This bill clarifies the criteria for determining employee status under the Fair Labor Standards Act and the National Labor Relations Act, focusing on the extent of control over how work is performed and the presence of entrepreneurial opportunities and risks.
Kevin Kiley
Representative
CA-3
This bill amends the Fair Labor Standards Act and the National Labor Relations Act to establish a clear standard for determining whether a worker is an employee or an independent contractor. It specifies that a worker is an independent contractor if the hiring entity does not have significant control over the work and the worker has entrepreneurial opportunities and risks. Certain factors, such as legal compliance or carrying insurance, are excluded from consideration of employee status.
New Bill Redefines 'Employee,' Could Shift Many to Contractor Status: Less Protections, More Flexibility
This bill aims to rewrite the rules on who counts as an "employee" versus an "independent contractor" under both the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA). It's a big deal because it could change the game for a lot of workers and businesses across the country.
Rewriting the Rulebook
The core of the bill, found in SEC. 1, focuses on how we decide if someone's an employee or a contractor. The new standard emphasizes whether the hiring entity has significant control over how the work gets done. If the person doing the work has real entrepreneurial opportunities and takes on some risk, they're more likely to be considered a contractor. Critically, the bill says things like following legal or safety rules, having insurance, or meeting deadlines won't automatically make someone an employee. SEC. 2 ties this new definition into the NLRA, meaning it impacts union organizing and collective bargaining rights too.
Real-World Rollout
Imagine a delivery driver who sets their own hours but has to follow company safety protocols and meet delivery deadlines. Under current rules, those requirements might lean towards them being an employee. This bill changes that. Now, because they can choose when to work and maybe even work for multiple platforms, they're more likely a contractor – even if they have to follow safety rules. This means no guaranteed minimum wage, no overtime pay, and no employer-provided benefits like health insurance. For a construction worker, this could mean that meeting safety regulations on a job site doesn’t automatically qualify them as an employee, impacting their access to worker protections and benefits typically associated with employee status.
The Challenges Ahead
While the bill offers businesses more flexibility, it raises some serious questions. By making it easier to classify workers as contractors, companies could potentially avoid paying minimum wage, overtime, and benefits. This could lead to a situation where more people are working without the basic protections that employees have come to expect. It also means fewer workers might have the right to unionize, impacting the power balance between workers and employers. It is also worth noting that the bill specifically excludes compliance with legal or safety requirements as a factor for employee status. This could incentivize businesses to cut corners on safety to maintain contractor classifications, potentially endangering workers.
Connecting the Dots
This bill essentially streamlines the definition of "employee" across two major labor laws. While consistency sounds good on paper, it also means the impact of this redefinition is much broader. It's not just about wages and hours (FLSA); it's also about the right to organize and bargain collectively (NLRA). The bill’s language, particularly in Section 3(e)(2) of the FLSA, is now the key to understanding worker classification across the board. This creates a unified, but potentially more restrictive, standard for determining who gets the protections and benefits of being an "employee."