Comment from Opportunity Solutions Project

Opportunity Solutions Project (OSP) is a nonprofit organization that advocates for federal and state policy solutions to advance the power of work so that more people may achieve the American Dream. OSP strongly supports the proposed rule to streamline the worker classification test under the Fair Labor Standards Act (FLSA). The department’s proposal will remove regulatory barriers to work, making it easier for Americans from all walks of life to support themselves and their families.

Clarifying the application of the test for independent contractor status will promote compliance with labor standards under the FLSA and, in turn, reduce worker misclassification. In addition to protecting the workforce, the proposed rule will empower entrepreneurs and individuals who need flexible work arrangements. Simplifying the compliance landscape will make it easier for businesses to work with independent contractors. It may be difficult to determine exactly how many more people will find work as a result of the streamlined test proposed by the department, but it is evident that inflexible worker classification tests hold back workers and the economy.

There is a reason why occupational groups lobby for exemptions to California’s worker classification law. ABC tests like California’s presumptively consider workers to be employees and, in turn, restrict opportunities for independent contractor jobs. As a result, tens of thousands of people in California have lost income and work opportunities in countless occupations. Inflexible worker classification tests confine individuals and businesses to narrow understandings of work relationships, and the consequences extend beyond labor law. The one-size-fits-all approach to worker classification fails to consider the individual life circumstances of workers.

The majority of independent contractors prefer their work arrangements. This fact is unsurprising, as traditional work arrangements do not allow for the same flexible work/life balance as independent contracting. For many independent contractors, the point is independence. Independent workers often cite the freedom to set their own schedules and meet personal and familial obligations as the reason they chose flexible work. Some independent contractors are entrepreneurs, while other individuals need flexible work due to life circumstances, such as individuals with disabilities, rural workers, and working parents.

OSP supports the department’s proposed test because it implicitly considers that workers and their families have individual needs and preferences. Unlike one-size-fits-all tests, the proposed test is adaptable to most any type of work relationship because the ultimate inquiry is whether a worker is economically dependent on someone else’s business. The department’s approach is intuitive, differentiating independent contractors from employees by focusing primarily on a worker’s control over work and the opportunity for profit or loss resulting from one’s own initiative or investment. By simplifying and adopting a test that reflects the “economic reality” of work relationships, more individuals will be able to find flexible work and achieve economic independence.

America’s independent workforce is growing, and independent work will continue to play an increasingly important role in the national economy. The economic fallout of COVID-19 has been devastating for Americans, and independent work has been a lifeline for countless families. COVID-19 has likely accelerated the shift to independent work, and it is critical the department clarify the test to identify independent contractors.

While some may assert the proposed test will result in worker misclassification and economic insecurity for workers, the department’s proposal is not a radical departure from the standard. Instead, the proposed rule clarifies existing standards long held by the courts and the Department, providing consistency in a time of particular uncertainty. Complicated labor laws mean less economic opportunity, and the proposed rule will promote work opportunities by simplifying compliance. By ensuring greater worker freedom, more Americans may choose flexible work, make a living, and support themselves and their families.

Comment ID: WHD-2020-0007-0211 | 21-Oct-20

Categorized under Flexibility, Independence

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