Free to freelance: Independent contractors may be shifting nature of work

Hayley Landstrom likes the flexibility of her work as a freelance graphic designer and photographer.

When she’s not working for the Traill County Tribune or as the curator for the county’s historical society, she can work on projects and set them aside to tend to her 6-year-old daughter or other responsibilities.

“I can work from anywhere provided there’s an Internet connection,” Landstrom said.

While the number of people working as freelancers can be difficult to quantify and define, some say there’s a growing demand for their services. That change could have a number of legal and social implications, including how businesses classify their employees.

California officials ruled in June that drivers for Uber, the ride-sharing service that recently came to Fargo, are company employees and not contractors. Some said that comes during efforts to crack down on employment misclassifications.

Meanwhile, the Freelancers Union released a survey last year showing 53 million Americans, or 34 percent of the workforce, are freelancing. Its study defined freelancers as independent contractors, moonlighters, workers deriving income from a mix of traditional employers and freelance jobs, temporary workers and freelance business owners.

That same study said almost a third of freelancers are seeing an increased demand for their services, compared to 15 percent who are seeing less demand.

Sara Horowitz, the Freelancers Union executive director who was not available for an interview with the Herald, said freelancers are causing a major shift in the way people think about work.

“Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/coworking spaces,” she wrote in a 2011 essay for the Atlantic. In another Los Angeles Times piece last year, she declared the “Era of Big Work” over.

“Now, independent work is the new normal,” Horowitz said.

Flexibility Landstrom hopes to make her freelance work her full-time job. She’s long had an interest in graphic design and photography, and she went to UND to study the profession. She works under the moniker Hiss E Fitt Studios.

Landstrom said being a freelance graphic designer can be difficult when some potential clients don’t realize the work that goes into it.

“There’s a whole science to it,” she said. “You try to show them the value of it.”

Some local business officials were unsure how many people in the region are making money through freelancing. Troy Seibel, the North Dakota Commissioner of Labor, said trucking and construction are common areas to find independent contractors here.

The number of people working as independent contractors overall has been growing over the past couple of decades, said Stephen Befort, a labor and employment law professor at the University of Minnesota. He cited the flexibility for both sides of the relationship for that growth.

“For employers, they can expand and contract workforce more rapidly than when they’re dealing with employees,” he said.

Classification Keith Reitmeier, the manager of the Job Service North Dakota office in Grand Forks, said it’s important for companies to do “thorough research” about how they’re classifying their employees.

“There are pretty severe penalties if you call somebody an independent contractor and in fact they’re an employee,” he said.

That distinction is apparently so often misunderstood that information about it is posted on the main page of the North Dakota Department of Labor and Human Rights website. The department uses a “common law” test made up of 20 factors to determine the nature of the working relationship, including the amount of instruction a person receives and the “integration of the person’s services into the business operations.”

“Contrary to some common thought, parties may not simply agree that their relationship is an independent contracting relationship rather than employment,” the website states. “The distinction is based, under law, upon objective characteristics of the relationship.”

Seibel said he’s seen more businesses claim their workers are independent contractors in defense of a wage or hour complaint. Independent contractors are not protected by labor standards, workers compensation or unemployment insurance, according to the state Department of Labor. They are also often treated differently than employees for tax purposes.

“Often times, employers are misclassifying an individual as an independent contractor when indeed that person is an employee,” Seibel said.

That can sometimes happen when companies are simply unaware of the law, so Seibel encouraged them to contact the Labor Department to make sure they’re in compliance.

Scrutiny Befort said the Uber case in California may be the “first step in a battle” for companies with a similar model.

“They don’t look like classic employees,” he said. “The drivers have a lot of control over how they do their operations, what equipment they use and the like.”

Uber isn’t the first company to have its employment model scrutinized. FedEx Ground has been the subject of lawsuits over the classification of its delivery truck drivers, and in October, the Kansas Supreme Court ruled that those drivers were employees and not independent contractors.

For its part, Uber released a survey earlier this year that shows 71 percent of its “driver-partners” have boosted their income, and 63 percent said they drive for Uber in order to have more flexibility in their schedule.

“The growth of Uber has provided new opportunities for driver-partners, who, based on the (driver) survey, seem quite pleased to have the option available,” another study conducted by Uber and a Princeton University researcher released this year concluded.

More Info

• 34 percent of the U.S. workforce is working as freelancers, or people who have "engaged in supplemental, temporary, or project- or contract-based work in the past year."

• 32 percent of freelancers has seen the demand for their services grow in the past year.

• The biggest reason people freelance is for supplemental income, with 68 percent saying their motivation was to earn extra money.

• 42 percent of freelancers said they wanted flexibility in their schedule.

 
Source: Freelancers Union survey, 2014