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The new independent contractor rule is bad news for Latinos

The new independent contractor rule is bad news for Latinos

(The Daily Record – Mar 29, 2024) – Judy Pino

Independent work is alive and well, but perhaps not for much longer. 

That’s because the Department of Labor’s new independent contractor rule would make it harder to be classified as an independent worker. It would likely lead to many of these workers being reclassified as employees or risk losing their livelihoods entirely. 

This is terrible news for families and individuals doing their best to make ends meet — often through independent work such as real estate agents, painters, nannies and website designers. 

Half of all immigrants are engaged in independent work. Low barriers to entry allow women, immigrants, younger individuals and those with lower incomes to make a living through independent work. 

For Hispanics, a whopping 50 percent of whom report being independent workers, it’s a gateway to the labor market, earning part-time or full-time income through consulting, delivery services, nursing, ride-sharing, dog-walking — you name it.

Freelancing, contract work, app-based gigs and side hustles are increasingly prevalent in today’s workforce nationwide. Before the COVID-19 pandemic, 57.2 million U.S. workers were in the independent workforce. Since then, the estimated number of freelancers has skyrocketed to 73.3 million and is growing. 

Latinas, practically eliminated from the workforce during COVID-19, are now enjoying a resurgence. One in five Latinas were out of a job during the pandemic, suffering the highest unemployment of any group of women ever.

Before the pandemic, Latinas were creating businesses at a rate six times faster than all other groups, including White men and Latinos, and some data suggests that trend has continued. Latinas are the fastest-growing cohort of entrepreneurs. They run nearly 2 million businesses nationwide but receive less than their White counterparts on business-related funding. Latina-owned businesses start small and stay small.

A shift in policy would disrupt millions of lives and inflate costs for these business owners, potentially leading to widespread layoffs as they struggle to comply.

The re-entry of Latinas into the workforce since the pandemic is closely linked with family dynamics. Latinas typically have more children, with their children being younger on average, and they are more likely to be single parents.

In fact, they are three times more likely to be the sole heads of households compared to White women, and they also have the highest likelihood of residing in multi-generational households

Flexibility stands out as the primary motivator for workers who have children. This is why Latinas have so much to lose under this new rule.

The vast majority of independent workers prefer their current employment situation. Nonetheless, the administration has attempted numerous times to push for reclassification through congressional avenues without success, leading them to pursue rulemaking through the Labor Department. The regulation will heighten the challenge for companies to classify workers as independent contractors rather than employees. This distinction typically triggers coverage by wage-and-hour laws.

This regulation would supersede the previous rule, allowing workers who either own their businesses or can work for competing companies to be considered contractors.

The presence of an adaptable workforce offers numerous economic advantages, especially for emerging businesses and expanding enterprises run by women. A recent Independent Women’s Forum report found that “to reclassify independent workers as employees and subject to regulations about sick leave, overtime and minimum wages would backfire on gig workers by eliminating the flexibility that they rely on and eliminating opportunities.”

Unsurprisingly, the U.S. Chamber of Commerce, the largest U.S. business lobby, has publicly denounced the new independent contractor rule for creating “uncertainty and bias against independent contractor status.” Others have followed.

States and federal lawmakers should reject proposals to reclassify independent contract workers to protect the flexibility and opportunity that these workers need and desire. Rather than expanding government programs and reforms, policymakers should assess areas where existing laws have facilitated women’s economic advancement and where they have hindered progress. 

The essence of the American Dream lies in the freedom to pursue one’s livelihood. Within a society founded on liberty, few rights are as foundational or crucial to fostering a vibrant and thriving economy. We need an approach that allows women to construct lives and work arrangements that align with their distinct preferences and circumstances to live their version of the American Dream.

Judy Pino is a spokesperson for the Independent Women’s Forum and The LIBRE Initiative. She wrote this for InsideSources.com.

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