The group of small business owners sat around a table talking earnestly about what helps and what hurts their efforts to stay in business and maintain the jobs they have previously created.<\/p>\n
During the current recession, said one gentleman, he did everything he could to avoid layoffs in a construction-related company that had lost much business.\u00a0 He and other principals took no pay for several months.\u00a0 He knew he could not keep everyone on full time at full pay, so he explored alternatives.\u00a0 Could he cut back employees\u2019 hours, keeping everybody but giving everybody some time off?\u00a0 Or just reduce their pay?\u00a0 Or put some employees on a contract rather than employee basis?\u00a0 The consultants who advise him on employment law matters told him no.\u00a0 He would face serious liabilities if he did those things, possibly from the workers, possibly from the government.\u00a0 Eventually he had to let some people go.\u00a0 They lost their jobs.\u00a0 The company lost the value of their knowledge, training, and established working relationships.<\/p>\n
The employment laws developed in the 20th<\/sup> century to protect workers from exploitation are now clashing head-on with new realities of the 21st<\/sup> century.<\/p>\n Last year, an attempt was made to pass new federal legislation that would have increased already complex restrictions on business\u2019 ability to use independent contractors. \u00a0Similar legislation was introduced in 2012 in the state legislature:\u00a0 House Bill 91, called the Employee Fair Classification Act, which defined “misclassification” as \u201cwrongly designating an individual who performs services for an employer as not being an employee of the employer.\u201d These bills attempt to hold \u201cemployers\u201d liable if a person is treated and compensated on an independent contractor basis when he or she should be classified as an employee.\u00a0 The New Mexico bill didn\u2019t pass but is expected to be back, perhaps next year.<\/p>\n Tax collection is said to be one reason for this initiative. Most Americans are pretty good about paying income tax, largely because their employers withhold the money from their paychecks.\u00a0 But nobody takes deductions for independent contractors.\u00a0 They are supposed to pay their own taxes, and allegedly many don\u2019t.\u00a0 So federal agencies are looking for \u201cmisclassified\u201d workers whose \u201cemployers\u201d should have withheld\u00a0 money.<\/p>\n The \u201cmisclassification\u201d concept also opens the door to making employers liable for benefits they didn\u2019t provide to these independent contractors but that are required by law for employees.<\/p>\n But the 21st<\/sup> century requires businesses to be efficient and flexible, and smaller businesses don\u2019t have enough work to keep everybody busy all the time.\u00a0\u00a0 The flexible workforce is the logical answer.\u00a0 This demand is met by independent contractors who are willing to work independently as needed.\u00a0 Some of those new entrepreneurs are former salaried workers who have lost their full-time jobs.<\/p>\n Companies in some European countries are embracing this model, we hear. \u00a0They keep their workforces intact by cutting back hours, paying everybody less, but keeping everyone employed.\u00a0 That\u2019s beneficial not only in the short run, but also in the long run: when the economy picks up, those trained workers will be ready to resume full production.\u00a0 Meanwhile all the workers are feeding their families.<\/p>\n I wonder about the logic of a system that applies the same standards of employer liability to big corporations and small struggling family-owned companies. They are not the same at all. \u00a0The hard-won labor protections of the last century still have great value when applied in the right places, but when applied in the wrong places they can threaten the viability of small businesses and cost jobs.\u00a0 Not only don\u2019t we need harsher restrictions, we should take a fresh look at some of the laws already on the books.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The group of small business owners sat around a table talking earnestly about what helps and what hurts their efforts to stay in business and maintain the jobs they have previously created. During the current recession, said one gentleman, he … Continue reading