The U.S. Department of Labor has been rumored for a while now to be readying new regulations that would require extensive legal work on the part of businesses seeking to work with independent contractors (a category which includes most respondents receiving incentives for research participation).
According to the Department, "The current recordkeeping regulations require covered employers to keep specified payroll records and other information but do not require that such information or other information regarding a worker’s employment or exemption status be disclosed to the worker."
However, new "Right to Know" rules being developed by the Department of Labor are expected to require a company to:
- Provide each independent contractor with whom the company does business with a written analysis explaining the legal basis for classifying the individual as an independent contractor for purposes of the Fair Labor Standards Act of 1938 (FLSA); and
- Provide each company employee treated as "exempt" from the FLSA's overtime and/or minimum wage requirements with a written analysis explaining the legal basis for classifying the individual as exempt.
If implemented, these rules would likely lead to a significant decline in client opportunities for self-employed marketing research consultants, because prospective clients -- before doing business with them -- would need to conduct extensive due diligence to prepare a written legal analysis justifying their independent-contractor status for purposes of the FLSA. Prospective clients could avoid this burden by purchasing substitute services from larger firms.
These rules presume that a company makes the decision to treat an individual as an independent contractor, rather than the other way around. But only in isolated cases of intentional misclassification does this actually occur. By contrast, legitimate independent contractors – of which there are millions today, including many in the survey and opinion research profession – make their own decisions to operate as independent contractors.
In addition, these rules could make it extremely difficult to handle respondents receiving research incentives.
MRA and our coalition allies have discussed this important issue with various Members of Congress and their staff. We aim to head off these rules in legislation, while trying to convince the Department directly to abandon the concept.