In the past several years there has been a great deal written about the changing world of work. Tom Peter’s talked about it when he discussed “You, Inc.”; Dan Pink wrote about it in Drive! and I have written about it numerous times in my Future Friday posts. We have seen the reference to the “gig” economy or the “on-demand” economy and the increasing use of independent contractors. We have seen numerous discussions of, and examples of, Results Only Work Environments (ROWE) where employees don’t have their time tracked because the company is only interested in their results. Flexible schedules are becoming more common and more people have the opportunity to work from home. All of these things portend a very different style of work in the coming decade. However, some recent government actions may have dealt a setback to this forward movement.
The first setback was dealt by the California Labor Board in its decision to declare Uber as an employer and not just a technology enabler. This put a chink in the armor of the gig model where independent contractors perform services as needed. While this is just one decision, and in reality about just one employee, there are a number of other lawsuits in progress in other states that will now be emboldened by this decision. It will provide other courts and governments some direction that could result in a slowdown of the movement toward the greater use of independent contractors.
On July 6, 2015 the US Department of Labor issued proposed rules on a revision of the Fair Labor Standards Act. The reason this was done was the expressed desire of the President to have more people classified as non-exempt. The purported reason for this desire was for more people to be eligible for overtime in order to make money. The problem with this is that it flies in the face of ROWE.
Being nonexempt means that your actual worktime needs to be tracked and tracked accurately. You are being paid on the basis of your time not your results. Certainly you can be punished for your lack of results but the company can be punished for not accurately tracking your time. The proposed salary level for being an exempt employee is predicted to make almost 5 million current exempt employees nonexempt. Although it does not put the kibosh on ROWE entirely, or on productivity based work, it certainly makes it more difficult to have such a system in place.
One of my more cynical friends (or is she a realist?) says that neither the Feds, nor state governments, are interested in embracing the gig economy. It has a potential impact on tax revenue, in that it is much harder to collect taxes from independent contractors than it is employers.
As to the FLSA changes the move is, in my opinion, a step back and not toward the future. I am all for people making more money, but I prefer to have that done by higher profits and enlightened employers who pay well, rather than enforcement by the government.