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Under contract from the U.S. Department of Labor (DOL), Abt Associates conducted a survey of 8,503 workers on issues related to employee classification; i.e., whether those who by law are employees are being treated as self-employed (and vice versa). In addition, the study conducted 17 semi-structured interviews with employers and employer representatives. The report describes the survey which suggests that workers have an imperfect understanding of the implications of employment status. In particular, many self-employed individuals believe that they are covered by the minimum wage, overtime rules, family and medical leave regulations, and occupational health and safety regulations. Interviews with employers and their representatives suggest that employers think carefully about whether to treat workers as employees. Salient considerations include lower total compensation costs for self-employed workers and the potential compliance cost of misclassifying a worker.

Key Takeaways

• The respondents did not consistently agree with the conventional wisdom that we are in the midst of a shift away from permanent employees to contract labor. To the extent that there has been movement in this direction, employers and employer representatives described this shift as one in which employers are adapting or reacting to economic or other changes. Employers report that the shift is not being driven by the employers themselves.
• There is no “one size fits all” framework describing how firms decide to hire workers as employees or contractors. Most respondents share the view that the cost of employing workers is increasing. However, decisions, including determining the advantages and disadvantages of workers versus contractors, are highly contingent upon the nature of the work, even within firms.
• It is unclear whether jobs that were traditionally held by permanent employees will continue as such or move to contracted labor. Employers and employer representatives have mixed feelings about what direction is the right one for their company, but most agreed that past and future change is tied closely to the economy and the available labor pool.
• Enforcement experiences have varied from very little awareness to full litigation. Some employers and employer representatives believe that regulation and enforcement have increased and will continue increasing.

Citation

Daley, K., Klerman, J., Baugher, M., Dunton, L., Kattel, U., Burkey, A. (2016). Abt Associates. Worker Classification Knowledge Survey Volume I—Technical Report. Chief Evaluation Office, U.S. Department of Labor.

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The Department of Labor’s (DOL) Chief Evaluation Office (CEO) sponsors independent evaluations and research, primarily conducted by external, third-party contractors in accordance with the Department of Labor Evaluation Policy and CEO’s research development process.