California truckers last month temporarily shut down the Port of Oakland protesting California’s refusal to let them remain independent contractors. Tens of thousands of independent truckers are now subject to California’s Assembly Bill 5, “AB5,” which punishes businesses that hire independent contractors to perform similar work as the business performs. This means trucking companies can’t hire self-employed truckers, newspapers can’t hire freelance writers, and software companies can’t hire independent contract programmers.
These independent truckers face a choice: become trucking company employees, leave California, or quit driving altogether. California’s government claims the truckers need protection from companies that “misclassify” self-employed truckers as “independent contractors.” So now 70,000+ California owner-operators (truckers who own their own rigs and drive for multiple companies) won’t be able to contract with trucking companies to deliver necessities across the country. The only winners are union bosses looking for more members, bureaucrats looking for more ways to crack down on businesses, and trial lawyers who hope to get rich suing businesses that hire independent workers to meet customer demands.
The U.S. Department of Labor (DOL) wants to follow California’s lead with new regulations to stop businesses from hiring independent contractors. These politicians and bureaucrats oppose self-employment because they believe the only good jobs come with a boss, a W-2, and a name grandma can recognize on the paycheck. Such a plan would make it harder for independent contractors to find work, put businesses that contract with independent contractors at risk, and punish innovative businesses that connect self-employed workers to available projects.
The acting administrator of DOL’s Wage and Hour Division claims that misclassifying workers as “independent contractors” is “one of the most serious problems facing affected employees, employers and the U.S. economy.” Don’t tell that to the millions of businesses looking for workers or the families who can’t find baby formula. She announced that DOL wants to change its definition of independent contractors via rulemaking.
To support these efforts, DOL hosted “listening sessions” to hear how interested parties wanted the independent contractor rules to change. The goal was to hear stories from disgruntled independent contractors to justify a new restrictive regulatory regime. DOL hoped the hundreds of satisfied workers who supported the last administration’s independent contractor rulemaking would remain quiet.
Unfortunately for DOL, those small businessmen and women like their independent contractor status and overwhelmed the forums to share just how happy they are. Freelance journalists told of earning more money while assisting multiple publications; Financial advisers lauded the flexibility and ability to meet client needs; and Translators noted the community benefit they can provide to customers of dozens of businesses who would otherwise go without services in their native tongue.
These voices echo the sentiment of millions of independent contractors across the country. MBO partners last year found that 87% of independent contractors prefer independent contractor work. Flexibility makes independent work especially attractive to women, parents, caretakers, students and retirees. And independent work is often most helpful to women who are not able to take on full-time employment due to other time constraints. DOL should listen to these happy entrepreneurs and stop any regulation that makes it harder for the self-employed to earn their livings.
To do otherwise would force workers to sacrifice the flexibility they came to value during COVID. Restricting independent work limits moms’ ability to perform work for multiple customers and takes away teachers’ opportunity to earn extra money over the summer or during the weekend. And by highlighting the current administration’s animosity toward independent contracting, DOL discourages businesses from entering into independent contract relationships for fear of an investigation.
Worker shortages continue to make headlines, and customers face the consequences of closed businesses and missing products in stores that can open. Activating every possible worker right now should be something everyone can agree on. But instead of applauding self-employed workers for their help, California, DOL, and bureaucrats across the country keep looking for ways to relegate independent contractors to the history books.
California’s truckers are just the tip of the iceberg of the havoc such needless meddling can cause. States and the federal governments should listen to the workers and ensure that independent contracting remains a viable option for years to come.
Jonathan Wolfson is Chief Legal Officer and Policy Director at the Cicero Institute where he focuses his policy research on healthcare and regulatory policy. He previously led the policy office at the United States Department of Labor.
