New Laws Could Have Devastating Effects for Some Work-From-Home Parents

Lisa Milbrand

I had a demanding magazine job when I became a mom, and as it would turn out, the late nights, hellish commutes, and work travel didn't necessarily mix with new motherhood. After one too many nights getting home past my baby's bedtime, I took a gamble on taking my part-time freelance gig full-time. It paid off—I made more money than I had as an editor, while still being able to be class mom, host an occasional playdate, and pick up a sick kid in five minutes flat.

And I'm not the only parent following this path. There are more than 57 million independent contractors in the United States, many of them fellow parents who chose a more flexible work arrangement to allow them to balance work and family. Look at Matthew and Victoria Grogaard of Hackettstown, New Jersey, who need the flexibility to cover the daily therapist appointments for their son, who has global apraxia. Or Jessica Ramos, a freelance instructor who likes the flexibility to take care of her children, one of whom has cerebral palsy.

"This job has allowed me to work as an educator, make money for the family, make my own schedule, and work from home so as to meet all the needs of my children even during emergencies," says Ramos. "Being a mom to a special needs daughter, you tend to suffer from depression more often than not. So not only did this job give us extra financial support, but it gave me a sense of purpose beyond being a mom."

But for me and the other millions of moms and dads who chose the flexibility and rewards of life as an independent contractor, that wonderful work-life balance may be coming to an end. And that's thanks to an influx of new bills that would change the rules for the majority of freelancers—80 percent of whom are very happy running their own independent businesses—when it comes to getting recognized by the federal government.

New Laws with Big Impact

The new laws are based on a 1937 "ABC" test to define who must be considered an employee and who can be an independent contractor. The ABC approach is far stricter than the current federal guidelines. To pass as an independent contractor, workers must:

  1. Work outside of the control of the employer.

  2. Work in a business that isn't the same type of work the company does (for instance, you can hire a freelance accountant for your hair salon, but not a freelance stylist), or work completely at home/outside the company's business sites.

  3. Be engaged in their own independent practice of the business.

Because the laws require independent contractors to pass all three parts of the test, many legitimate, long-term businesses flunk. Independent speech therapists for example—like many of those who provide early intervention at home for children—would fail part B, because they're in the same line of work as the agency who employs them.

And already, the laws are wreaking havoc. AB5, California's bill due to take effect on New Year's Day, has already resulted in the loss of hundreds of jobs there—including 200 freelancer jobs at Vox Media, and translators who worked remotely for Rev.com. Though the law carved out exemptions for some independent contractors, others—like freelance writers—were heavily impacted by an arbitrary 35-story limit, a number that some freelancers can hit within a month.

New Jersey and New York each have their own versions currently working their way through their statehouses, while other states are already considering the bills. New Jersey's bill S4204 was recently voted out of committee and has even fewer exemptions than the California bill. While the bill's sponsor, New Jersey Senate President Steve Sweeney, says it "just codifies current existing law," legal experts say that the New Jersey law significantly changes how employment is characterized. "This bill makes it harder for employers to characterize a person as an 'independent contractor' that would have the effect of depriving a person of overtime pay and unemployment benefits that are typically offered to employees," says David Reischer, employment law attorney and CEO of LegalAdvice.com. "These bills would hurt freelance business owners, subcontractors, and even those businesses that contract with these companies, creating headaches for small business owners in these states."

Supporters of the laws say that it provides workers with necessary protections regarding overtime, sick leave, and benefits that independent contractors don't receive. But independent contractors argue that the freedom, flexibility, and financial benefits of working independently far outweigh these issues. "This is an attack on parents, especially mothers," says Jen Singer, a freelance writer and editor in Red Bank, New Jersey, and a founder of FightforFreelancers.com, a grassroots group that is fighting the bill in New Jersey and combining efforts with fellow freelancers around the country. "So many will not be able to find flexible jobs that allow them to blend work with raising their kids, either during school hours or in the wee hours of the night. The old school 9 to 5 job doesn't fit everyone."

And surveys show that flexibility is the key word for many working moms. The Mom Project found that only 9 percent of moms wanted a traditional 9 to 5 gig, with 88 percent of moms considering flexibility as important—or even more important—than salary when choosing their work. And 90 percent look for careers that allow them to work remotely.

Widespread Impact

Even if you aren't an independent contractor, these bills could impact you—and your pocketbook. "If companies now have added costs with reclassification as employees, such as benefits and overtime, they will no doubt pass those along to consumers," says Doug Diaz, a partner and member of Archer & Greiner's Labor & Employment Law group.

And as the confusion wrought by the bills will cause many businesses to hire fewer people—just like Vox hired 20 people to replace the 200 contractors they had used previously. That means you'll find fewer people available to help you manage your family's daily life—Amazon delivery people; hair stylists; speech, occupational, and physical therapists; after-school instructors and coaches; and even the photographer who does those adorable back-to-school shots are often independent contractors.

Finding Solutions

Creating more flexibility to account for the 21st century way of working could go a long way to making these bills fairer. "Forcing people to become employees when they don't want to is not the answer to the problem of misclassified employees," says Singer. "Taking into consideration the IRS 20-point test for determining if someone is an employee, coupled with a rewording or scrapping of the ABC test will go much farther in both protecting misclassified employees and those of us who wish to work our way."

For many families, the freedom of freelancing allows them to balance earning a living with actually living their lives. And the constraints of these new laws will simply make that impossible.