PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Coalition Letter to Senator Bill Cassidy in Support of Protecting and Strengthening Independent Work

By at 26 June, 2024, 2:35 pm

The Honorable Bill Cassidy

Ranking Member

Senate Committee on Health, Education, Labor and Pensions

Washington, DC 20510

 

Dear Ranking Member Cassidy:

The undersigned organizations write to express support for policies that seek to advance independent work opportunities and support the millions of Americans who choose to pursue careers and income as independent contractors. We appreciate your leadership in issuing a request for information (RFI) on the topic of portable benefits and are committed to working with you to ensure that policies pursued in this space strengthen independent work for the 21st century workforce.

While independent work has played an important role in our economy for decades, a growing share of Americans are increasingly choosing to secure additional income opportunities outside of traditional employment or pursue their own entrepreneurial endeavors altogether. For example, the number of people working occasionally as independent contractors is up by 130% since 2020.[1] Similarly, the number of individuals choosing careers as full-time independent contractors has similarly grown from 13.6 million in 2020 to 26 million in 2023.[2] This is true even as nearly 8 million traditional employment roles are currently available.[3] While the internet and digital connectivity have made these opportunities more accessible to many, worker preferences for flexibility, autonomy, and earning scalability are major factors driving this trend.

We are concerned, however, with recent federal worker classification policies that would ultimately serve to undermine independent work opportunities by narrowing the scope of independent contractor status under laws such as the Fair Labor Standards Act and National Labor Relations Act. For example, the U.S. Department of Labor’s recently finalized rule on independent contractor status[4] would adopt a classification test that injects significant subjectivity into whether a worker is considered an employee or independent contractor – a standard that could ultimately have a chilling effect on independent work opportunities, entrepreneurship, and businesses’ ability to engage in these work arrangements – particularly for small businesses. Likewise, the National Labor Relations Boards’ 2023 decision in The Atlanta Opera reinstates a classification test under the National Labor Relations Act that has been rejected by the U.S. Court of Appeals for the DC Circuit and would narrow opportunities for independent work.[5],[6]

These policies are misguided and out-of-step with evolving worker preferences in the 21st century economy. Rather than pursuing actions that would make it more difficult for independent contractors to operate and grow their careers or seek additional earning opportunities, lawmakers should explore forward-looking policies that strengthen the independent contracting model and support individuals pursuing their own entrepreneurial endeavors.

With this in mind, the undersigned organizations are supportive of your work to explore policy reforms that increase the ability of independent workers to access benefits that are traditionally tied to the employment relationship – such as retirement savings vehicles and health care benefits. As the independent workforce is diverse and spans every sector of the economy, a one-size-fits-all portable benefits model is unlikely to exist. Therefore, we urge the committee to continue its work engaging with the variety of stakeholders that make up this broad and growing constituency.

Furthermore, any portable benefits policy initiatives should ensure that any proposal adequately reflects the preferences of workers themselves. Survey after survey find that independent contractors prefer to maintain their independent status.[7] In that vein, any portable benefits policies must carry worker classification certainty such that the independent contractor model is protected; in other words, policies must ensure that the provision of portable benefits for independent workers does not serve as a factor in worker classification analyses.

The undersigned organizations stand ready to continue working with you on exploring portable benefits policies and are grateful for the opportunity to response to this RFI. Thank you for your continued leadership on this important issue and support for independent workers.

Sincerely,

American Trucking Associations

Construction Industry Roundtable

Financial Services Institute

Flex Association

HR Policy Association

Independent Bakers Associations

Libre Initiative

National Association of Realtors

National Council of Chain Restaurants

National Retail Federation

Small Business & Entrepreneurship Council

 

[1] In 2020, 15.8 million people worked occasionally as independent contractors; in 2023, that number is up to 36.6 million. See, MBO Partners, 4 Long-Term Trends Driving the Growth of the Independent Workforce (December 8, 2023).

[2] MBO Partners, “State of Independence in America 2023” (October 2023).

[3] Paul Wiseman, US Job openings fall to 8.1 million, lowest since 2021, but remain at historically high levels, AP (June 4, 2024).

[4] 89 FR 1638, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, January 10, 2024.

[5] 372 NLRB No. 95, 2023.

[6]  In addition to DOL’s 2024 final rule and the NLRB’s decision in Atlanta Opera, it is concerning that the Federal Trade Commission has signaled interest in, among other things, worker classification issues, a space in which they do not have jurisdictional history or expertise. See, e.g., U.S. Chamber of Commerce, “The FTC Wades Into Employee Classification But Agency Lacks Expertise,” February 8, 2024.

[7] See, e.g., MBO Partners, State of Independent in America, 2023 (“In 2023, 77% of independent workers reported being very satisfied with independent work, and 78% plan to continue working independently.”); Upwork, Freelance Forward Economist Report, 2021 (“As freelance work continues to grow, 78% of those participating in this work say that schedule flexibility is a key reason for continuing this work, and 68% also cite ‘career ownership’ as a top draw”); Flex, Morning Consult, Attitudes of App-Based Workers, September 2022 (finding 77% of app-based workers support maintaining their classification as independent contractors); American Transportation Research Institute, “Owner-Operators / Independent Contractors in the Supply Chain,” December 2021 (noting that 73% of independent truck drivers expected they would experience a significant decrease in job satisfaction if they were reclassified to a company driver).

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