Single or not, all working parents have faced the kind of troubles experienced by George Clooney and Michelle Pfeiffer – ‘One Fine Day’. They struggle to juggle their responsibilities to their children while trying to meet their obligations to their employers – often when under severe stress. But real life consists of many such days – not just one. That is probably why the job market is transforming itself as more people choose to work as freelancers, in an effort to achieve greater balance between personal and professional commitments.
The market is looking at freelancing as a potential win for all parties. It helps a worker achieve a better work-life balance and it also saves money for employers. By coming up with ways to employ freelancers, employers avoid the fixed costs of a permanent employee, and the associated expenses of offering health insurance, and paying employer taxes and workers’ compensation. An increasing number of jobs – from technical support to landscaping – are shifting to freelancers and independent contractors.
In the DCR Workforce blog, we have repeatedly cautioned employers against misclassifying workers as independent contractors, without justification, without industry precedent and without establishing an independent relationship with the worker. Lately, however, we now see an increase in the use of the term “freelancer”, and a corresponding rise in the level of confusion regarding the difference between freelancers, consultants and independent contractors.
There are two ways to differentiate between these labels:
It is possible for a freelancer to do many things. As with everything else in life, some of them are good, while others may be not so good:
As of today, the estimates of how many freelancers are in the market vary most dramatically. One report states that 34% of the U.S. workforce, or 53 million workers, fall into the categories of “contractors, moonlighters, diversified workers, temp workers, and freelance business owners”. Other research firms offer a more conservative estimate of 12%! No one really knows.
Where are the Laws?
The answer would be – very far behind and not likely to catch up in the near future! Perhaps the U.S. legislators should take a critical look at the various laws governing independent contractor relationships around the world as examples of how to bring financial and legal clarity to the definition of independent contractors, and the role of freelancer. Current IRS guidelines are often subjective when considering the classification status of a freelancer. As freelancers work alone, it becomes harder to prove or disprove issues of control. When a freelancer works for a sole major customer, such financial dependence could also prove to be an issue. More concerns will be added to the list, as new legal challenges are filed. Hopefully, their outcome will bring more insight into the laws governing the use of freelancers.
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