Bold Solutions to End Misclassification and Deliver Stability and Flexibility for Workers

This following is a testimony to the U.S. House of Representatives Committee on Education & the Workforce Subcommittee on Workforce Protections. 

“Thank you Chairman Kiley, Ranking Member Adams, and Members of the Subcommittee on Workforce Protections for this opportunity to testify today on the important subject of independent contracting.

True independent contractors are people who are in business for themselves. As such, they make all of the important decisions about how to run their business. They determine what goods or services to sell and at what prices, make capital investments to grow their business, and build a customer base. At NELP, we support policies that ensure these small business owners are treated fairly, such as the Freelance Isn’t Free Act in New York City.

What we take issue with is when corporations mislabel the workers powering their businesses as “independent contractors,” “self-employed,” or “freelancers” even though these workers are not in business for themselves. Corporations do this to shift the risks and costs of the business onto their workers, while channeling wealth to investors and CEOs.

Misclassification excludes workers from bedrock labor rights and protections, such as the right to minimum wage and overtime, the right to collectively bargain, and the right to a harassment and discrimination-free workplace.

Because corporations that misclassify their workers as independent contractors shirk their responsibilities to pay into social insurance funds, their workers pay both the employer and employee shares of payroll taxes that fund Social Security and Medicare and are excluded from critical state social insurance programs like unemployment insurance and workers’ compensation.

Corporate misclassification of employees as independent contractors is an urgent problem: it erodes workers’ wages and benefits, makes it difficult for law-abiding businesses to compete, undermines social safety net programs, and silences workers by stripping them of the right to organize.

The practice reinforces racial and gender occupational segregation and promotes a second-tier workforce of predominantly workers of color in precarious jobs without bedrock protections. Combatting independent contractor misclassification should be a priority for policymakers regardless of party affiliation: doing so would benefit workers, businesses, and government coffers.

Workers who are truly running their own businesses – with the power to set prices and make decisions and investments impacting profits and losses – can continue to do so, and high-road businesses will not be undercut by competitors skimping on employee payroll costs.

Every worker deserves livable wages and benefits, a tenable schedule, safe and healthy working conditions, equitable treatment, and the ability to exercise collective, democratic power at work. Federal policy can and should ensure that employers create jobs that deliver financial security and real flexibility for all workers.

Read the full testimony by clicking the button below.