Independent Contractor Classification

HR Policy Association believes the current legal status accorded independent contractors should be preserved in the interest of the creation of economic opportunities for all individuals, whether they offer their services as independent contractors or employees.  The Association strongly supports the proper classification of workers, and the proper and timely compliance by independent contractors with their federal, state and local tax reporting and payment obligations.  Moreover, it supports government policies aimed at enhancing these objectives, provided that such policies do not undermine the rights of independent contractors and their clients to do business with each other.  Individuals who operate as independent contractors generally do not wish to be classified as an employee.  Status as a contractor affords both individuals and client companies the flexibility to agree to terms that are in the best interest of each party.  There is an extensive body of research documenting the fact that many workers prefer independent contractor relationships to salary/wage employment.  The Bureau of Labor Statistics reports that 82.3 percent of independent contractors prefer an independent or alternative work arrangement to being an employee, compared with only 9.1 percent who would prefer an employment arrangement.  A Pew Research Center survey found that self-employed workers are “significantly more satisfied with their jobs than other workers.”  In addition to flexibility and autonomy, one important reason workers prefer independent contracting is that it serves as a stepping stone to entrepreneurship and small-business formation.  The Association opposes the enactment of legislation that would increase the regulatory risks of doing business with independent contractors to an excessively high level.  Companies that rely on the services of independent contractors would face additional burdens when engaging in legitimate and legal business practices.  Such burdens limit companies’ flexibility to retain independent contractors, which would reduce their efficiency and ultimately threaten opportunities for not only independent contractors but also employees.