From JDSupra, Richard Reibstein discusses a study released by the Bureau of Labor Statistics which shows more people are working as independent contractors. Richard writes:
The most compelling news involving independent contractor compliance and misclassification last month was not a class action lawsuit or a government investigation but rather a government study released by the Bureau of Labor Statistics of the U.S. Department of Labor. The study, discussed in more depth below, covers the period from 2017 to 2023. It confirms that IC working arrangements have increased over those six years by more than 12%, with nearly 12 million American workers characterizing their primary work arrangements as independent contractors. It is hardly surprising that class action lawsuits alleging that companies have misclassified employees as ICs instead of employees have become commonplace during that time period, with few if any industries immune from these sorts of legal challenges. As we have reported in this blog each month, IC misclassification lawsuits regularly settle for 7-figure dollar amounts, and some settlements reach 8- and 9-figures. To avoid that exposure, many companies using an IC business model have made use of a process such as IC Diagnostics (TM) to enhance compliance with applicable IC laws by structuring, documenting, and implementing their IC relationships in a manner than minimizes such legal challenges yet is consistent with their business model. The court cases on which we report below from November highlight some of the industries that are among the many that are frequently targeted by class action lawyers and government investigators: health care, transportation, and food distribution. Companies in those and other industries that seek to maximize compliance with IC laws by using a process such as IC Diagnostics tend to avoid these types of lawsuits or, if sued, tend to prevail or to settle their cases on favorable terms.
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NUMBER OF INDEPENDENT CONTRACTORS GROWS IN THE U.S. AS PER BUREAU OF LABOR STATISTICS. Independent contractor business models are becoming far more prevalent. In a study released in November 2024 by the Bureau of Labor Statistics of the U.S. Department of Labor, individuals in the U.S. workforce who identified their primary working relationship as “independent contractor” increased in the past six years from 10.6 million in 2017 to 11.9 million in 2023 – a jump of over 12%.
The information used in the study was obtained from a supplement to the July 2023 Current Population Survey (CPS), a monthly sample survey of about 60,000 households that provides data on employment and unemployment in the United States. Some of the other findings of the study are: an overwhelming percentage of such individuals (80.3%) preferred their status as ICs to a traditional employment arrangement; the likelihood of being an independent contractor increases with age; men were more likely to be independent contractors than women (8.7% and 5.8%, respectively); white workers (7.9%) and Hispanic or Latino workers (7.4%) were more likely to be independent contractors than Black workers (5.4%) and Asian workers (5.4%); part-time workers were about two times more likely than full-time workers to be working as independent contractors (13.1% and 6.2%, respectively).; and over seven out of ten independent contractors (70.7%) worked full time.
