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Studying how government regulations affect women's employment is a priority of the organization I lead, the Independent Women's Forum. Now, instead of reviewing data and economic reports, we have become a case study of how misguided policies harm women.
We're working with lawyers and human resources consultants to address this issue from an unfortunate angle: How many women will we have to lay off when the Department of Labor's new independent contracting rule goes into effect?
Guidance from the Society of Human Research Management summarizes the challenge: “The most basic question about the employment relationship is whether a worker is, in fact, an employee or an independent contractor. As with so many employment law questions, the answer is “it depends.”
The new Department of Labor regulations are intended to reduce the number of relationships with contractors and push more people to work as traditional employees. (Getty)
It depends not only on the details of the employment relationship, but also on which government entity is asking the question, since “even courts have admitted that the distinction is not always clear.”
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The legal distinctions are not clear, but what is It is clear that the new Department of Labor regulations are intended to reduce the number of relationships with contractors and push more people to work as traditional employees.
With an estimated 25% to 35% of workers participating in the “sharing economy” in some way, this means this new law will have a huge impact on all of us: as workers, employers, and consumers.
The Department of Labor's new regulations require employers to consider six factors to determine who can be a contractor: the employer's level of control over how the work is performed; the worker's opportunity to make profits or losses; the skill level required; how long the relationship will last; the worker's investment in equipment or materials; and how integral the job is to the employer's core business.
The legal guidance is to err on the side of caution, meaning that recruitment should only be permitted if the employee meets all tests and requirements. What does all this mean in practice for an entrepreneur like me?
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Currently, the Independent Women's Forum (IWF) involves more than 20 independent contractors. Some are policy experts who cover us issues with occasional writings; others help with fundraising and accounting services; and others are high-impact consultants who help us implement new important projects.
Who can I keep and who should I let go? Like most other nonprofits, the IWF cannot afford to offer every current contractor a full-time position. In fact, we will have to let most of them go if that is our only option.
Even more importantly, most of our contractors do not want a full-time job with us or any other employer. Unfortunately, this is a factor that the Department of Labor does not seem to care about at all.
Most independent contractors value their independence and ability to control their schedules. They don't want to rely on a single employer, but prefer to have a variety of relationships so they never risk becoming unemployed.
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Many independent contractors we have hired quit full-time positions to become caregivers. They sought opportunities like those we offer to stay involved in their fields, have an intellectual outlet, and enjoy camaraderie with colleagues, while contributing to family finances.
They don't want the pressure of short deadlines and in-person meetings; They don't want to have to keep track of time and explain things about sick children or field trips.
Can we continue to offer these working relationships? Perhaps, although the statement that contractors cannot “perform work similar to that of employees” is complicated.
Certainly, we now find it prudent to offer contractors only short-term contracts. I am advised not to “issue business cards”; “pay expenses”; offer “continuing education training”; or even, “invite or allow contractors to attend company parties or special events intended for employees.”
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That's a real loss of collaboration, productivity, and expanding our influence. It also seems simply cruel that so many workers, especially those balancing caregiving and career, crave the community and validation of a partnership.
Companies across the country are reviewing their own contracts just like us. They are talking to lawyers who will invariably advise caution, which means eliminating job opportunities for contractors.
We saw the results when California adopted strict rules (AB5) for hiring in 2019. According to a Mercatus Institute study, self-employment fell 10.5% in affected occupations, and overall employment in those sectors fell 4.5%. ,4%.
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Why is the Department of Labor making it so difficult for employers to offer truly flexible work opportunities? Why do they ignore how many people – not just parents of young children, but also caregivers of the elderly, those nearing retirement, the disabled, people with health problems, and students – want non-traditional job opportunities and Will they leave the workforce instead? Will he be forced to accept a traditional job?
Like many of the other questions raised by these onerous new rules, these don't have good answers.
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