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.

Join the forum discussion on this post - (1) Posts

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

Join the forum discussion on this post - (1) Posts

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

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “Government should be turning to – not against – independent contractors” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

A Bureau of Labor Statistics job report out a few days ago underscores the importance of temporary workers, who some experts predict could become a QUARTER of the American workforce as contract work grows. When the economic outlook is uncertain, small businesses (and big businesses for that matter) call more often on independent contractors, who are able to offer the much-needed flexibility for the ups and downs of our economy.

However, as 2009 draws to a close and the recession forges on, big changes in labor policy continue to threaten the very things that helped make America the land of opportunity – small businesses and a free market economy. To illustrate the irony of government’s efforts to curtail independent contracting:

• According to a report by California-based Nelson Staffing, there is a long-term shift towards contractors in the workplace.
• Littler, the No. 1 employment law firm, predicts half the jobs created in the recovery will be filled by contractors, consultants and other temps.
• According to Business Talent Group, which places executives, fifteen years ago most temporary slots were for office work, but more than half are now filled by professionals such as engineers and physicians.

You may think these facts alone would be enough to convince government of the value of independent contracting in the economy and put a halt to anti-independent contractor legislation… but they’re NOT.

In the face of facts like these, several states (most recently Nebraska) are considering more anti-contracting legislation. Of course, this is IN ADDITION to the federal threat and the several states that have already passed new anti-independent contractor legislation. And let’s not forget what this legislation would do to our healing economy.

Independent Contractors and the companies that use them can do something about that. We are more than 10 million strong and growing. If we come together as one voice, government must pay attention.

We continue to urge all of you to come together at www.cficf.org. And please, urge your friends and colleagues to sign up at http://www.cficf.org/join-us.

Sincerely,
David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “States becoming more aggressive in fight against 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 Washington focused on difficult healthcare legislation and perhaps even more difficult financial regulation, their labor policy agenda seems to have taken a backseat… for now.

However, this doesn’t mean independent contractors can sit back and relax. While the federal anti-contracting agenda waits in the wings, states are:

• Adopting legislation to force the classification of independent contractors as employees
• Trying to take away the rights of independent contractors in order to gain new revenue to help shore up their budget deficits
• Revising definitions of “Employee Misclassification” in legislation of various sorts

Not only is the new anti-contractor legislation popping up in many states — up to 23 states, according to a recent news report — it’s making its way through regulatory and executive agencies as well.

Now, state Attorneys General appear to be getting more aggressive in their fights against the independent contractor model.

Making big news this week, the Attorneys General of New York, New Jersey and Montana plan to sue FedEx Ground. They’re claiming the unit’s classification of workers as independent contractors violates state labor laws.

Don’t let this fool you. It isn’t just about FedEx – it’s about ALL independent contractors. States and the federal government want to redefine independent contracting… and the result could be to redefine many independent contractors out of business.

Don’t let this happen in your state. Join us in creating an effective political voice for independent contractors and the companies that use their services. Many of the 50 state governments want to force independent contractors to become employees, costing the ICs the businesses they’ve worked hard to build. And soon the federal government will be joining in. All this comes, of course, on the backs of our nation’s small businesses – and economy – at the worst possible economic time.

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. Additionally, don’t forget to sign up for news and continuing updates on Twitter.

Sincerely,
David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “Threats to Independent Contractors virtually ignored by media” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

As we’re all well aware of by now, U.S. labor policy is at a crossroads and the independent contractor model remains in serious danger of becoming severely crippled. However, the threat to independent contractors is often overlooked because the Employee Free Choice Act (EFCA) continues to get all the labor news headlines – as it has been in the past couple of weeks with Sen. Arlen Specter, D-Pennsylvania, touting an EFCA agreement.

EFCA allows workers to be forced into unions without ever getting a say. It’s a bad idea for workers and their families, small businesses, and the economy – especially at this vulnerable time as we slowly rebuild our economy.

While EFCA would be a blow to the independent contractor model and the companies that use them, there are far more serious and immediate threats to our livelihoods and families – such as the Independent Contractor “Proper Classification” Act (ICPCA). With the summer officially over and Congress back in session, now is the time – more than ever – to take a stand for the rights of independent contractors and the businesses that use them.

If EFCA passes, watch out. Independent contracting legislation is next on the list. But if EFCA doesn’t pass, its proponents may feel like they have to placate unions by giving them something. That something would be the legislation that forces companies to convert their independent contractors into employees. Unions want independent contractors to be forced into employee status so they can be recruited into unions.

It’s a mystery why the threat of ICPCA goes virtually unnoticed in the media. The Act is devastating to the millions of independent contractors who want to remain independent, and it’s a direct threat for small businesses, many of whom rely on independent contractors.

Independent contracting provides workers and companies economic flexibility and allows them to financially rebound more quickly. The attack on independent contracting threatens to deepen and extend the recession… and make recovery even more difficult.

We continue to encourage you to take a few minutes of your time to go online and send an email to your members of Congress and to President Obama. If our voice is big enough, and it easily can be with 10 million of us, the serious issues facing independent contractors will start to take shape in the media and influence the thinking in Washington.

As always, if you do take a moment to contact the government officials who work for you, we’d appreciate it if you would share your story with us at www.cficf.org… or copy your message to info@cficf.org.

Sincerely,
David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “This Labor Day, speak out for your rights as an Independent Contractor” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

With Labor Day just around the corner, we’re reminded of all we have to celebrate. As independent contractors, the fruits of our labor are rewarded with flexibility, financial freedom and control of our own destinies.

For the families of America’s 10 million independent contractors, this weekend may also mean time to celebrate the family’s hard work at their small business – and the financial freedom and flexibility owning such a business can offer.

That in mind, let’s take this Labor Day to also celebrate that we live in a country where hard work is valued as an important part of our culture and economy. However, if we want to keep a culture where independent contracting is valued, we must also continue to take a stand and fight proposed state and federal legislation that threaten to take away our rights.

We encourage you to take a few moments this holiday weekend to go online and send an email to your members of Congress and to President Obama.

Let them know that you are one of America’s 10 million independent contractors, how hard you work, and how important independent contracting is to your family and our economy – especially in this difficult time. And, by the way, thank them for their support of America’s working families on behalf of independent contractor families everywhere.

As always, if you do take a moment to contact the government officials who work for you, we’d appreciate it if you would share your story with us at www.cficf.org… or copy your message to info@cficf.org.

A safe and pleasant Labor Day to you all!

Sincerely,
David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “Labor Law Changes are killing the American Dream” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

It’s long been known that the majority of new jobs come from small businesses like those started by independent contractors. However, recent changes to labor law in some states, such as Florida, are creating severe economic and career hardships for independent contractors and small business owners.

It’s gotten so bad that some of our nation’s best and brightest recent college graduates are taking their entrepreneurial skills elsewhere. And by “elsewhere,” we don’t mean a different state, we mean a different country.

According to The New York Times, faced with increased difficulty of running a small business in the U.S., many recent American college graduates are headed to China for its growing economic opportunities and low cost of running a small business.

Although many of these American ex-pats working in China say they’ll eventually return to the United States, the fact remains that our increasingly hostile small business environment is sending economic growth to China (and probably other countries) when we desperately need it here at home.

Our nation’s young entrepreneurs shouldn’t have to leave the U.S. to pursue their dreams of starting and owning a business, and we DON’T need changes to labor law that make their dreams even harder to achieve.

Consultants, independent contractors and off-site work locations are commonplace, and the businesses that use them are a big chunk of the U.S. economy; however, hidden political agendas are hindering the growth of this important sector of the workforce and taking the road to economic recovery right along with it. Now, they are forcing the entrepreneurial spirit and thousands of young, bright minds to leave the U.S.

It appears the politicians are forgetting – or ignoring – that small businesses and the entrepreneurial spirit are key to the economic success of our country. It’s incredibly ironic that young workers wanting to start businesses that could fuel tomorrow’s growth now feel they have to leave America in search of the “American Dream.”

So, once again, we stress the importance of joining together as one giant, cohesive voice that is 10 million strong. It is the only way we will be heard.

We must secure the future of independent contracting for our future generations. And we must act quickly. We cannot sit by the sidelines and watch this play out. After all, the future of America’s economic security is also relying on it.

And remember, in addition to our website, we can now rally together on YouTube and Twitter. Help us take a stand, UNITE together and spread the word!

Sincerely,

David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “Skewed Political Agendas ‘Poison the Well’ for Independent Contractors” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

It seems like the politicians who want to change independent contracting poison the well when they talk about it. They seem to assume ICs are misclassified and use words that imply illegality. America’s 10 million independent contractors can and should expect more of their government.

Politicians who think this way are either missing or ignoring an important point about what’s been happening in the U.S. economy. In today’s economy, consultants, independent contractors and off-site work locations are commonplace and the businesses that use them are a big part the U.S. economy.

The long-established, existing laws define independent contracting, and thousands of companies have relied on those laws to build their businesses. Existing laws provide guidance as to how to classify workers. Just because the politicians don’t like the outcome, doesn’t mean a worker has been misclassified. And current laws even provide for corrective action when mistakes or abuses occur.

These existing laws have a documented history of regulatory and court interpretation that, if properly enforced (and they should be when abuses are found), can assure the proper classification of independent contractors. As they say, “if it ain’t broke why fix it?” The IRS rules are clear and have worked well for decades.

Despite this, using toxic words to describe independent contracting is not only insulting to America’s 10 million independent contractors; it’s also a growing tendency in government. And – it’s now spreading through various states like wildfire. In fact, some politicians repeat them as if they were true and some media let them get away with it – and the proof is in all the proposed legislation.

And we can’t forget these poisonous words aren’t only coming from state and federal governments – they are also coming from trial lawyers and unions. Facts, and the workability of current law notwithstanding, they’ll probably continue to use toxic words to inaccurately and unfairly characterize the situation in an effort to get their way.

But these manipulative approaches will work only if we let it happen. If we, as independent contractors and the companies that use their services, want to protect our livelihoods and our families we must stop their efforts to re-write labor policy. We must not let the hidden agendas of anti-independent-contracting politicians get in the way of our livelihoods and the well being of our families. As ambassadors of the Coalition, we encourage you to:

• Write guest columns for your local paper
• Send letters to the editor
• Write your Members of Congress

Actions like these will allow us to drown out the toxic words that threaten independent contracting and create a rational discussion based on the facts. There are more than 10 million of us and TOGETHER we can do this.

And remember, in addition to our website, we can now unite together on YouTube and Twitter. Help us take a stand and have the positive, proactive words be heard! After all, our economy, livelihoods and families depend on it.

Sincerely,
David Dunnigan
Executive Director
Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts

Be sure to read the latest CFICF e-newsletter, “Your state wants to force independent contractors into becoming employees” (full copy is below). If you’re not already signed up to receive these communications, then sign up today.

Dear Independent Contractor,

New state actions, this time targeting Workers Compensation legislation, are once again putting independent contractors and the companies that use them at SERIOUS RISK.

New state laws are revising definitions of “Employee Misclassification” in Workers Compensation legislation. It has sprouted up in several states and threatens to spread like wildfire. The legislation comes under the disguise of “protecting workers,” but the real goal may be revenue generation for states and more policies for insurance companies.

This movement gained more steam when the National Conference of Insurance Legislators (NCOIL) recently drafted a piece of “model legislation” all states can use. NCOIL, an organization that creates model legislation for states to use in creating new laws, has based the model “employee misclassification” act on Florida and Wisconsin statutes that use a nine-point test to define an independent contractor and mandate workers’ compensation coverage in the construction industry.

A similar law became effective in New Hampshire during January, 2008. Here’s what resulted there, according to a recent report in the Nashua (NH) Telegraph:

• “New Hampshire is now crawling with state auditors examining the payroll records of small businesses.”

• “In the guise of protecting workers, the state is aggressively seeking fee income from small businesses, and at the worst possible time.”

• “The truth is that the statute sets forth a list of qualifications to be an independent contractor that cannot possibly be met.”

• “The reality is that small businesses caught in this trap will not retain these contractors as newly classified employees, because they cannot afford to.”

Ominously, the story says, “the independent contractor in New Hampshire is dead and buried.”

Don’t let this happen in your state. Join us in creating an effective political voice for independent contractors and the companies that use their services. The federal government and many of the 50 state governments want to force independent contractors into becoming employees, costing the ICs their businesses. And this comes, of course, on the backs of our nation’s small businesses – and economy – at the worst possible economic time.

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.

Sincerely,

David Dunnigan

Executive Director

Coalition for Independent Contractor Freedom

Join the forum discussion on this post - (1) Posts