Independent Contractor

Independent Contractor Issue Campaign

DOL's dramatic new interpretation highlights the need for a single federal standard for determining who qualifies as an independent contractor. Small businesses like the flooring installer and retailer are now at the mercy of each agency's test and its latest interpretation of that test.

Please send the following letter to your representatives on the Hill.

THANK YOU!

The WFCA's members include flooring retailers, commercial contractors,restoration contractors, inspectors and installers.WFCA members operate over 2,200 local retail brick and mortar stores throughout the United States, including large metropolitan areas and small towns in rural America.


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Subject: Independent Contractor Issue Threatens Our Industry

I am a constituent and I am writing you about this very important issue. In my many years in the flooring industry, I have not seen an issue with a greater potential to shutter an entire industry than how independent contractors are being treated. Independent contractors are vital to our industry, however, there are few issues that cause more confusion and inconsistent results than determining who qualifies as an independent contractor.  
The problem is that there is not a single all encompassing standard for defining who is and who is not an independent contractor. Not only do the standards vary between federal agencies, but the determination by one agency will not necessarily apply to another agency's determination. There is not even a consistent standard within agencies. For example, divisions of the DOL apply different tests. A company may follow all the rules established by the Internal Revenue Service ('IRS') only to be audited by the Department of Labor ('DOL') and told its independent contractors are in fact employees and must be paid back overtime compensation.  

Compounding the problem, in July 2015, DOL issued an aggressive interpretation of who qualifies as an independent contractor under the economic realities test. DOL admits that this new interpretation results in a finding that 'most workers are employees' and limits independent contractors to a very few. DOL's new interpretation ignores decades of legal precedent concerning the classification of employees and independent contractors. It also ignores the economic realities of some industries, especially the construction industry. Construction subcontractors work hard to develop a good reputation and seek out good relationships with the local builders and retailers. The key to success is in having repeat business. Moreover, there are a limited number of builders and retailers in any given location. Without repeat business from these builders and retailers, an independent contractor could not survive. Yet, DOL's interpretation finds such repeat business as strong indication that the contractor is an employee.  

The impact of DOL interpretation will be to eliminate the possibility of an individual starting up a small business, especially in the construction industry. No longer will can an individual start a small business by taking a risk, buying tools and a truck and going out on his or her own.

Need for Uniform Standard and Precedent

DOL's dramatic new interpretation highlights the need for a single federal standard for determining who qualifies as an independent contractor. Small businesses like the flooring installer and retailer are now at the mercy of each agency's test and its latest interpretation of that test. I strongly urge Congress to create certainty to save my industry. A bill is needed that:

 

  • Establishes a single standard for determining who qualifies as an independent contractor
  • Mandates that all federal agencies honor the determinations of each other.

 

The proposed bill should also include a safe harbor standard so an independent contractor does not face liability if it complies in good faith with a basic standard.