Washington Is Out of Touch with the 21st Century Workforce 

Capitol Hill


From Economics21, Jared Meyer shares part of his testimony before the House Committee on Education and Workforce.  Jared’s testimony included the following:

Unlike employees, independent contractors are not entitled to minimum wage, overtime pay, unemployment insurance, or workers’ compensation. But extending these employment protections to independent contractors makes no sense. When debating the future of worker classification, lawmakers should resist calls to extend employee wage and hour protections to independent contractors.

The difference in treatment is justified because independent contractors work for themselves.

Moving these workers into an employer-employee relationship from their current—but threatened—independent contractor status would substantially hinder the growth of sharing economy, not to mention the flexible work opportunities and immense consumer benefits that it provides.

Since intermediaries do not control workers’ hours, and determining how much someone is actually working solely for the intermediary is difficult (if not impossible), minimum wage and overtime pay requirements are inapplicable to the companies’ workers. Additionally, one of the benefits of the sharing economy is that supply can easily fluctuate to meet ever-changing demand.

Because of the option of flexibility, independent contractor work for intermediaries is often transient, or done in addition to other work. This is why there is little reason to compel employers to fund unemployment insurance benefits. Intermediaries’ workers also usually complete jobs off-site and use their own materials. For these reasons, workers’ compensation systems should remain optional—not mandatory—for intermediaries.

The worker classification question needs to be sorted out by federal legislators, not courts or unaccountable executive agencies. The alternative is the crippling of the sharing economy by executive agencies set on incorrectly classifying the vast majority of new economy workers as employees.

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