A half-century-old policy doesn’t protect ICs – and didn’t see the rise of independent work coming
Allegations of sexual harassment against Hollywood execs, politicians, comedians and TV personalities have dominated the news. They’ve prompted a movement to expose sexual offenders beyond powerful public figures and uncover a culture of misconduct that crosses socioeconomic strata – particularly in the workplace.
Surprisingly, not all victims of sexual harassment in the workplace are protected and offenders aren’t the only ones who can be punished for this crime.
Title VII of the Civil Rights Act of 1964 indicates that employers may be liable for damages that result from harassment of their employees. The U.S. Equal Employment Opportunity Commission encourages employers to protect their employees (and mitigate risk) by preventing sexual harassment from happening in the first place.
Practices like clear communication, training, enforced codes of conduct and complaint processes can help companies create cultures that don’t tolerate sexual misconduct.
The independent, unprotected workforce
The workforce is changing. More companies have adopted a flexible workforce strategy, which includes a blend of full-time employees, independent contractors, freelancers and consultants that fit a business’ needs.
But the federal sexual harassment policy passed in 1964 didn’t take the future of work into account.
Independent contractors are exempt from Title VII protections because of their non-employee status. It’s a major gap in the decades-old policy. Rationale for the protections gap stems from the view that independent contractors, if properly classified, are not subject to the same duress as an employee.
According to both the Department of Labor and the IRS 20 Factor Test for independent contractor classification, properly classified independent contractors should be offering their services to multiple clients. In other words, they rely on multiple clients – not a single employer – to earn a living. An independent contractor, therefore, would have a greater ability, financially speaking, to walk away from a client than an employee walking away from an employer if they are experiencing harassment in the workplace.
While still not protected under the law, independent contractors can do more than walk away from misconduct in the workplace.
A sophisticated independent contractor may recognize the need for these protections and insist that they are included in the independent contractor agreement executed to perform their services.
Another option for independent contractors suffering harassment at the workplace, is to prove that they are improperly classified as an independent contractor and should therefore qualify for protection under Title VII as an employee.
This scenario, however, is unlikely in the case of the sophisticated independent contractor mentioned above, but it is a possible course of action for many workers, perhaps misclassified as independent contractors, to take in order to receive the protections offered to employees.
Employers are often only aware of misclassification risks associated with the IRS. Sometimes, independent contractors insist on the classification because they’ve worked in this capacity before, enjoyed a benefit of the status or the hiring manager told them they were being hired as a contractor, not an employee. Misclassification of workers isn’t rare, but it is costly to companies.
For example, an employer may be liable for fines and fees associated with misclassification – as well as back-wages, benefits and protections under the EEOC and Title VII, if an independent contractor can prove they should have been classified as an employee. It’s yet another financial risk companies face with respect to independent contractor classification.
The future of work – and protection under the law
The rise of the independent workforce shows no signs of slowing down. And the state of California has been ahead of the game.
In January 2000, California updated the state’s Fair Employment and Housing Act, which made it easier for employees – as well as independent contractors – to prevail in harassment and discrimination cases.
The inclusion of independent contractors as a protected class under the California Fair Employment and Housing Act sets significant legal precedent and reflects the shift in the traditional understanding of the employer/employee relationship.
Don’t wait for change to happen
More states will begin to recognize the need for legislative change when it comes to the independent workforce. But companies cannot wait for laws to change. Not only must companies understand proper classification of their blended workforce (and apply it!), they must create a better workplace.
Talent is scarce. Companies are vying for the most talented full-time and independent workers on the market. It’s in a company’s best interest to prioritize creating a safe and accommodating environment for everyone in the workplace, independent contractor or otherwise.
Providing a workplace experience that talented people seek to be part of delivers positive results for independent contractors and companies, alike.
Is your company in compliance?
Learn more about Independent Contractor Compliance – and the risks of misclassification – from TalentWave.