Explainer: Top 10 Facts About the War on Independent Contractors in the U.S.
Why independent contractors are in the crosshairs.
Are you confused about why the U.S. Department of Labor wants to restrict or even eliminate Independent Contractors (ICs)? Perhaps this explainer will help.
Before we begin, let’s talk about what an independent contractor is.
Here is one simple definition: “An independent contractor is an individual in business for themselves, providing goods or services to another individual or business.”
Independent contractors, depending on their profession, can also be referred to as “freelancers” (as in artists or writers), as well as “gig workers” (as in drivers, musicians) or, simply, “independent contractors.”
Top 10 Facts:
Between 60 million (approximately 38%) to 72 million Americans (or about 45%) of the U.S. workforce participates as Independent Contractors or “1099 workers”—either full-time (or part-time with “gigs”) to support themselves and their families. [4.6 million Independent Contractors earned $100,000 or more in 2023]
Approximately one-half of Independent Contractors are women, many of whom value independent contracting due to the flexibility to fit work around their lives (not the other way around). About eight in 10 independent contractors prefer their work arrangement over a more traditional job arrangement.
Independent Contractors (ICs) are not “employees” and do not receive W2’s like employees. Depending on their profession, they can be referred to as “freelancers,” “gig workers” or Independent Contractors (ICs) and, as such, receive “1099s.”
As non-W2 employees, Independent Contractors (ICs) cannot be unionized under existing labor law and do not pay union dues
As non-employees are not unionized, many unions see ICs as competition
Narrowing the definition of independent contractors creates a “chilling effect” causing hiring entities (e.g., companies) to stop using them.
To date, there is no evidence that indicates a mass hiring of former ICs to full or part-time employment
Unlike California’s AB5, under the Department of Labor’s six-part rule, there is no known exempted professions and/or industries.
Although unions only represent 10% of the workforce (6% of the private sector), unions are a large political constituency.
As a result, and on behalf of unions, politicians and their appointees are pushing to drastically reduce or even eliminate Independent Contractors
ICYMI: Labor Relations Radio Releases Four-Part Series on the War on Independent Contractors
The podcast series on the War on Independent Contractors has been aired in four parts:
Part One features Congressman Kevin Kiley (R-CA) and his efforts to end the Department of Labor's War on Independent Contractors.
Part Two is an interview with Fight for Freelancers co-founder Kim Kavin and her attorney from the Pacific Legal Foundation, Wilson Freeman, who filed one of the first federal lawsuits against the Department of Labor and its rule.
Part Three is a discussion with Liya Palagashvili, an economist and Senior Research Fellow at the Mercatus Center at George Mason University, about a new Mercatus study on the damaging effects of California's War on Independent Contractors through the disastrous AB5.
Part Four is the final episode in the four-part series and goes to where the War on Independent Contractors began: to California. In this episode, six independent contractors from California - ranging from writers to musicians, as well as an independent filmmaker, a radio journalist, and yoga instructor - join the podcast to share their stories on how the War on Independent Contractors crippled their careers.