We Are All Independent Contractors Now

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Hang out a shingle,” or in other words, freelance—that’s the advice given to many law school graduates today, faced with the daunting odds of getting a job at a law firm. While the legal job market has shown a slight uptick since the recent recession, that’s only because more lawyers are working in part-time and contingent positions, barely pulling down enough to pay the rent, let alone pay back the six-figure loans they took out to pay for their legal education. Having gone to law school with dreams of being a star litigator and commanding a six figure salary, more and more of these professionals work contract to contract, often for as little as $15 an hour, doing the scut work of the law—tedious and mind-numbing document review for 10 or more hours at a stretch. Just as in other parts of the economy, companies and law firms are using legal temps and contractors to lower costs, creating a burgeoning workforce with only tenuous ties to any single employer.  

In his Fireside Chat on the Sunday before Labor Day in 1936, President Franklin Delano Roosevelt urged his listeners to recognize that helping those on the lowest rung of the income ladder would help those at the top by lifting the economy and securing our democracy. We have a common interest, he said, and “there is no cleavage between white collar workers and manual workers, between artists and artisans, musicians and mechanics, lawyers and accountants and architects and miners.” Ironically, his words ring true today, but only because the contingency and lack of security besetting low-wage workers has now come to the elite. This Labor Day, white-, blue-, and pink-collar workers should once again make common cause since we are all independent contractors now.

A phenomenon most identified in today’s media with the tech industry and companies like Uber, Lyft, and Handy, the increased reliance on contractors is now affecting the professional class—not just lawyers, but also doctors, dentists, and of course journalists. Estimates now put these workers—known either as contingent or, more positively, as freelancers—at 42 million, or 40 percent of the workforce, with projections that they could exceed the number of people in traditional employment relationships as early as 2020. It remains to be seen whether recent changes in labor law enforcement, like last month’s National Labor Relations Board ruling on contract labor, can put a dent in this trend, but for now it seems here to stay. While we lawyers don’t like to admit it, the uberization of the legal field is upon us.

There are a lot of ways to avoid paying the minimum wage or overtime, to work staff beyond 40 hours a week or shorten their schedules without warning, to escape liability for discrimination or violating health and safety laws. But perhaps the most ingenious approach taken by certain companies is saying that those who work for them aren’t actually their workers, shrugging off any liability at all. By calling certain staff members “independent contractors” and hiring others through temporary agencies, the boss is suddenly free from many of the financial burdens but not the benefits of having employees. While some see the accusations that Uber, Lyft, and others have misclassified employees as independent contractors as a new phenomenon specific to the tech industry, in reality, this is just an old dog doing a new trick.  

When the New Deal laws were drafted, few could have imagined the creativity of the American employer. The law establishing the minimum wage and overtime pay, the Fair Labor Standards Act or “FLSA,” was written only to apply to “employees” who worked for companies with a minimum $500,000 dollar volume of business. The FLSA helped set in motion the legal contortions used by employers today by giving smaller companies the freedom to pay less than the minimum wage and avoid overtime pay. Similarly, Title VII and the other antidiscrimination statutes, as well as the Family and Medical Leave Act and the Affordable Care Act, are limited to firms with more than a certain number of employees. The financial incentive is powerful. The combined impact of protecting only “employees” and applying the legal requirements only to larger firms drives companies to shed employees by designating workers as independent contractors, or by hiring temps.

In addition, employers have devised creative structures, with holding companies, shell operations, and franchises, to continue to avoid any liability for minimum wages, overtime, or discrimination. These companies often have common ownership and common management, including officers and directors—and even pool their workforces and use interrelated operations—yet argue, often successfully, that they don’t reach the $500,000 threshold or requisite number of employees because each entity is an independent employer. Some go so far as to “go in and out of business” to escape legal requirements.

While some view freelancing as liberating, the data underscore the downside of contingency—low pay, high poverty rates, reliance on government assistance, unstable work arrangements, and limited intellectual engagement. For a growing number of accountants, lawyers, insurance agents, and others, temping has become the only way to make money. What temping doesn’t provide is enough money—or benefits or structure in our lives for that matter. For my generation, an advanced degree provided near certainty that one could enjoy the benefits of a middle class existence. For new graduates, however, swamped in debt, it may only mean they too need a new social contract just like the home care workers, truck drivers, and construction workers, their brothers and sisters in contingency.

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