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NASE Supports New Legislation Harmonizing Employee Definitions
In August, after careful evaluation, the National Association for the Self-Employed endorsed H.R. 4069, the Modern Worker Empowerment Act, introduced by Congresswoman Elise Stefanik (R-NY) and co-sponsored by Reps. Bradley Byrne (R-Al), Phil Roe (R-TN) and Ron Wright (R-TX).
The Modern Worker Empowerment Act would liberate independent entrepreneurs by updating the definition of the term “employee” for purposes of the Fair Labor Standards Act (“FLSA”) and conforming it to the other New Deal statutes enacted during the 1930s that also applied an “economic realities” test many years ago but now apply a common-law definition for the term.
The common-law definitions include:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
Per the Coalition to Promote Independent Entrepreneurs (of which NASE is a supporter), “a harmonized definition of “employee” would be beneficial to all stakeholders. It would provide much needed certainty to independent entrepreneurs and their clients, while also enabling government agencies to more efficiently ensure proper worker classification.”
Read the text, H.R. 4069.