Do current employment laws cover independent contractors?
Employment Laws. Despite there being more than 180 employment laws, such as Fair Labor Standards Act, the Occupational Health and Safety Act, and the Family Medical Leave Act, most of these do not apply to independent contractors, leaving independent contractors exposed to civil rights abuses, discrimination, harassment, and “wage claims.”
With the increased momentum towards independent contractors and gig employment, therefore, the question is how to effectively protect these independent contractors and freelancers. Seth Harris and Alan Krueger of The Hamilton Project, propose that labor laws need to be modernized for the 21st century and the new wave of independent contractors. They, along with others, suggest a new legal classification of independent contractors that would require companies engaging independent contractors and freelancers to do the following:
- Allow contractors to unionize
- Guarantee them Civil Rights Protections
- Withhold taxes
- Contribute half of FICA (Federal Insurance Contribution Act) taxes
- Contribute to ACA (Affordable Care Act) based earnings
- Allow contractors to pool together for benefits purposes such as health and retirement
The proposal, which is garnering support amongst independent contractors, would not require employers to do the following:
- Pay overtime
- Adhere to minimum wage laws
- Provide unemployment insurance
- Provide worker’s compensation benefits
Obviously, the implementation of above proposals would undermine the independent contractors’ appeal for businesses. Moreover, given the current political climate in Washington, it is highly unlikely that any of these proposals would be passed by the Congress anytime soon.
Nevertheless, businesses that choose to utilize independent contractors, must be sure that they are treating their independent contractors as just that. Regardless of the political environment in Washington, both Federal and State agencies and courts have been very skeptical of the businesses engaging independent contractors to meet their day-to-day operational needs.
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