Preserving the Freedom of Virginia’s Freelance Workforce – The Virginian-Pilot
Virginia’s business-friendly policies encourage workers to chart their own entrepreneurial path. But new federal regulations aimed at tackling misclassifications could undermine the Commonwealth’s booming self-employed workforce.
Last month, the US Department of Labor announced proposed changes to the Fair Labor Standards Act to erect barriers for workers wishing to operate as independent contractors. The rule, if passed, would impose strict criteria on the self-employed to prove they are not employees in the form of a new economic reality test. This is a major departure from the Trump-era rule that favored a flexible worker model.
As a full-time freelancer in Virginia, I would be penalized for honestly living the freelance lifestyle under these obtuse worker guidelines.
The DOL argues that this revision would limit perceived misclassifications in the workplace. However, by reclassifying most workers as employees, it will make them candidates for unionized jobs – a declining sector that comprises just 10.3% of the workforce. Virginia workers who have survived the pandemic with self-employment don’t want bureaucrats obliterating their livelihoods.
Developing federal rules to discourage independent contracting would be costly to Virginia’s economy.
According to the American Action Forum, the Commonwealth has 557,643 self-employed people. This represents approximately 15% of our total non-union private sector workforce, or 3,445,000 private sector workers.
If 50% of the freelance workforce is converted to traditional employees, for example, the cost would be $1.28 billion. Comparing that displacement projection to the alleged cost of misclassification in Virginia — allegedly $28 million in “lost revenue” — reclassification poses a greater threat to worker freedom.
This is why the majority of freelancers in Virginia, like their counterparts in 49 other states, are content with their status and not tied to a single employer.
When they ask Virginians about restricting freelance contracts under the guise of fighting misclassifications, they see through the misleading language and overwhelmingly oppose changes to the existing law.
In June 2021, the Northern Virginia Chamber of Commerce surveyed Virginians – Republicans, Democrats and Independents – and found that 69% of respondents were concerned about limitations that may be placed on individuals to operate as independent contractors.
This aligns with a national poll revealing greater acceptance of flex jobs and non-traditional work.
A Forbes-Tate poll found that 70% of voters are concerned about labor law changes that create barriers to contract work.
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Virginia’s labor law is flawed and not as self-employed friendly as it was before 2020 – thanks to changes signed into law by former Governor Ralph Northam. However, the Virginia Employment Commission says it relies heavily on the IRS’ 20-factor test to determine a worker’s status.
Pro-worker reforms – not to be confused with pro-workers – are needed in the General Assembly to attract more freelance talent here. Why? Virginia is the 30th friendliest state for freelancers, according to Tipalti’s Freelancers Index. There are 4,800 self-employed workers per 100,000 people. As a result, lawmakers could further strengthen self-employment protections by strengthening the self-employed workforce to insulate workers from misguided policies.
A possible remedy under study is Del. Amanda Batten, R-Williamsburg, House Bill 529, which discusses the classification of workers without imposing strident considerations to meet the criteria for operating as an independent contractor.
Governor Glenn Youngkin also pledged to support the independent Commonwealth workforce, saying: “Let me be clear, I believe in the fundamental right to work. If anyone tries to bring me a bill that creates forced unionization, it will meet the business end of my veto pen.
Like the rest of the country, Virginia’s workforce will join the independent economy – which is expected to grow to half of the US workforce – 90.1 million – by 2028.
Virginians who wish to retain their independent contractor status should submit comments expressing their displeasure with the Biden administration’s flawed labor rule.
Gabriella Hoffman of Alexandria is a full-time freelancer and senior researcher at the Independent Women’s Forum. Follow her on Twitter at @Gabby_Hoffman.