Studying how government regulations affect women’s employment is a priority of the organization that I run, Independent Women’s Forum. Now, rather than reviewing data and economic reports, we have become a case study of how ill-advised policies hurt women. 

We are working with human resources consultants and lawyers to address this topic from an unfortunate angle: How many women will we have to let go when the new Department of Labor independent contracting rule takes effect? 

Guidance from the Society of Human Research Management encapsulates the challenge: “The most basic question about the employment relationship is whether a worker is, in fact, an employee or an independent contractor. As with so many employment law issues, the answer is “it depends.” 

It depends not only on the particulars of the work relationship, but on which government entity is asking the question, since “even courts have admitted that the distinction is not always clear.”

The legal distinctions aren’t clear, but what is clear is that the new Department of Labor regulations are meant to reduce the number of contractor relationships and push more people into working as traditional employees. 

With an estimated 25% to 35% of workers involved in some way in the “gig economy,” this means that this new law will have an enormous impact on all of us – as workers, employers and consumers. 

The new Department of Labor regulations require employers to consider six factors to determine who can be a contractor: the employer’s level of control over how the work is done; the worker’s opportunity for profit or loss; the level of skill required; how long the relationship will last; the worker’s investment in equipment or materials; and how integral the work is to the employer’s core business. 

The legal guidance is to err on the side of caution, which means that contracting should be allowed only if the employee meets every test and requirement. What does this all mean in practice for an employer like me? 

Currently, Independent Women’s Forum (IWF) engages more than 20 independent contractors. Some are policy experts who cover issues for us with occasional writing; others help with fundraising and accounting services; and others are high-impact consultants who help us implement major new projects. 

Who can I keep and who must I let go? Like most other nonprofits, IWF cannot afford to offer every current contractor a full-time position. In fact, we will have to let most go if that is our only choice. 

Yet more importantly, most of our contractors do not want a full-time job with us, or with any other employer. Sadly, this is a factor that the Department of Labor doesn’t seem interested in at all. 

Most independent contractors value their independence and ability to control their schedules. They don’t want to depend on one employer, but would rather have a variety of relationships so they never risk being unemployed. 

Many independent contractors we have engaged quit full-time positions to become caregivers. They sought opportunities like what we offer to stay engaged in their fields, have an intellectual outlet, and enjoy camaraderie with colleagues, while contributing to the family finances. 

They don’t want the pressure of short-term deadlines and in-person meetings; they don’t want to have to track time and explain about sick kids or field trips. 

Can we continue to offer these work relationships? Maybe, although the guidance that contractors cannot “perform similar work of employees” makes it fraught. 

Certainly it seems prudent for us now to offer contractors only short-term contracts. I’m advised to not “issue business cards;” “pay expense;” offer “continued education training;” or even, “invite or permit contractors to attend company parties or special events intended for employees.” 

That’s a real loss of collaboration, productivity, and expansion of our influence. It also seems simply mean when so many workers, especially those balancing caregiving and careers, crave the community and validation of an association.

Businesses across the country are reviewing their own contracts just like we are. They are talking to lawyers who will invariably urge caution, which means eliminating work opportunities for contractors. 

We saw the results when California adopted strict rules (AB5) for contracting in 2019. According to a study by the Mercatus Institute, self-employment fell by 10.5% in affected occupations, and overall employment in those sectors fell by 4.4%. 

Why is the Department of Labor making it so hard for employers to offer truly flexible working opportunities? Why do they ignore how many people – not just parents of young kids, but also caregivers to the elderly, those approaching retirement, the disabled, people with health issues, and students – want nontraditional work opportunities and will drop out of the workforce rather than be forced into traditional employment? 

Like so many of the other questions generated by these onerous new rules, these don’t have good answers.