In Congress and in thousands of workplaces, the nation's business community is seeking to change long-standing rules and practices to turn many people classified as employees into independent contractors -- a move that could cause many Americans to lose health insurance and pension and unemployment insurance benefits.
In a little-noticed provision in its tax bill, the House of Representatives has approved a new -- and, many experts say, more inclusive -- test to determine who is an independent contractor. The Clinton administration is fighting the provision, asserting that it would strip millions of workers of their basic benefits. But business groups say the legislation is needed to clarify the often fuzzy definition of who is an independent contractor.
Outside Capitol Hill, employers ranging from small construction companies to giants like Microsoft and Pacific Bell are increasingly hiring new workers as independent contractors rather than as traditional employees -- a not entirely new practice that is expanding rapidly as employers strain to cut costs.
Such a strategy not only gives employers more flexibility to shrink their work forces, but it saves them thousands of dollars per worker because companies do not have to make Social Security, Medicare, unemployment insurance or workers' compensation contributions for contractors.
Seeking flexibility
"What's clear is employers are seeking increasingly to have more flexible arrangements," said Sara Horowitz, the executive director of Working Today, an advocacy group on workplace issues. "But what that means in reality is people are working increasingly without benefits. They're working not only without health coverage but without the protections of the major labor legislation of this century: pensions, minimum wage, occupational safety, unemployment insurance, age discrimination. The list goes on."
Opponents of this practice say companies are wrongly lumping people usually considered employees, such as truck drivers and middle-level managers, into the independent contractor category, which traditionally referred to people in business for themselves.
At last year's Olympic Games in Atlanta, for example, several hundred broadcast technicians hired by the Atlanta Committee for the Olympic Games had to sign contracts saying they were free-lance independent contractors rather than employees, who are protected by overtime and unemployment insurance laws.
