Self-employment is ballooning in the workforce right now. Prior to the pandemic, women were starting businesses at a rapid pace. Despite the challenges of the past year, entrepreneurship and independent work continue to enjoy great popularity as workers seek independence, flexibility, and freedom.
A new federal proposal seeks to make it easier for self-employed Americans to be their own boss—and it’s a good approach.
New Jobs America has proposed the Be My Own Boss Act, legislation that would create a new classification of self-employed workers under federal law. For example, these individuals may be independent contractors who drive for Uber or small business owners contracting their labor. They are not employees of that company though.
Under this act, an individual voluntarily chooses to self-classify as self-employed and registers with the Department of Labor. He or she agrees to some conditions including (but not limited to):
- Set her own schedule
- Choose the contracts or projects she works on
- Direct the performance of her work
- Find work
- Name price of her work
- She can make a profit or suffer a loss
- She can engage other workers as employees or contractors
In essence, the federal government under the Fair Labor Standards Act would formally recognize these non-employees as self-employed, thereby eliminating the confusion over whether someone is an independent contractor.
The threats to independent contracting are on the rise
This approach could not be more timely. The U.S. Senate is expected to consider the Protecting the Right to Organize (PRO) Act, which has already passed the House of Representatives. Among many union-supporting provisions, the PRO Act would establish a tougher standard to determine whether a worker is an independent contractor.
Similar to the test adopted in California through the law AB5, this approach would likely mean that millions of the nation’s over 50 million independent contractors would suddenly be classified as employees. Companies simply could not afford to hire these individuals as employees and would let them go. Gig economy companies would be upended, as their business models depend on drivers, workers, and independent contractors not part of their workforce such as tech developers and HR staff.
The workers themselves do not want to be employees but choose independent contracting for many reasons. They may be forced to leave the workforce. We saw this play out in California. The incomes of independent workers were shredded as they lost contracts and regular jobs.
Congress should not put its thumb on the scale in favor of one form of work over another. Flexible work is as critical and necessary as ever. For women who need to balance caregiving for children, aging parents, or sick spouses, independent work allows them to work on their own schedule. For workers who have disabilities and health conditions that keep them from working in a traditional job, independent contracting gives them the ability to work at their pace and around their treatments. Read stories of workers like this through our Chasing Work series.
The Trump administration sought to bring greater clarity to the independent contractor issue by advancing simpler economic test, but the Biden Administration rescinded that rule recently and has how placed its full support behind the PRO Act.
Workers want flexible opportunities, not unionization. The Be My Own Boss Act appears to deliver that.
We will track how this effort unfolds, but encourage more innovative approaches to protecting worker flexibility and rights.