If we’re going to create new jobs amidst the Wall Street casino economy and political gridlock in Washington, a big dose of entrepreneurship and self-help is likely to be part of the answer. From a legal standpoint, however, there’s at least one big catch: Many innovative approaches to job creation are hindered by laws that do not cover independent workers. You see, many of our worker protections, employee benefit laws, and tax provisions were adopted with traditional employment relationships in mind. Independent workers often fall between the cracks of these laws.
Law reform for 42 million workers
That’s a pretty big group: According to the Freelancers Union, a support and policy advocacy organization, some 42 million people may be classified as freelance or independent workers, representing roughly 30 percent of the American workforce.In a blog post last year, Sara Horowitz, the group’s founder, summarized the legal challenges that confront freelancers and proposed a three-point policy agenda to help them:Independent workers need (1) unemployment insurance to stabilize their income – and the U.S. economy – when they are involuntarily unemployed; (2) protection from late or denied payments, which 77% of freelancers have faced; and (3) access to affordable health insurance, which is prohibitively expensive to an individual on the open market.Freelancers Union advocates in New York have been lobbying for the Freelancer Payment Protection Act, which would allow freelance workers to file claims with the state labor department for unpaid wages from deadbeat clients.
From the business sector, too
Perhaps folks from the business sector are grasping the problem as well. Richard Greenwald of St. Joseph’s College in Brooklyn, in a recent column for Business Week, examined some of the legal hurdles facing workers in America’s freelance sector, including unemployment insurance, workers’ compensation, legal recourse for unpaid client bills, and health care coverage. In terms of legislative action, Greenwald suggested: Congress should reenact the Small Business Jobs Act of 2010. This piece of the stimulus, which expired at the end of last year, allowed freelancers to fully deduct their health premiums before assessing Social Security and Medicare tax. Then let’s amend federal labor law to cover the nonpayment of consultants so they have recourse through the Labor Dept. rather than suing in small claims court.
Promoting enterprise and job growth
At a time when we sorely need to jumpstart this economy, the independent, freelance sector offers opportunities for innovation, small business generation, and job creation. Our laws should facilitate, not hinder, the tapping of these underutilized energies and skills.