One bedrock of the American dream is the ability to be one’s own boss in whatever way one’s talents and ambitions allow. Whether a full-time career, a part-time pursuit, or an occasional side hustle to earn extra income, self-employment provides people with the opportunity to work as they see fit.
Unfortunately, the relentless pursuit to stifle self-employment through independent contracting in certain states and at the federal level is taking that freedom away.
Independent professionals contribute to a thriving economy. Yet, the Biden administration’s Department of Labor has doubled down on freelance-busting regulations. It deployed a restrictive independent contracting rule earlier this year that severely tightens the definition of a 1099 worker.
The six-factor classification test established by the new regulation, totaling a mind-boggling 339 pages, draws its inspiration from California’s infamous Assembly Bill 5. The law decimated self-employment across the state and continues to destroy hundreds of thousands of independent careers across a vast swath of professions.
In the original 184-page proposed regulation first revealed in 2022, DOL officials lauded California’s ABC test, lamenting that they could not verbatim deploy it into the Fair Labor Standards Act without risking being overturned by the Supreme Court. The rule’s final language, however, mimics California’s ABC test nonetheless.
Enacted in January 2020, California’s AB 5 restricts or forbids independent contracting in more than 600 categories of professions. While some freelance occupations received exemptions from the law’s strict ABC worker classification test, far too many have fallen through the cracks and are unable to operate legally in the state. The freelance transcription profession, for example, is now virtually extinct in California, thanks to AB 5. Nonprofit arts organizations and theatrical groups have been decimated by AB 5, as reported by the San Francisco Chronicle and other media outlets over the past few years.
Despite the collateral damage on the aforementioned independent professionals, on-demand transportation platforms, such as Uber, Lyft, and Doordash, are convenient villains for lawmakers and their Big Labor benefactors. Their goal is ultimately to lower the boom on the entire independent workforce and corral as many workers as possible to become W-2 employees who can be unionized.
Indeed, these freelance-busting laws and regulations are written specifically to capture all the “dolphins in the tuna net” — everyone from licensed medical professionals and highly skilled technicians to wedding florists, independent owner-operator truckers, tutors, music teachers, massage therapists, and anyone getting paid via Form-1099.
Consider the fact that the rideshare and delivery sector comprises only 5% of the entire independent workforce nationally. Meanwhile, tax data documented by the Internal Revenue Service and U.S. Treasury Department spanning 15 years show that industries with the greatest share of independent contractors are not the so-called gig workers, but rather, “professional, scientific, and technical services,” followed by “other services (e.g., grant writing, pet care, repair)” and “healthcare.”
Not surprisingly, restrictive labor policies disproportionately affect women, who make up close to half of the freelancer workforce. Be it the single mother needing flexible work arrangements, the aspiring solopreneur looking to reinvent herself, or the senior wanting to supplement her social security with extra income while staying active in her sunset years, women have made it clear they prefer choices.
The other side of the coin is how the small business community is affected by the increasing limitations on the independent contractors with whom they traditionally engage. Main Street businesses and mom-and-pops need to be light on their feet in order to grow. They should be allowed to bring on specialized help when and if the need arises without incurring the massive overhead of putting everyone on payroll, even when the work is just for an hour or a day.
Policymakers might think their one-size-fits-all labor laws are good for everyone. However, these so-called “protections” end up putting countless career professionals out of business.
Self-employment is as American as the Fourth of July and apple pie. Lawmakers need to keep their hands off our livelihoods and protect the independent workforce, not destroy it.