Dateline: Sept. 30, 2008, Associated Construction Publications
Independent Contractors Are Key to Limiting Damage from Economic Crisis, Says CFICF
Independent contractors can play a key role in preventing a deep recession. But a series of moves by state governments, labor unions, the IRS, and proposed legislation in Congress are putting independent contracting – and economic recovery – at risk.
Some of these actions – which compel employers to “reclassify” their contractors as full-time employees – seem intended to protect workers. But according to J.R. Gonzales, the former Chairman of the U.S. Hispanic Chamber of Commerce and founding chairman of the Coalition for Independent Contractor Freedom (www.cficf.org), they are likely to have the opposite effect by limiting employment – denying workers the flexibility to find new work quickly after layoffs, work extra hours if they’re able to and escalate their pay. In a release, CFICF explains its viewpoint as to:
- Why independent contractors play a critical role in the U.S. economy. According to the IRS, independent contractors account for 8 percent of the U.S. workforce. In all, there are 10 million of them. They are central to small business – which is itself the largest U.S. employer and job creator. Independent contractors work in virtually every industry. Independent contractor ranks include truck owners/operators, software engineers, plumbers, nurses, writers, photographers, graphic artists, accountants and attorneys, among others. They are a dominant force in several industries, including transportation, construction, technology and healthcare.
- Why independent contractors are a key to economic recovery – for workers, businesses and the U.S. economy as a whole. Independent contracting allows workers to find new work quickly and flexibly after layoffs and restructuring – especially important when full-time jobs are scarce. Independent contractors can work multiple jobs, work longer hours if they need more pay, or shorter hours if they need to balance work and family life. Companies that use independent contractors can stay flexible and efficient, adding (and paying for) extra capacity only when they need it. That keeps them profitable and makes sure that they can continue to grow. And flexibility is essential to competitiveness, as U.S. companies face the threat of lean, hungry, innovative overseas firms. Finally, the fees paid to independent contractors go directly back into the economy as consumer spending, savings and equity growth in their small businesses.
- How attacks on independent contractors are putting the economy at risk. Independent contracting is under attack from several quarters. The IRS is on a sustained drive to force the companies that use independent contractors to turn them into employees. In 2007, the IRS undertook a “worker misclassification” program, aimed at forcing companies to “reclassify” independent contractors as employees, and entered into data-sharing agreements with more than 25 states. A number of states have passed their own “worker misclassification” laws, among them Arizona, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New Mexico, Oregon and Pennsylvania. At the federal level, a bill currently before Congress (H.R. 5804) would repeal a 1978 law that protects independent contractors from “overzealous” IRS actions. And, several powerful unions have gone to court to force companies to convert their independent contractors into employees.
“Some – though not all – of these actions are well intentioned,” Mr. Gonzales says. “Some legislators and regulators genuinely believe they are helping workers by restricting independent contractors, when in fact they’re doing the opposite. They’re taking money out of the economy and jobs away from American workers. Independent contractors and the companies that rely on them need to stand up and make that case.”
“It’s important to remember that the ability to work as an independent contractor is a fundamental American right,” he continues. “It’s the right to work where you want, when you want, in the way you want. And everyone benefits from that – individuals, companies and the economy. In a time of severe economic challenge, we need to use all the tools available to us, and take advantage of flexibility wherever we can. Independent contracting is the right tool at the right time. To restrict it is a serious mistake.”
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February 11th, 2009 at 7:01 pm
It would be nice to see more of this.