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Fix the Fundamental Flaw in Labor Law

If the DOL 2020 Independent Contracting proposal is adopted into the Fair Labor Standards Act of 1938, three problems will remain, symptoms of a single flaw in all U.S. employment law.

First, there will still be no way for a voluntarily self-employed individual to acquire self-employed status for certain.

Second, there will still be no way to communicate voluntarily self-employed status. There will be no token that a self-employed individual can show a buyer that he or she is voluntarily self-employed. As a result, buyers of services will have no safe harbor from the risk of fines, penalties and other regulatory enforcement actions.

Third, buyer reluctance will still grow. Buyers nationwide have pulled back from hiring contractors, fearing regulatory and judicial retaliation and enforcement. Employment laws vary widely among the states and the federal government, and the laws change frequently. Buyers have heard harsh news about draconian penalties on buyers in Massachusetts and California. Other states’ legislative leaders intend to follow.

Missing is the voice of each individual wishing to work and identify as self- employed. This hurts a third of our work force directly, and shrinks the economy. Instead, the FLSA permits many distant third parties to categorize workers as either employees or independent contractors. State and federal regulators, state and federal legislators, judges, union activists and plaintiffs' attorneys—many with conflicting interests—and defense attorneys, all have a hand, under current law, in classifying which individuals are freelancers and which are self-employed. Ironically, all these third-party classifiers are employees. Freelancers and the self-employed, in contrast, are seeking to be employers of themselves and perhaps, in time, other individuals. FLSA does not permit this choice of law, so state law cannot permit it, either. Thus, there can be no federalist-style experimentation with voluntary declarations among the states under current law. Why not allow a willing individual to make a determination of what is best for her? She is fully involved in an intensely personal and vital economic decision for herself, her family and her economic livelihood. Choosing to be self-employed is a choice between working under contract law or self- employment law. Individuals can choose to be married or single and live with different laws. Why not trust those willing to choose self-employment?

Check out our Proposal to Allow Voluntary Self - Classification here.


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