Final month, the U.S. Division of Labor proposed modifications to the Truthful Labor Requirements Act (FLSA) that will decimate the gig financial system, drive-up prices for our nation’s small enterprise neighborhood, and crush entrepreneurs. Whereas the FLSA governs rules for workers associated to such matters as minimal wage, additional time, and file protecting, the foundations and rules haven't beforehand utilized to these categorized as impartial contractors. Below the present guidelines, the parameters used to categorise a person as an worker, or an impartial contractor are comparatively easy and clearly outlined.
The proposed rule drastically alters the present assessments used to find out if a person have to be categorized as an worker somewhat than as an impartial contractor beneath the FLSA. In contrast to the present rule set, the proposed rule makes an attempt to broaden the definition of an worker via the usage of arbitrary, overly broad, and extremely subjective language. The proposed rule would additionally impose a brand new, six-factor take a look at for figuring out whether or not a person is “economically dependent” on an employer beneath the “totality of the circumstances”. Moreover, there isn't a predetermined weight for every of the assessments. Fail one of many six take a look at and the person employee may very well be reclassified by the federal paperwork as an worker.
Confused but? Effectively, you have to be, as a result of the parameters on this proposed rule are extraordinarily complicated and can pull the rug out from our small companies and impartial contractors which are doing effectively beneath the prevailing guidelines. That’s why the Small Enterprise Affiliation of Michigan, of which I've been an energetic member for a few years and have served as its Board Chair, is strongly advocating in opposition to this rule change and is encouraging small enterprise house owners and allies throughout the state to affix us.
Our opposition have to be loud as a result of if enacted, the actual ache could be felt by the numerous small companies whose operations depend on the engagement of impartial contractors. Small companies often have interaction impartial contractors to offer a myriad of companies. Facility upkeep, supply, bookkeeping, graphic design, digital advertising, and internet growth are just some examples.
Unbiased contractors present the well timed and scalable companies small companies have to service their clients or help their organizations. This symbiotic relationship accomplishes two issues. 1) The small enterprise receives the companies wanted at an inexpensive price that's pushed by market forces, and a couple of) the impartial contractor receives truthful, market-based compensation for his or her efforts whereas setting their very own work phrases, pricing, and work schedule. It's a real “win-win”.
Think about for a second the real-life instance of Dominique, a contract artist who's working as an impartial contractor within the hopes of growing her small group of purchasers right into a sustainable small enterprise. My firm engages Dominique as an impartial contractor to satisfy the design wants of our purchasers. She likes being an impartial contractor because it offers her with the liberty to work at home, and the pliability she wants to satisfy the calls for of her household’s schedule.
Below the proposed rule, if any one of many six-factor assessments just isn't totally glad, then Dominique could be categorized by the federal government as an “worker” of my small enterprise. This may serve solely to inflate my working prices as I must take in the executive, wage, advantages, and tax prices related to bringing on a further worker. This will likely be significantly pricey to my enterprise since my wants for design companies are intermittent. The symbiotic relationship between my enterprise and Dominique, the
impartial contractor, could be destroyed, not by market forces, however arbitrary rules imposed via a very broad, extremely subjective bureaucratic rule.
The proposed rule would pressure Dominique to desert her desires of being her personal boss, following her personal path, constructing one thing uniquely her personal, and doing what she feels is in the most effective curiosity of her household. Although she is prepared to just accept the financial danger related to constructing her enterprise, she will likely be denied the chance with a purpose to fulfill the federal government’s subjective guidelines.
The underside line is that the proposed USDOL rule is dangerous for small companies and can severely impede our nation’s entrepreneurial spirit. Please assist us cease this rule by submitting a public remark to the USDOL by Nov. 28 by visiting sbam.org. Earlier than it hurts Michigan’s small companies, the proposed rule must be rejected with out exception.
— David Rhoa is a serial entrepreneur, proudly owning and working a number of companies. David is an advocate for small enterprise, having written and spoken on the themes of small enterprise tax coverage, and small enterprise labor coverage at each the state and federal degree.