits.

An uncommon coalition of labor groups and business associations formed to promote the legislation, after an investigative series by The News & Observer of Raleigh last fall reported that employee misclassification costs the state $467 million annually.

Lawmakers in both chambers have amended the legislation several times in response to public comments. House members debated in another committee meeting last month whether a $1,000 penalty on employers who misclassify employees is too harsh.

But on Tuesday, House supporters encouraged swift action to move the bill through the chamber and to the Senate for approval. Changes, they said, could come next year after lawmakers have time to review the law’s initial impact.

“If we start tinkering with it we face the unintended consequence of screwing it up,” Rep. Chuck McGrady, R-Henderson, told his colleagues on the committee.

The House Appropriations Committee will next review the changes before sending it to debate on the House floor.

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