Today, the American independent workforce holds a vital place in the country’s economic landscape. There are more than 40 million people working as independents, and together, this population contributes more than 1 trillion annual to the economy. Innovation, technology,and worker preference have propelled the self-employed to abundant projects and opportunities with an expanding pool of potential clients.

But ambiguous and complex laws and rules governing independents and their prospective clients put this growth and innovation at critical risk. To ensure the growth of the American independent economy, a modern solution is needed to eliminate the friction associated with our growing independent workforce.

MBO Partners has proposed the Certified Self-Employed solution in direct response to this issue. The proposal creates a safe harbor for certain independent workers who wish to conduct their business responsibly and establish themselves as undisputed, self-employed, independent contractors via a special certification. The goal is simple; CSE helps to clear worker classification confusion related to where employer responsibilities begin and end. Certified Self-Employed workers would be responsible employers of themselves; this includes funding all Federal and local employer payroll taxes, health benefits,and worker compensation.

Current labor laws use a “one-size-fits-all” approach to classifying their workers, but with an independent workforce that boasts a diverse array of economic situations, it is simply not appropriate. One of the key motivating factors behind the CSE solution is to properly address these different audiences. The CSE allows independents to be freed from employee entitlements, removing the friction in the marketplace that impedes those independents that wish to have full control over both their business and how they engage clients. For those contractors who do not elect the CSE solution and are clearly independent and properly classified, there is no issue. On the other hand, for those contractors who do not elect the CSE solution and are too closely resembling employees and thus being potentially misclassified, current laws exist - and would remain in existence - to ensure employee protections are provided to those that believe they are entitled.

Unlike many proposals that have been in circulation, the CSE solution requires the least regulatory intervention once the certified standards are created.

Businesses wishing to hire a CSE independent professional would no longer endure the burden and risk from state, local, and federal officials challenging their compliance practices. CSE workers would never run the risk of being classified as employees. As a result, these Certified Self-Employed professionals could continue to help innovate, invigorate, and grow American business. The CSE solution encourages American enterprises to engage top-level independent talent domestically, where currently they may elect to outsource these opportunities overseas to avoid any misclassification risk.

Companies should not be discouraged from using independent workers. Similarly, independent workers should not be discouraged from working with certain companies. The CSE solution addresses these two concerns, but also has the foresight to prevent companies from potentially exploiting workers by coercing them to become CSEs, as it only opens CSE certification status to workers earning above a certain income threshold proposed at the equivalent of a $50 an hour billing rate.

The needs of the independent contractor - and those of their clients - cannot be ignored. The path to continued American innovation begins - and will continue - with its people, and the Certified Self-Employed solution will help drive the discussion to breaking the barriers to industry innovation.