New U.S. Labor Regulation Would Hurt Contractors & Workers
In this opinion piece in Fortune, signatory contractor, Scott Casabona (Sloan & Company), explains how a proposed federal labor regulation would make it even easier for unscrupulous contractors to shift the cost of being an employer onto workers by classing them as "independent contractors."
Classing workers as independent contractors allows a contractor to drive down its cost and increase its profits by shifting the burden of workers' compensation, payroll taxes, unemployment insurance, health coverage and retirement costs onto individual workers.
"The Ohio attorney general has estimated that classifying employees as independent contractors provides a 20% to 30% labor cost advantage against law-abiding employers. When competing against a company like mine that pays middle-class wages, pays overtime, sets aside money for unemployment and workers’ compensation, sponsors registered apprenticeship programs, and offers a retirement plan and health benefits, the independent contractor model can offer a 50% cost advantage.
It should not be surprising that some businesses fully support the Labor Department’s rule reinterpreting federal law to institutionalize and encourage the independent contractor model. But our society is sure to regret these revisions. The answer to America’s economic challenges is not to encourage more companies to evade the costs and risks associated with employees."
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