The Labor Department has recently introduced 300 pages of new regulations aimed at reclassifying many individual contractors as payroll employees.
CNBC claims that this move could help freelancers “recover lost wages.”
However, the reality is quite different.
These new rules will make it harder for some freelancers to make a living and support their families. My new video demonstrates how it will also limit their ability to pursue their passions.
My perspective is informed by observing the consequences of similar legislation in California. Four years ago, unions successfully lobbied then-Assemblywoman Lorena Gonzalez (D–San Diego) to pass a law that reclassified gig workers.
These workers were promised higher wages, overtime pay, and additional benefits. However, the outcome was far from ideal.
The law resulted in the layoffs of hundreds of freelancers, including those in the media industry.
Freelance musician Ari Herstand highlighted the additional burdens imposed by the law, such as the requirement to put musicians on payroll and provide various types of insurance.
Despite the intention to protect gig workers like Uber and Lyft drivers, many of them actually prefer the flexibility of being independent contractors.
Politicians, backed by unions, continued to push for such legislation, claiming to know what’s best for workers.
However, as is often the case, politically connected individuals found ways to exempt themselves from the law. Truck drivers, writers, musicians, and numerous other professions were granted exemptions.
Even with these exemptions, the negative impact on freelancers was evident. Employment in self-employment reliant professions dropped significantly.
The U.S. Department of Labor’s decision to enforce similar regulations nationwide is concerning. Each state should have the autonomy to make decisions that best suit its unique circumstances.
Additionally, President Joe Biden’s support for the PRO Act, a bill that mirrors California’s reclassification efforts but without exemptions, raises further alarms.
It’s clear that the lessons from California’s mistakes have not been heeded. Politicians must reconsider their approach to labor regulations to avoid further harm to freelancers and the economy.
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