Employee or Independent Contractor?

A Middle Ground Between Contract Worker and Employee 

loft-business-with-conference-tables1.jpgFrom The New York Times, Noam Scheiber discusses the challenges of classifying workers as employees or independent contractors.  He relates the story of two companies that started off using independent contractors and changed them to employees.  He also discusses the challenges of start-ups who may use independent contractors.  Noam writes:

Another fear among venture capitalists and tech executives is that these innovative companies are being coerced by the threat of litigation and a crackdown by regulators to upgrade their workers’ status even if they only engage in one or two practices — like training — that are common among employers.

“You have regulatory bodies suing people, lawyers out there suing people,” said Simon Rothman, a venture capitalist at Greylock Partners, who is on the board of an on-demand firm. “Many start-ups can’t withstand a lawsuit even if a company is in the right.”

To fix this, regulators could simply clarify the criteria that suggest employment or independent contractor status — categories that, in theory at least, already give businesses a fair amount of flexibility because no one factor carries the day. “Courts and regulating agencies look at the totality,” said David Rolf, president of a large service employees union in the Northwest. “Training in and of itself is not determinative.”

Mr. Krueger and Mr. Harris are concerned that what they see as the overly crude nature of labor law means that independent contractors are not provided enough protections.

But creating an entirely new category of worker would not only be politically and logistically tortuous, it would also risk depriving workers who would otherwise be classified as employees of the benefits they might enjoy.

That has been the experience with intermediate categories both in Britain and Italy, according to an analysis by Valerio De Stefano and Janine Berg of the International Labor Office, which is based in Geneva.

“We could do something that is unduly hasty and ends up doing more harm than good,” said Labor Secretary Thomas E. Perez, whose department is actively exploring the implications of the gig economy for the laws it enforces, but who declined to comment on the Krueger-Harris paper specifically. “I am undeniably fearful that the on-demand conversation is used as an excuse to further roll back the safety net.”

Read the full story at A Middle Ground Between Contract Worker and Employee

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