During a House Education and the Workforce Committee hearing prior to the congressional recess, Rep. Bobby Scott (D-VA) questioned Andrew Stettner, the Director of Economy and Jobs at The Century Foundation, about the classification of employees as ‘independent contractors.’
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00:00All right, the ranking member of the full committee, Mr. Scott from Virginia.
00:05Thank you, thank you, Mr. Chairman.
00:09Mr. Stetner, a lot has been said about workers wanting to be independent contractors.
00:17Let me just check.
00:19If you're an employee, you get minimum wage, you're entitled to minimum wage, is that right?
00:26And if you're an independent contractor, you're not.
00:30That's correct.
00:31If you're an employee, you're entitled to overtime, and if you're an independent contractor, you're not.
00:37That's correct.
00:38If you're an employee, if you lose your job through no fault of your own, you're entitled to unemployment compensation.
00:46That's correct.
00:47And if you're an independent contractor, you're not.
00:49If you get hurt on the job, if you're an employee, you get workers' comp.
00:54That's correct.
00:55And if you're an independent contractor, you don't?
00:57That's correct.
00:58If you're an employee, your employer pays part of your Social Security responsibility?
01:04That's correct.
01:04And if you're an independent contractor, you have to pay it all yourself?
01:08You pay the whole thing.
01:08Your safe workplace under OSHA, you're entitled to a safe workplace under OSHA.
01:15If you're an employee, it doesn't apply to independent contractors?
01:19For the most case, yes.
01:20If some of the employees have health and pension benefits, if you're an employee, you get those.
01:28If you're an independent contractor, you don't?
01:30That's correct.
01:31And we just heard if you spend hours in training, if you're an independent contractor, you get to volunteer.
01:41If you're an employee, you actually get paid for the time you spend in that kind of training.
01:46Is that right?
01:47That's correct.
01:47What are the advantages, so you lose all that, what are the advantages of being an independent contractor?
01:54You know, no one on this committee disputes that if you are genuinely in business for yourself to make profit, you should be an independent contractor.
02:03But in the world that I live in, I've seen janitors and said, well, your condition of working to clean this business building in Boston
02:11is to pay for a franchise and get paid less than you would have got paid in the minimum wage.
02:17In the world that I live in, we found dishwashers in a restaurant in Minnesota who were given the privilege of washing dishes
02:24because they had a business and that was their skill.
02:27These don't make common sense.
02:28So what these workers are losing when businesses call them independent contractors, they're losing their right to the minimum wage and overtime.
02:36And so the employer saves a lot of money when he misclassifies people as independent contractors.
02:44And so do workers, in your opinion, want to be independent contractors or are they relegated to be independent contractors
02:51because the businesses only will hire them if they call themselves and agree to be independent contractors
02:59so the businesses can avoid the costs?
03:03There are just so many myriad examples of businesses misclassifying their workers as independent contractors
03:08and those workers really having no choice and it's really to cut corners and to increase their profits.
03:15The Department of Labor is going through staffing reductions.
03:24Economic Policy Institute suggests that more than $50 billion could be stolen from workers
03:29through wage theft, what would the impact of reductions that the wage and hour division have
03:38on the ability to recover stolen wages for workers that have earned them?
03:44We have just about one investigator for every 250,000 workers in the economy.
03:48Already DOGE has canceled leases for offices across the country.
03:52That means that the few investigators we have are going to have to drive hundreds of miles to investigate.
03:57They're not going to be there to answer calls from employers seeking to comply or workers seeking to complain.
04:02So it's going to increase the amount of wage theft that goes unchecked in our economy.
04:09We've had headlines about a recent dip in the stock market.
04:13We also know that under President Biden, the economy created 16.2 million jobs, a record for a single term,
04:21and more jobs than any Republican president created where they served four or eight years, unemployment rate fell.
04:30He was the first, but President Biden was the first president on record not to have a single month of seasonally adjusted job loss.
04:39What indicators do you, are you watching to see if the Trump administration is performing from an economic perspective?
04:48Well, we're already seeing consumer sentiment dropping, business sentiment dropping,
04:54and we're waiting for the other shoe to drop, which will be people losing their jobs with the rise of the unemployment claims.
04:59Thank you, Mr. Chairman.
05:01You're back.