Coalition for Independent Contractor Freedom - Group: Coalition Forum

admin on Boston Freelancers Fight Independent Contractor Law

Tue, 06 Jul 2010 15:48:14 +0000

^{Dateline: June 30, 2010, Andrea Shea, WBUR.org} Freelancers Fight State’s Independent Contractor Law By Andrea Shea BOSTON — Let’s say you’re an independent contractor based in the Berkshires, and you work from home as a freelance writer. Then let’s say you get an e-mail from one of your main clients, a big, out-of-state publishing company. You’re informed they won’t be giving you any more assignments. In fact, the company has pretty much blacklisted Massachusetts independent contractors altogether. “All the industries we’re trying to grow in the creative economy, we’ve now just put up a huge roadblock,” says Kathy Bitetti. Bitetti calls this a horror story that’s playing out across the state. She’s a tireless arts advocate, constantly roaming Beacon Hill’s halls, cornering politicians, going to bat for artist health care and housing. Now she’s obsessed with the Massachusetts Independent Contractor Law. “We’ve been very quiet about it because we’ve been trying to fix it,” Bitetti says. “But now it’s just like, forget it, you know, this is really a problem, and the fact that our writers cannot get work, and it’s going to start hitting our graphic designers, our illustrators.” Longtime freelance illustrator Ken Dubrowski says he’s already feeling it. Some of his out-of-state clients are in a tizzy. They’re confused by the state law. “It’s like a stigma, you know, the Scarlet Letter,” Dubrowski says. “It’s like, ‘Oh my God, I’m from Massachusetts, what does that mean?’ This tax law, this Independent Contractor’s Law.” So, what exactly is the law? And how did we get here? “It’s a law that went into effect in 1990,” says Waltham employment attorney Robert Shea, who consults corporate clients about this law all the time. “And it was tweaked in 2004 to deal with a concern about the use of independent contractors in the construction area, and the tweak has had a lot of unintended consequences.” In a 2005 article, Shea predicted the “tweak” would reach beyond the construction industry. It has. But in a nutshell — if complex law can ever be put into a nutshell — the law was created to prevent worker exploitation. Companies hiring, say, a carpenter would classify him or her as an independent contractor to save money on payroll, taxes and benefits. Under the tweaked law, that carpenter must be granted employee status unless he or she performs duties “outside the usual course of business.” What that means, exactly, can seem gray. And there are other criteria that must be met. Critics say the law is broadly written, making it susceptible to open interpretation. But, bottom line, classifying workers as independent contractors now requires major hoop-jumping. If employers get busted classifying incorrectly — say, giving a worker a 1099 form at tax time rather than a W-2 — they’ll face hefty fines. The attorney general’s office is charged with enforcing the law. “This law applies to so many different businesses that use so many different types of independent contractors,” Shea says, including bike messengers, delivery drivers and accountants. And it protects a lot of them. But, the attorney adds, writers and artists are a different breed. “I mean, they’re a clear victim of this change in the law,” he says, somewhat bemused. Artist Bitetti says — whether by design or by accident — the law needs to change. Not every worker wants a W-2. “Most of us are independent contractors and we want to be because once you’re classified as an employee you don’t own any rights to your intellectual property,” she says, “whether you’re a visual artist, a dancer, an engineer, videogamer.” Bitetti is endeavoring for an amendment to acknowledge this. But Frank Callahan, president of the Massachusetts Building Trades Council, is wary. “At the risk of sounding very stubborn, we’ve been working on this very hard for over six years,” he explains, “and we’re always open to any change that could address legitimate concerns without impacting the workforce as a whole in a negative manner.” Callahan was a prime mover on the 2004 amendment. He represents 74 local unions and says the law is doing exactly what it was intended to do — especially in the drywall and painting industries. “I haven’t seen the unintended consequences that you reference,” Callahan says. “We heard this argument back in 2004 and 2005. They trotted out a number of different groups — the hair dressers, the bike messengers.” And they’re fine, he says. But state Rep. Smitty Pignatelli, D-Lenox, is concerned about the law’s unintended impact ripping through his district. Many of his constituents are indie artists, and he says western Massachusetts — and the state as a whole — really can’t afford to lose its creative workforce because of this law. “This creative economy is certainly putting people back to work and all I know is out in the Berkshires, if it wasn’t for the creative economy, I’m not sure where the Berkshires would be on the radar map at this point,” he says. Pignatelli also co-chairs the House’s Cultural Caucus, which is organizing an upcoming forum at the State House to educate legislators and artists unions on the contractor law — a lot of people don’t know the law exists. Or how it really works. But Sen. Thomas McGee, D-Lynn, does. He voted on the more restrictive version back in 2004. “There’s strong, legitimate arguments on both sides of this issue, so you don’t want to blow up a piece of legislation that’s doing what it was intended to do,” McGee says. At the same time… “We have been able to clearly recognize — particularly in the arts and in freelance writing — that there is an impact that is not an intended impact and that we are trying to address,” he adds. McGee, also chairman of the Committee for Workforce and Labor Development, introduced a draft of a new amendment to the law a few weeks ago. It didn’t make it out of committee, though. Bitetti calls it a nice try, but says “it doesn’t even come close to fixing it.” While Massachusetts tries to figure it out, other states are also starting to crack down on companies that incorrectly classify independent contractors. And there’s movement on the federal level to do the same.

admin on WSJ article: "New Bill Would Help Freelancers Fight Deadbeat Companies"

Mon, 28 Jun 2010 08:38:18 +0000

^{Dateline: June 24, 2010, Aaron Rutkoff, The Wall Street Journal} Freelancers can face difficulties with one of the most rewarding aspects of their work: getting paid. Now new legislation under consideration in Albany would grant independent contractors in New York protections against companies that don’t pay up for completed work. The language of the bill, first introduced in the Senate earlier this month and sponsored by Assembly Speaker Sheldon Silver this week, sets a two-month window for freelancers to be paid following the completion of a project. The legislation also gives the State Department of Labor new powers to take action against businesses that violate work agreements with freelancers or fail to pay full compensation within a reasonable amount of time. In the case of disputes between freelancers and businesses, what counts as “reasonable” would be adjudicated by Labor Department officials. Sara Horowitz, the executive director of the Freelancers Union, says that the “reasonable” standard for freelancer compensation would function much like the “just cause” standard that governs the firing of employees. State officials evaluating disputes would make decisions that gradually create recognized standards. “There have been zero standards for freelancers, and that’s why this is so important,” Horowitz explained. “Right now, it’s so unclear what the law actually is on hiring freelancers. I think businesses would look forward to having guidance.” Her nonprofit group, which has 90,000 members in New York, supports the legislation. They have made unpaid wages the centerpiece of an advocacy campaign launched in April along with a spate of subway advertisements. The Freelancers Union website also includes a space for disgruntled freelancers to name and shame companies that haven’t been prompt with payment. State Sen. Daniel Squadron, who sponsored the bill, was once a freelancer himself. (Check out his biographical tagline in this 2005 op-ed for proof.) He worked as a writer on Sen. Chuck Schumer’s 2008 book as an independent contractor, although he says New York’s senior senator never stiffed him on wages. “I always had something in writing,” he said of his work agreements with Schumer, “but I never had to use it.” But the problem of delayed or unpaid wages is very real for New Yorkers, according to Squadron. Freelancers “come up to me all the time when I’m out on the street” to talk about the issue, he said in an interview. The Freelancers Union cites a survey it conducted of 3,000 independent contractors across the country which found that 77% had not been paid for an assignment. Squadron insists the legislation won’t unduly hamper small businesses that rely on freelance workers. “A lot of the businesses that contract with freelancers are small businesses or even individuals, so there’s a real attempt in this bill to make it manageable even if you don’t have an HR department,” he said. “The only folks who will be negatively impacted here are the ones who don’t pay.” The legislative session is winding down in Albany amid a crippling impasse over the state budget, so there is little chance that the freelance-wage legislation will come up for further debate any time soon. But Silver’s support is pivotal in the Assembly, and Squadron is optimistic that his Senate colleagues will back the legislation. “Everyone represents an increasing number of freelancers,” he said.

admin on Canadians coming to the defense of U.S. Independent Contractors

Fri, 18 Jun 2010 14:40:54 +0000

^{Dateline: June 17, 2010, Jim Park, Today'sTrucking.com} Time for a trucker declaration of independence? by Jim Park TORONTO -- There’s a huge push underway south of the border to redefine independent contractor status. At the federal level, a bill sponsored last year by Senator John Kerry (D-Mass) proposes to eliminate Section 530 of the Revenue Act of 1978. Known in some circles as the “safe harbor“ provision, it allowed companies to rely on the test of long-standing, recognized practice to determine whether a worker is an employee or an independent contractor. If passed, the bill would reverse the burden of proof, forcing companies to show they have a “reasonable basis” for not treating an individual as an employee. As American Trucking Associations (ATA) deputy general counsel, Robert Digges Jr. puts it, “…a motor carrier would need to spend significant resources to defend independent contractor classification under a fact-intensive review. That would, in some instances, be prohibitively expensive.” It would probably also push out of the industry plenty of owner-ops -- many already on the endangered species list -- since there was something appealing to buying their own equipment in the first place. Note that President Obama himself strongly supports efforts to outlaw employee misclassification and has made it a priority. In Canada, where unions are already allowed very lenient guidelines to collectively bargain on behalf of owner-ops (even against their will), can a push to strip them of independent status be far behind? Maybe it’s time we took a fresh approach to the tired old labor/management relationship that exists between carriers and owner-operators, if not just to forestall the challenges that are bound to arise following the American initiative, but simply to strengthen the bond between what are really business partners. How about a franchise model? Many do not see the carrier owner-operator relationship in that light, but taken to its logical conclusion, that’s what it is. So why not solidify it without all the confusion and encumbrances. Set them up as franchisees. The typical franchise model doesn’t work perfectly for owner-operators as currently defined, but with a little imagination, it could. Owner-ops are extensions of the carrier. They often fly the company colors and they are certainly beholden to the carrier in terms of policy and procedure, compliance requirements, and more. The carrier does most, if not all of the marketing and the owner-op -- in theory -- benefits from an association with a strong business model and recognized brand. The franchisee operates at arm’s length from the franchisor, but is obliged under terms of the agreement to operate in a certain manner. This relieves the carrier of the burden of proof in terms of the employee/ contractor debate, while providing both parties with a degree of both autonomy and obligation. Current owner-op/carrier relationships really don’t serve the owner-op well, but the confines of Part III of the Canada Labour Code don’t give either party a lot of latitude to make change. As for unions who scrutinize the amount of control a company has over an independent worker, it can be easily argued that corporate McDonalds, for example, has more oversight and control over a retail franchisee than a carrier ever would over an owner-op. A bone fide franchise deal for owner-ops would take the Labour Code right out of the equation, and allow two independent businesses to maximize their strengths and help each other achieve certain goals without complication. All it takes is a little imagination. - By Jim Park (For more on how drivers and owner-ops are dealing with today's hyper regulatory environment, check out our weekly online Feature, The Case of the Disappearing Drivers, click here).

admin on Nevada cracking down on "misclassified" workers

Mon, 14 Jun 2010 12:34:29 +0000

^{Dateline: June 11, 2010, Cy Ryan, Las Vegas Sun} Lawmakers targeting businesses ducking employee taxes By Cy Ryan CARSON CITY — In these tough economic times, some employers have found a way to cut expenses by avoiding the business tax and not contributing to the fund that finances benefits to the unemployed. The businesses are improperly classifying some workers as independent contractors and skipping the tax and the state assessments. A legislative subcommittee has voted to recommend imposing hefty fines on employers that misclassify their workers. Assemblywoman Bonnie Parnell, D-Carson City, said the practice is widespread and the state is losing a lot of revenue. Jack Mallory, director of government affairs of the painters union in Las Vegas, said legitimate contractors are pushed out of the market because they cannot compete with those who break the law. He said these contractors reduce their labor costs by as much as 30 percent by not paying various employment-related taxes or providing workers compensation insurance. “This does not foster fair competition,” he told the Subcommittee to Study Employee Misclassification. As a recommendation to be forwarded to the 2011 Legislature, the subcommittee agreed the employer should be fined for the first offense at $5,000 for each employee who is misclassified as an independent contractor. A fine of $15,000 for each employee misclassified would be imposed for a second offense. And the fine for a third offense would be $25,000 and loss of their business license for three years. The state imposes a tax on businesses based on payroll. By having employees classified as independent contractors, that tax is lowered. And the business would not have to pay into the unemployment trust fund or the account for coverage for workers injured on the job. The subcommittee accepted the suggestion of member Yindra Dixon to give employees who are misclassified the right to file suit to collect money they were due but did not receive. Labor representatives have testified that some employees who were misclassified were not paid minimum wage. Dixon, of Las Vegas, said an employee who filed a complaint with a state agency would have to wait 120 days before filing suit. That would give the agency time to process the claim. If there was no decision, the worker could carry the case to court. The subcommittee, headed by Sen. Shirley Breeden, D-Henderson, also is recommending to the 2011 Legislature that state labor law posters including definitions of employees and independent contractors be placed in areas where work is perform or employees congregate. The subcommittee also wanted to ensure that audits are being made of employers to see if they are properly classifying workers. Subcommittee member Fran Almarez of Las Vegas said that is how other states have found money due in lost taxes or assessments. Donna Clark, chief of contributions at the state Division of Employment Security, told the subcommittee that it conducts 4,000 random audits of employers a year, and about 12 percent of those are for misclassified workers. The subcommittee, on the recommendation of Parnell, who is subcommittee vice chairwoman, approved a plan for civil penalties against a person who advises an employer to misclassify workers as independent contractors in an attempt to lower costs.

admin on Some experts say Independent Contractors will one day become the majority

Tue, 01 Jun 2010 18:28:30 +0000

^{Dateline: June 1, 2010, Chris Isidore, senior writer, CNNMoney.com} Say goodbye to full-time jobs with benefits By Chris Isidore, senior writer, CNNMoney.com June 1, 2010 NEW YORK (CNNMoney.com) -- Jobs may be coming back, but they aren't the same ones workers were used to. Many of the jobs employers are adding are temporary or contract positions, rather than traditional full-time jobs with benefits. With unemployment remaining near 10%, employers have their pick of workers willing to accept less secure positions. In 2005, the government estimated that 31% of U.S. workers were already so-called contingent workers. Experts say that number could increase to 40% or more in the next 10 years. James Stoeckmann, senior practice leader at WorldatWork, a professional association of human resource executives, believes that full-time employees could become the minority of the nation's workforce within 20 to 30 years, leaving employees without traditional benefits such as health coverage, paid vacations and retirement plans, that most workers take for granted today. "The traditional job is not doomed. But it will increasingly have competition from other models, the most prominent is the independent contractor model," he said. Doug Arms, senior vice president of Ajilon, a staffing firm, says about 90% of the positions his company is helping clients fill right now are on a contract basis. "[Employers] are reluctant to bring on permanent employees too quickly," he said. "And the available candidate landscape is much different now. They're a little more aggressive to take any position." Cathy, who asked that her last name not be used, lost her job as a recruiter for a financial services firm in February 2009. She started working on a contract basis four months later. She believes that many employers are taking improper advantage of the weak labor market. "I work in HR, I understand that sometimes you need to hire a contractor because you have a project and you won't need the person when it's done in three months," she said. "But that's not what's happening here." Cathy said her co-workers who had permanent jobs didn't treat her differently, but she still felt like a second-class citizen. "At one job they were giving out H1N1 flu shots but the contract workers weren't eligible to receive them," she said. "I said 'You guys are still in trouble if I get the flu.'" Much of the change is due to employers' desire to limit their costs. Stoechmann equates the shift to the one seen in retirement plans, in which employers moved away from the traditional pension plan toward defined contribution plans, which passes more of the burden onto the employee. Demographic factors are feeding the shift as well. Stoechmann said many younger workers are more open to the idea of not tying themselves to a single employer. And as baby boomers reach the age when they are eligible for Medicare and not dependent upon their employer for health insurance, many are more open to contract work. Health care reform legislation passed earlier this year, which will create a mandate for employers to provide health benefits for employees but not contractors, will also feed the trend. "Once you have an employer mandate in place, you create an incentive for employers to get around that mandate," said Susan Houseman, a senior economist studying labor issues at the W.E. Upjohn Institute. Houseman also believes the jobs market could stay tilted in favor of employers for much of the coming decade, because of the depth of job losses and the lingering weakness in the economy. Sara Horowitz, the founder and executive director of the Freelancers Union, an advocacy group for freelancers and independent contractors, said that employment laws and protections have been slow to recognize the shift. For example, independent contractors aren't eligible for unemployment benefits. And they have to pay both the employee and the employer match on their Social Security taxes. But Horowitz said not everyone who works as a freelancer or independent contractor is unhappy with their situation. She estimates about 30% are satisfied with the arrangement, about equal to the number who desperately want to find a full-time job with benefits. The other 40% are somewhere in the middle, feeling pleased by aspects of their job and unhappy about others. "It's not that most want to be freelancers or don't want to be freelancers. They're just following the work, and the work itself is evolving," she said.

admin on Dallas Business Journal blog warns Texas Independent Contractors of IRS scrutiny

Tue, 25 May 2010 17:58:16 +0000

^{Dateline: May 25, 2010, Chad Watt, Blog: DBJ Confidential, Dallas Business Journal} The eyes of IRS are on Texas Tuesday, May 25, 2010 The Internal Revenue Service has Texas companies in its sights. The agency is kicking off a major research project on employment taxes this year, and has lined up about 50 companies nationally for some very extensive audits, says Kevin Johnson, a former IRS agent and tax lawyer with Chamberlain Hrdlicka in Pennsylvania. Of those 50, 20 are Texas companies, or 40%. Yes, Texas is a big state with lots of companies, but so is New York. Only one New York company is getting the extra special audit treatment, Johnson says. Johnson couldn’t name names, but the 50 businesses generally are pretty big businesses, but not megacorporations. Wal-Mart and Exxon get extra-special IRS attention year-in and year-out, he says. From an employer perspective, the most important thing coming from the IRS study is the independent contractor question; the IRS suspects that companies are treating people who ought to be employees as independent contractors. Don't say you haven't been warned. cwatt@bizjournals.com

admin on Massachusetts law makes life harder for Independent Contractors

Mon, 17 May 2010 15:05:23 +0000

^{Dateline: May 6, 2010, Arthur S. Meyers, Alison F. Reif and Thomas E. Shirley, Choate Hall & Stewart LLP, Lexology.com} Review your classification of franchisees now or face threat of triple damages Choate Hall & Stewart LLP Arthur S. Meyers, Alison F. Reif and Thomas E. Shirley What you need to know: A recent ruling was the first to apply the Massachusetts Independent Contractor Law to franchisees. Under Massachusetts law, workers must pass a stringent three-part test in order to qualify as independent contractors; failure to properly classify workers may lead to a triple damages award against the employer. What you need to do: Massachusetts companies with franchisees should familiarize themselves with the requirements of the Independent Contractor Law and consult with counsel to assess their current arrangements with franchisees to ensure that individuals are properly classified. The decision In Awuah v. Coverall North America, Inc., the US District Court for the District of Massachusetts found that a cleaning service company had improperly classified a group of franchisees as independent contractors under Massachusetts law. The company at issue, Coverall, was a janitorial cleaning service business that sold franchises to thousands of franchisees across North America. Coverall required all of its franchise owners to complete mandatory training programs and wear approved uniforms and identification badges. Coverall also provided all of the initial equipment and supplies to its franchisees. Under the franchise agreement, Coverall had the exclusive right to perform billing and collection services and was entitled to management and royalty fees. Until May of 2009, Coverall also contracted directly with customers unless the customer specifically requested a direct contract with the franchisee. In this action, a group of franchisees sued Coverall alleging that they were misclassified as independent contractors and owed wages and overtime. The court granted their motion for partial summary judgment, finding that the franchisees were in fact employees under the Massachusetts statute. The Massachusetts Independent Contractor Act Under the Massachusetts Independent Contractor Act, a worker is presumed to be an employee unless the employer can prove all three of the following: * The worker is free from the employer’s control and direction in the performance of his or her work; * The service provided by the worker is outside the usual course of the employer’s business; and * The worker must routinely work in an independently established trade, occupation, profession or business performing the same type of services that he or she is performing for the employer at issue. If the employer can establish all three of the above prongs, only then may the worker be classified as an independent contractor. In Awuah, the court focused exclusively on the second prong of the test, finding it dispositive. As the court explained, to satisfy the second prong of the test, Coverall would have had to establish that the franchisees were performing services that were part of an independent, separate and distinct business from that of Coverall. Coverall argued that it was in a distinct business from its franchisees because it was not in the commercial cleaning business, but rather in the franchising business. Coverall asserted that it sells franchises and trains and supports franchises, but does not actually clean any establishments nor does it employ anyone who cleans. The court rejected Coverall’s argument, finding that franchising is not in itself a business. Instead, the court held that a company is in the business of selling goods or services and merely uses the franchise model as a means to distribute those goods in an economical manner. Additionally, because Coverall contracted directly with customers, the court found that the company sold cleaning services — the same services provided by the plaintiffs. As such, because the franchisees did not perform services outside the usual course of Coverall’s business, the company failed to establish that they were independent contractors. Implications For the first time, the court in Awuah has made clear that the Massachusetts Independent Contractor Act will be strictly applied to franchisees. Companies can no longer assume that the classification of workers as franchisees will shield them from misclassification claims. Moreover, once a court makes the determination that an employer has misclassified a worker, then the plaintiff may be entitled to triple damages under the Massachusetts Wage Act for any benefits that were denied as a result of the misclassification. Since the failure to properly classify workers may lead to triple damages, Massachusetts companies would be wise to consult with counsel to assess their current arrangements with franchisees and to ensure that individuals are properly classified under the law.

admin on Commercial Carrier Journal weighs in on threats to owner-operator model; cites CFICF

Fri, 07 May 2010 13:06:15 +0000

^{Dateline: May 1, 2010, Henry Seaton, Commercial Carrier Journal (CCJ Digital)} Owner-operator model still threatened By Henry Seaton Q Is the new healthcare bill going to make us convert our independent contractors to employees? A There is nothing in the healthcare bill that addresses reclassification directly, but the Coalition for Independent Contractor Freedom published a news release suggesting that the Obama administration is more likely to move quickly to address the alleged misclassification issue now that healthcare has passed. The Messenger Courier Association of America, which has held two successful lobbying days on Capitol Hill in support of independent contractors, reports that from a federal perspective there are three legislative initiatives and one administrative initiative that affect the trucking industry’s use of owner-operators as independent contractors. The legislative initiatives are:

The inclusion by the Obama administration of a provision in the new budget bill that would direct the Internal Revenue Service and the Treasury Department to rewrite rules for the classification of independent contractors, repealing the 20-part test and existing favorable law;
Senate Bill 2882, introduced by Sen. John Kerry (D-Mass.); and
House Bill 3408, introduced by Rep. Jim McDermott (D-Wash.).

These three bills clearly portray the majority’s asserted effort to repeal favorable case law, including the so-called safe harbor provisions that allow a company charged with misclassification to rely upon past industry practice. A repeal of the safe harbor provisions would result in loss of the North American Van Lines precedent that permits lease-to-own arrangements between carriers and owner-operators. Legislative initiatives would repeal favorable case law. In addition to the legislative initiatives, the administration issued directives to the IRS, which is processing 2,000 targeted payroll tax initiatives on companies suspected of misclassification with the threat of criminal charges. An IRS and state information sharing task force has been established to aid in these targeted audits. Thus, notwithstanding a few successful court cases (see “A great decision for owner-operators,” November 2009), the push to eliminate independent contractors remains unabated. Constant battles are being waged at the state level to defeat pro-labor initiatives that would force independents to be treated as employees for worker’s compensation and overtime purposes. The proponents of reclassification already view the independent contractor model as a mere subterfuge for depriving working Americans of welfare benefits and federal and state coffers of needed tax revenue. The healthcare bill mandates that companies with more than 50 employees purchase healthcare or pay a penalty. As any small businessman knows, affordable health insurance traditionally has been available only to large preformed groups. I predict the mandate in the healthcare reform program that everyone buy health insurance will put additional pressure on the independent contractor model, unless some way is fashioned for independent contractors – typically small one- to five-employee companies – to obtain their own insurance at reasonable premiums. The paradigm of the healthcare reformers and the reclassification advocates sees the economy only in 19th century economic terms: The captains of industry versus workers, the latter of which incorporate the middle class. Clearly, owner-operators are not seen by the current Congress and administration as small independent businessmen who need special treatment and consideration as required by the National Transportation Policy. I continue to fear that independent contractors and the small motor carriers that depend upon them are not making their case for the preservation of the owner-operator model as essential to the survival of small businesses. The upcoming midterm elections and the aftermath of the healthcare bill suggest that an important tipping point is approaching rapidly. – Henry Seaton is a transportation lawyer who represents carriers.

admin on New York Times article highlights value of independent contracting in tough economy

Fri, 23 Apr 2010 12:05:37 +0000

^{Dateline: April 19, 2010, Michael Luo, The New York Times} Recession Adds to Appeal of Short-Term Jobs By MICHAEL LUO NORCROSS, Ga. — Michael Sinclair knows that in a few months, his stint in the marketing department of a health care manufacturing company here north of Atlanta is set to end. He has been with the company for only six months, but he is not dismayed. In fact, he actually prefers his life as an independent contractor — constantly being laid off and rehired, sometimes juggling multiple jobs — to his old corporate position. “I think it’s far less risky than being in a full-time job somewhere and cut at will and left with nothing,” Mr. Sinclair said. “I see this as the way more people will work in the future.” Economists believe that Mr. Sinclair’s situation has become increasingly common. What is known as “contingent work,” or “flexible” and “alternative” staffing arrangements, has proliferated, although exact figures are hard to come by because of difficulties in tracking such workers. Many people are apparently looking at multiple temporary jobs as the equivalent of a diversified investment portfolio. The notion that the nature of work is changing — becoming more temporary and project-based, with workers increasingly functioning as free agents and no longer being governed by traditional long-term employer-employee relationships — first gained momentum in the 1990s. But it has acquired new currency in this recession, especially among white-collar job seekers, as they cast about for work of any kind and companies remain cautious about permanent hiring. In just one snapshot of what is going on, the number of people who describe themselves as self-employed but working less than 35 hours a week because they cannot find full-time work has more than doubled since the recession began, reaching 1.2 million in December 2009, according to the Bureau of Labor Statistics. Economists who study flexible work arrangements believe that the increase has been driven in large part by independent contractors like Mr. Sinclair and other contingent workers, struggling to cobble together whatever work they can find. As the economy continues its halting recovery and employers’ confidence remains shaky, economists believe that it is likely that the ranks of these kinds of workers will continue to grow. “To the degree there’s more uncertainty coming out of this recession than in past recessions, we would expect companies to be more cautious about taking on more permanent employees,” said Susan Houseman, senior economist with the W.E. Upjohn Institute for Employment Research, who studies contingent workers. “So they’d be looking for more of these nonstandard employees to hire.” Some, like Mr. Sinclair, have embraced this lifestyle, influenced by a growing sense of just how precarious traditional employment can be and reveling in the other benefits, like flexibility and diversity. Others, however, would vastly prefer permanent jobs. They have struggled to deal with the instability, the second-tier status often accorded contractors and other temporary workers and the usual lack of benefits. In most states, they are ineligible for unemployment insurance and worker’s compensation. Indeed, it is not at all clear that the shift to these kinds of arrangements is good for workers. Christine Reams, 45, spent a dozen years as the director of human resources at a large hospital in Columbus, Ohio, but was laid off in July 2008. After struggling for more than a year to find a permanent job, she landed a contract assignment back at her former employer in September, this time in the information services department. Initially, the position, which pays half of what she used to make, was supposed to last only six weeks, but the hospital has extended her contract several times. Now past her sixth month, she is grateful for the work, but the uncertainty has weighed on her, so much so that she checked herself into the emergency room recently when her blood pressure soared. Without health benefits, she had fretted over whether she would be extended again. “It’s not permanent,” she said of the assignment. “So I am not feeling secure.” Bob Longo, 47, of Green Brook, N.J., was laid off as a divisional sales training manager at Unilever in 2006. Since then, he has worked as an independent contractor, stringing together a relatively steady stream of assignments, often several at once. But he has also had to deal with serious peaks and valleys, and he is now trying to find a permanent job. Mr. Longo estimates that he has earned slightly more on an annual basis than he did at Unilever. On the other hand, he no longer has health benefits, a company car, a pension or a 401(k). Though he can use his wife’s health insurance, he says he does not have the stomach anymore for the endless cycle of scrabbling for work every time he comes off a project. “I have steak days, and I have peanut butter days,” he said. “When times are good, times can be really good. But when times are bad, they can be really lean.” Federal and state officials have recently stepped up efforts to crack down on companies that have sought to save money by avoiding paying taxes and benefits on behalf of workers they classify as independent contractors who should actually be treated as full-time employees. The universe of contingent work and alternative employment arrangements is broad. The largest segment appears to be independent contractors, which includes consultants like Mr. Sinclair, as well as freelance writers, nurse practitioners, information technology specialists and myriad other professionals. In 2005, the last time the Bureau of Labor Statistics tried to track these kinds of workers, independent contractors accounted for 7.4 percent of total employment. There is also a much smaller group whose ranks have been expanding in recent months — workers who draw their paychecks from temporary help agencies. Still others are employed directly by contracting firms, and there are also temporary workers, like seasonal retail hires, brought on directly by companies. Despite the drawbacks, there are many who have entered this world voluntarily. In Mr. Sinclair’s case, he had been working at a marketing and strategy consulting firm in the Atlanta area but was laid off last year. After realizing that companies were mostly not hiring but still had short-term work to be done, Mr. Sinclair plunged into selling himself as a consultant. After taking a few months to get started, he found himself juggling a steady stream of part-time projects. His current position at Mölnlycke Health Care, which makes surgical gloves and other medical products, started out as a short-term assignment but has morphed into a full-time job as the company’s interim head of marketing. The company plans to hire someone permanent but has been busy with other priorities, which is fine with Mr. Sinclair. If he is offered the position, he said that while he would be tempted, he was not certain he would take it. His experience with his last company — the first time he had been laid off — taught him a lesson. “I just saw you really can’t rely on a company,” he said. “I think too many people, even in this day, still think you can rely on a company for security.” He would rather rely on himself.

admin on With healthcare behind them, politicians eye Independent Contractors

Wed, 24 Mar 2010 10:18:03 +0000

^{Dateline: March 24, 2010, CFICF E-Newsletter} Be sure to read the latest CFICF e-newsletter, "With healthcare behind them, politicians eye Independent Contractors" (full copy is below). If you're not already signed up to receive these communications, then sign up today. Dear Independent Contractor, With the healthcare bill passed, Washington politicians will be gearing up to focus their attention elsewhere, including legislation that threatens the way millions of Americans make a living and support their families: independent contracting. Proposed federal legislation includes a complex set of new rules defining who is allowed to be an IC – more complex rules with threatened heavy penalties to deter companies from hiring ICs. As highlighted in a recent San Jose Mercury News article, politicians continue to either miss or ignore important facts about our healing economy – particularly in Silicon Valley and other tech centers where thousands of highly-skilled ICs work in the technology sector. In an area – and industry – hit especially hard by the recession, why would our lawmakers want to do something to hamper growth and recovery? The answer is simple: hidden agendas and budget deficits. The proposed legislation – sponsored by Sen. John Kerry, D-Mass., and Rep. Jim McDermott, D-Wash. – would give the IRS more power to go after employers. Additionally, it would increase fines tenfold, meaning some fines would end up being $1 million. Startling, isn’t it? Many politicians either refuse to see or ignore the fact that ICs are part of the solution – able to speed up economic recovery and allow businesses of all sizes to survive in today’s economic climate. Some experts now fear a startling trend — U.S. small businesses becoming hesitant to hire ICs for fear of steep fines and confusing classification issues. Those of us who are independent contractors – or who hire them – must act now, before it’s too late. After all, every day we’re a little closer to new laws that could do irreversible damage. If you’re an IC – or a company that relies on them – visit www.cficf.org to voice your opinion about proposed legislation that threatens your livelihood. And as another reminder, look for continuing updates and news at www.twitter.com/IndContractors. Sincerely, David Dunnigan Executive Director Coalition for Independent Contractor Freedom

admin on CFICF E-Newsletter: States don't want independent contractors

Fri, 12 Mar 2010 09:54:25 +0000

^{Dateline: March 12, 2010, CFICF E-Newsletter} Be sure to read the latest CFICF e-newsletter, "States don't want independent contractors" (full copy is below). If you're not already signed up to receive these communications, then sign up today. Dear Independent Contractor, The lingering effects of the recession re-emphasize the need for independent contractors. According to a recent CBS News report, one-third of American workers (more than 40 million) now freelance – a percentage that is only expected to rise in the coming months and years. Despite this, government at both the state and federal levels continues to work to make it more difficult to work as independent contractors. At last count, independent contractors in more than a dozen states run serious immediate risk of having their livelihoods damaged by state government actions. The reason is simple: states are trying to force companies to convert their independent contractors to employees as a way of trying to shore up budget deficits. Make sense to you? Let us know what you think. Please visit our Recent Forum Topics on www.cficf.org to get involved in discussions about proposed laws and regulations, and other important information regarding your career as an independent contractor. We can all learn from each other! One of our recent postings in the “tips and advice” section is a link to an article, “Freelancing: Seven Keys to Success.” It sheds light on how independent contracting in the weak job market is helping people redefine themselves and take hold of their careers. The Boston Globe article also highlights important information on taxes, bookkeeping, networking and education. After all, if we contractors aren’t engaged and don’t step forward to protect our livelihoods, who will? Many thanks, David Dunnigan Executive Director Coalition for Independent Contractor Freedom

TCUFly on "Freelancing: 7 Keys to Success" from the Boston Globe

Tue, 02 Mar 2010 13:19:37 +0000

The below link below is definitely worth a read. It's a recent article from The Boston Globe and gives some GREAT advice on things to remember re: being a successful independent contractor/freelancer -- especially when it comes to taxes and bookkeeping.

Cheers to all the independent contractors out there!

http://www.boston.com/business/personalfinance/managingyourmoney/archives/2010/02/freelancing_-_s.html

admin on CFICF E-Newsletter: Freelancers face forced conversion to employee status

Fri, 29 Jan 2010 12:30:07 +0000

^{Dateline: January 29, 2010, CFICF E-Newsletter} Be sure to read the latest CFICF e-newsletter, "Freelancers face forced conversion to employee status" (full copy is below). If you're not already signed up to receive these communications, then sign up today. Dear Independent Contractor, As we settle into 2010, new anti-independent contractor legislation at both the state and federal level is taking quick form. As evidence of that, the Massachusetts Joint Committee on Labor and Workforce Development will hold a hearing on a proposed law that would affect freelance writers and editors (and lots of other independent contractors). The one-word change in the Massachusetts General Laws would stiffen the definition independent contractor, forcing even more companies to covert their ICs to employee status. Never mind that most ICs want to remain independent. Once again, they’re spinning the change in the law under the guise of “protecting workers.” The reality is that independent contractors caught in this trap will not be protected at all. If already struggling companies are forced to reclassify their freelancers as employees, many could not afford to retain these contractors. Jobs would disappear – and so could the companies that rely on the flexibility independent contractors offer them. That said, we must start off the new decade strong and take action now! The Coalition is a voice for America’s 10 million independent contractors and the voice of each and every one of you is extremely important. With new legislation threatening our livelihoods at every turn, we simply can’t sit around and be passive. If you’re a freelance writer or editor – or any sort of independent contractor or company that relies on them – visit www.cficf.org to learn more and voice your opinion. And don’t forget to look for continuing updates and news on this law and more at www.twitter.com/IndContractors. Let us know what you think about the strong possibility of more states adopting laws that would prohibit your lifestyle and freedom by joining in on the discussion at our Forum. And for those of you willing and able to help support the work we do here at the Coalition, you can click here to donate. Any amount – large or small – is extremely appreciated. After all, if it wasn’t for your support, we wouldn’t be around. Wishing you a safe and prosperous 2010, David Dunnigan Executive Director Coalition for Independent Contractor Freedom

admin on CFICF E-Newsletter: Sen. Kerry launches new threat to Independent Contractors

Tue, 22 Dec 2009 14:34:20 +0000

^{Dateline: December 22, 2009, CFICF E-Newsletter} Be sure to read the latest CFICF e-newsletter, "Sen. Kerry launches new threat to Independent Contractors" (full copy is below). If you're not already signed up to receive these communications, then sign up today. Dear Independent Contractor, As 2009 draws to a close, a new threat appears for our nation’s 10 million independent contractors. Sen. John Kerry, D-MA, recently introduced legislation to crack down on employers who classify their workers as independent contractors. Kerry’s proposal would, among other things, change a section of the tax code known as “safe harbor” that allows workers to be considered independent contractors. Of course, they’re spinning the bill under the guise of “protecting workers.” The reality is that businesses – large and small – caught in this trap will not be protected at all. If businesses are forced to reclassify their independent contractors as employees, many would be unable to afford to retain these contractors. That in mind, now (more than ever!) is the time to let your voice be heard. Join us in creating an effective political voice for independent contractors and the companies that use their services. After all, if we don’t take a stand and let our voice be heard NOW, next year’s holiday season could be far from jolly for ICs and their families. The federal government and many of the 50 state governments still want to force independent contractors into employment status, costing the ICs the businesses they’ve worked hard to build. And this comes, of course, on the backs of our nation’s small businesses – ICs and many of the companies that use them – and as a further challenge to the healing economy. If you’re an independent contractor – or a company that relies on them – visit www.cficf.org to learn more and voice your opinion. And don’t forget to look for continuing updates and news at www.twitter.com/IndContractors. Let us know what you think about the strong possibility of more states adopting laws that would prohibit your lifestyle and freedom by joining in on the discussion at our Forum. And of course, from all of us here at CFICF, a safe and pleasant 2009 holiday season to you. Sincerely, David Dunnigan Executive Director Coalition for Independent Contractor Freedom

Favila on Independent Contractors vs Employees

Fri, 11 Dec 2009 18:55:35 +0000

I run an Interpreting and Translating agency and have been doing so for the past 5+ years. Our agency ONLY contracts Independent Contractors - Freelance Interpreters and Translators; however for years Interpreters and Translators have been trying to clasify themselves as Employees.

ILI has set very specific contracting standards to avoid the issue of Independent Contractor vs Employee; however, it's been impossible since there is no set legal standards for this field, making it quite difficult for ILI to enforce or request that contractors provide the necessary documentation in order to protect agencies from having contractors trying to get clasified as employees.

Interpreters work for multiple agencies
They are able to pick and choose wich assignments to accept and from whom
They set their own rates
ILI does not provide a schedule, nor we provide them with an office locations, tools or supplies
They sign an Independent Contractor Agrement and W-9 form
They submit their invoice upon completion of assignment
ILI Does NOT control the method, or way of them doing or providing their services or whom to work for
Contractors Don't have a set schedule, nor do they report to anyone
Based on their State, County or Local agencies they may or may NOT be required to get a business license
They are to carry their own Errors and Omissions Insurance

Altough we try to request items 9 and 10, the response that we get from 95% of interpreters is that "NO OTHER agency has requested this from them and why should they make this expense" therefore it has made it difficult for ILI to enforce this matter causing this classification issue of Contractor vs Employee. I think that the reason as to why agencies don't enforce this it's because many interpreting agencies around the US depend on Freelance Interpreters and that has made it very difficult for ILI.

ILI is in the business to provide work for both contractor and employees, but we need to put a STOP to this madness and we need to find a solution to this major issue.

Although The Department of Labor Standards has a blog on the California website where they specifically go into details about the different types of interpreters and the difference of contractors vs employees when it comes right down to it, they will back the interpreter even after all of the proper documentation has been presented to show that they are Contractors. (Example: Court Certified Interpreters, that have been certified by the Judicial Council of California 95% of the interpreters are Freelance Interpreters, meaning that the majority are on call by the court to provide services directly for the court, but they are also registered with multiple interpreting agencies, whereas they provide or make themselves available for assignments based on the location, rate, etc... Although, the Judicial Council has standard set rates, when interpreters work for agencies they set their own rates, starting from $45.00 to $300 per hour, yet the Judicial Council does NOT require the independent interpreters to provide a business license or the necessary documentation in order to avoid the Contractor vs Employee classification), yet many agencies have been sued and have been required to pay these excessive fees by the labor board because Interpreters want both of best worlds!

Also the state says and has or requires agencies to provide workers compensation insurance for contractors, so imagine having a poll of over 2,500 Freelance Interpreters, how much money would you have to pay in order to be able to contract these interpreters... Alot of money of course, therefore why have a business if all of your profit is going to go directly to the State, Local or Federal agencies, for freelance interpreters that are trying to get the best of both worlds.