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Good news and bad news on 1099s in VT
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They're aware of the misclassification problem within state government, but they seem resigned to being able to do little about it. Vermont News Guy writes a considered piece on his blog about the issue.

The practice - scorned as "1099ing," by construction union officials (for the Internal Revenue Service form that freelance workers fill out) -short-changes Worker Compensation, Unemployment Insurance and Social Security funds. It also "creates an unlevel playing field," in the words of Vermont Labor Commissioner Patricia Moulton Powden. Businesses that play by the rules can be underbid by their competitors who do not.
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Powden said that before adding more enforcement officers, the state should streamline its laws, which now include "no fewer than three definitions" of how to distinguish between employees and independent contractors, so that "it can be very confusing for small business to know which way (it is) supposed to go."

With her boss, Gov. Jim Douglas, intent on cutting the state work-force, Powden could hardly support adding more workers to her own department. Bouchard of the Carpenters Union said Powden was too concerned with being considered "anti-business" if her department cracked down on labor law violators. But Powden said one step she favored was increasing the fines that companies in violation now pay.
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