Employment Law Daily Company proposes to solve growing independent contractor problem by creating formal certification
Thursday, May 5, 2016

Company proposes to solve growing independent contractor problem by creating formal certification

By Pamela Wolf, J.D. In our rapidly evolving economy, as federal agencies scramble to find ways of dealing with independent contractors in the context of worker antidiscrimination, health and safety, and labor laws, independent contractor engagement solutions provider MBO Partners has proposed modifications to how the federal government classifies and regulates independent workers. Its proposal would establish a formal certification for specific independent workers, "Certified Self-Employed (CSE)." It would also create a vetted infrastructure to ensure both CSE compliance and mitigate system abuse intended to lower labor costs. Independent contractor problem. "The growth and innovation of the American workplace has outpaced the evolution of laws and rules, creating issues ranging from independent contractor compliance to guaranteed worker protections," according to MBO. The company also pointed out that the independent workforce currently includes over 40 million people and is projected to grow to include more than half of the American workforce by 2020—in just four more years. "Decades after the emergence of independence as a major force in America’s economy, this solution is long overdue." National classification system. The proposal would establish a national classification system that empowers self-employable independent workers who want greater control over both their opportunities for work as well as their responsibilities as their own individual employer. These independents would be permitted to compete more fairly for business under the proposal by removing the burden of ambiguous worker classification risks and costs currently facing their potential clients. The proposed system would also make it easy to distinguishing between those who truly qualify as self-employable from those non-self-employable contract workers who may need the protections and benefits provided by existing employment and worker classification regulations. MBO said that the clarity of the designation is designed to encourage entrepreneurship and unleash the continued growth of the independent workforce and gig economy—without diminishing payroll tax revenues or creating a "race-to-the-bottom" for contract workers who are delivering commodity services. "By allowing independent workers to declare their professional independence and take on the burdens necessary to be their own employers, we avoid misapplying employee-focused regulations," said Gene Zaino, founder and CEO of MBO Partners. "In doing so, this avoids a major debate on regulatory change, and preserves a system by which taxes and regulations can continue to be more easily enforced." Better solution? Comparing its national classification system to previous proposals to manage the gig economy, MBO says that the CSE solution requires minimal regulatory intervention beyond the initial creation of the certification standards. Rather than proposing major tax and employment reform legislation, it creates a unique framework specifically for self-employable independent workers. The proposal points to one of the challenges of improving the independent contractor situation via a simple regulatory solution, or a new labor classification—the independent workforce is not homogenous. Therefore, a universally applied solution would not be prudent. Instead, MBO proposes a nuanced approach that it claims can "satisfy the needs of all independent contractors." The proposal would protect workers delivering routine services by addressing the power imbalance created by online platforms that commoditize work, while at the same time freeing from regulation workers who wish to take control of their independent businesses and apply their talent and innovation to work the way they choose. "The independent workforce is a powerful, innovative, and rapidly growing economic force in America," according to Zaino. "As the future of work continues to be performed digitally and globally, businesses have many new ways to get work done. In contrast, businesses encounter growing regulatory complexities when providing jobs to American independent contractors. We must quickly simplify the worker classification structure to keep valuable jobs from leaving American shores."

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