Three members of congress recently proposed a law that would greatly expand the rights of temporary and independent workers, yet compromise employer flexibility and the desire by some workers to maintain their independence as contractors or temporary employees.
The bill, called the “Worker Flexibility and Small Business Protection Act” (the text of which has not been released), would give workers the right (and potentially the obligation) to join their client company full-time after 1040 hours of work regardless of the company’s need for their continued services. This changes the purpose of temporary work from one of seasonal flexibility and cushioning against economic headwinds into a mechanism for “try before you buy.” The list of provisions is extensive and includes updates to the definition of ‘employee’ so that workers are presumed to be employees unless passing the ABC Test. It also limits the use of temps as replacements during a strike.
With over 40% of the workers in the U.S. reported to have engaged in the gig economy and an expected increase of 179% of work to be done by contingent workers in the next ten years*, this proposed legislation shows short-sightedness of the purpose and benefit of the use of contingent workers, whether independent contractors or temp workers, by making them very difficult to engage.
According to the authors, the law intends to “protect” workers by providing them with benefits that they already have: namely W-2 workers’ right to receive worker’s compensation and unemployment insurance and allowing ICs to continue to enjoy flexible hours (a sign of control).The legislation proposes that staffing firms, of which there are roughly ~10,000 independent firms, and each of their branches (there are scores of thousands of those), be made to register with and pay extensive fees to the DOL in order to be permitted to operate.
The legislation has a very low chance of passing. However, heading into the election season introduces some head-scratching unknowns. If it were to pass, it would cause wide-spread and long-lasting disruption to the employment industry, the gig economy and the ‘new normal’ introduced by COVID and alternative work arrangements. As discussed in our blog a few months ago, “Will COVID-19 force the creation of a third class of U.S. worker?” we wonder whether this new proposed legislation further proves that there’s a grey middle-ground for the ‘quasi’ worker who doesn’t belong in either the employee or independent contractor categories? Time will tell.
*Staffing Industry Analysts