Americans for Prosperity Foundation Comment Urges Administration to Remove Barriers for Employment

Oct 26, 2020 by AFP

Arlington, Va. – Americans for Prosperity Foundation (AFPF) today submitted comments to the Department of Labor concerning its Notice of Proposed Rulemaking regarding Independent Contractor status under the Fair Labor Standards Act. The proposed rule is intended to clarify and bring greater certainty to the test used by the Department to determine if a worker should be classified as an employee or an independent contractor.

Freelancing and entrepreneurship are under threat in America with the PRO Act at the federal level and laws like California’s AB-5 at the state level. Independent contracting and other forms of self-employment allow for flexible work arrangements that empower people to pursue meaningful work in a way that fits their lifestyle, creates new entrepreneurial opportunities, and improves their lives.

Click here to read the full comments to the Department of Labor.

In the comment, Americans for Prosperity Foundation Senior Policy Counsel Lee Steven writes:

“AFPF applauds the Department’s efforts to bring greater clarity and certainty to the question of independent contracting, a status that applies to millions of gig economy workers, freelancers, and self-employed entrepreneurs. This effort is long overdue and much needed. AFPF believes people should be empowered to earn success and fulfillment through their work and that freedom to choose the kind and type of work they wish to pursue, and under what conditions, is crucial to that empowerment.

“The confused and overly complicated regulatory framework undermines economic prosperity, limits consumer choice, burdens both employers and workers, and stands in stark contrast to the ideals of liberty embodied in this country’s founding documents. The Department accordingly should work to protect the right of individuals to work as independent contractors and should enshrine in its new regulations its institutional support for such a status by ensuring its employment determinations do not improperly undermine this right.”

Background:

As summarized by the DOL, the newly proposed rule would:

Clarify the “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for themselves (independent contractor) or is economically dependent on a putative employer for work (employee);
Identify and explain two “core factors,” specifically: the nature and degree of the worker’s control over the work; and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for themselves;
Identify three other factors that may serve as additional guideposts in the analysis including: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production; and
Advise that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.