Misclassification: Workers in the Borderland

Journal of Self Governance and Economics Management, II (2), 2014

24 Pages Posted: 24 Jan 2014 Last revised: 1 Nov 2015

See all articles by David Bensman

David Bensman

Rutgers University School of Management and Labor

Date Written: January 22, 2014

Abstract

Today, nearly one-third of Americans in the labor force are in non-standard employment. The rise of non-standard employment, beginning in the mid-1970s, has occurred at the same time as the precarity of work has increased, and the number of bad jobs has grown as well. Independent contracting is one of the most common types of nonstandard employment. Genuine independent contractors make up a small proportion of the American workforce. Misclassifying employees as independent contractors is increasingly common; one-third of firms pay their misclassified independent contractors with for-service contracts or pay them off the books. Misclassification is common in nearly every low-wage sector. In construction, nearly 40% of workers are misclassified. Port trucking and warehousing, key sectors in the logistics industry, are other industries where misclassification has become ubiquitous. Local, state and federal agencies have been trying to identify and prosecute misclassification for the past fifteen years, but the laws defining independent contracting vary significantly, and court rulings have been inconsistent. The result is that millions of Americans work in a grey zone where their rights are unenforceable, their pay is low, their benefits nonexistent, and their career prospects dim. Independent contracting has been increasing in other regions of the world, with misclassification prevalent as well, although efforts to regulate employment standards vary from country to country.

Keywords: Misclassification, independent contractors, contingent work, precarity, labor law enforcement

JEL Classification: J53, J65, K31, L50, L74, L92

Suggested Citation

Bensman, David, Misclassification: Workers in the Borderland (January 22, 2014). Journal of Self Governance and Economics Management, II (2), 2014, Available at SSRN: https://ssrn.com/abstract=2383396 or http://dx.doi.org/10.2139/ssrn.2383396

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