MiBiz with Mark Sanchez
Proposed Federal Rule Change Could Affect Millions of Contract Workers
Patrick Center: Wednesday afternoon, time for our bi-monthly conversation with MiBiz senior writer Mark Sanchez. The Small Business Association of Michigan is building opposition to a proposed federal rule change that could affect millions of workers who earn their living as independent contractors.
Mark Sanchez: And let’s stress “could” -if this rule goes through and is adopted by the U.S. Department of Labor. This is kind of a big deal. If you make you living as an independent contractor, you are a contract employee or if you're a small business and have contract employees who do regular ongoing work for you, this is an issue that you need to pay attention to and perhaps comment on at the Department of Labor website.This is a rule proposed couple of weeks ago by the Department of Labor. It would alter the existing legal test for who qualifies as an independent contractor. Are you exempt or not exempt is the legal term. And the Small Business Association, Brian Calley, who’s the CEO there, is trying to marshal some opposition to this, his take is these rule changes that are proposed, they're complicated, the existing rules are very clear for individuals and small businesses to follow. And if this goes through, it kind of really throws things into a mess and puts some complexities on what to follow. And the Department of Labor is really looking at the broader issue of who should be on a payroll and who should continue as a contract employee. So it's something that’s ongoing it could come through, it could not. There's a 45-day public comment period that's going on right now that goes through November 28. And so we wrote about this just yesterday posted the story on MiBiz.com. I would urge folks who are making their living as independent contractor, contract worker, or small businesses that have folks under contract doing continued, ongoing work…pay attention to this. This could very well affect you.
PC: What are the pros and the cons of this proposal?
MS: The cons, of course, are exactly what Brian Calley is advocating is that this could just cause folks to not be able to do this anymore, make their living as an independent contractor. There are some folks who like that, they like the freedom, they like the flexibility. The way he explained it is that the Department of Labor's really looking at this from the perspective of; you've seen these major gig economy players now: Uber, Lyft, DoorDash, the food delivery services, that are relying on contract labor and those cases people who have a vehicle, they purchased that vehicle, they already had that vehicle and now they’re using it for this as their primary, perhaps, source of making a living and that vehicle was not something they acquired and bought as equipment to form their own small business or in the terms of the regulation proposed, entrepreneurial use. The Department of Labor's is kind of arguing in this proposed rule that those folks should be on a payroll, they should be payroll employees and have the protections of all federal regulations and pull him to the federal minimum wage. It's a scenario that's going to play out over several weeks. They have a request into the Department of Labor by the U.S. Chamber of Commerce and the Association of Contractors and Builders, that’s the construction trade group across the U.S. They’d like to see this public comment period extended either, but another 60 days or extend it from 45 to 90 days. Because this is a big deal for those industries that rely a lot on contract labor and for and estimated 59 million people in the last year, have done some form of freelance work. It’s an issue we're going to keep an eye on and if you fall under that heading of contract labor, you may want to keep an eye on it, too.
PC: We're talking with MiBiz senior writer Mark Sanchez. You and I talk about a number of topics and there are a couple of buckets that I would say that we will work our way through. Health care, being one, venture capital… another one we touch on quite a bit is cybersecurity. And in this headline, it's in Caps: NOBODY IS IMMUNE.
MS: Nobody. Upper case, underline it, put it in bold. Nobody is immune. I’ll give you some numbers here, this comes straight from an annual report the FBI does. In 2021 there were more than 2,600 complaints to the FBI, those are complaints, not incidents, complaints that business and individuals filed, there were more than 2,600 in 2021 and cybercrimes cost those individuals and businesses 181.6 million dollars last year. This is a cost that continues to grow. This is a number of incidents that continue to grow. There's an annual report others put out the rise[unintelligible], back to the FBI report, nationwide almost to 850,000 complaints last year about cybercrimes. The cost: 6.9 billion dollars. That's a chunk of money coming out of the economy. And in the hands of folks who are doing this, and let's not make that mistake, as somebody who is quoted in the story we posted on this, these are not just disgruntled teenagers in mom and dad’s basement playing games. These are really well organized, well-orchestrated criminal enterprises. Often times run by rogue states. So it's a growing problem. And there's this persistent prevailing thinking sometimes among small business owners that, no, I’m too small, they're not going to go after me. Well, of course they will, because the phishing scams are the number one cause of data breaches. And if somebody in your office clicks on that e-mail, clicks on a a link, boy that cybercriminal gets access to your system, they lock it down and they demand a ransom to release your data in your IT system. And they can now make a good living hitting small businesses doing this. And the cost is quite high if you get hit, it can put a small business out of business because you're talking about, in some cases, multimillion dollar cost from being shut down to your reputational damage, to lost business, to having to alert people that there's been an incident and a data breach to having to provide some credit checks for people whose data was breached. If you keep a database of folks such as credit card numbers or healthcare information. So this is something that has grown. It's getting worse each and every year. Folks need to be aware of it and not get into that mindset of, I’m too small of a business to be victimized because that's not going to work. If you're a small business, whether professional services or retail shop, you lock your door each night before you leave the business, right? Of course they do. Well, you also need to look at a cyber-security as part of protecting your business as well.
PC: The West Michigan Sports Commission is launching an 11-million-dollar Capital campaign.
MS: Yes, this is a nice campaign announced yesterday, Tuesday afternoon, but the West Michigan Sports Commission wants to expand the Meijer Sports Complex up there in Rockford. It's an 11-million-dollar campaign to expand the facility and their off to a good start. The Sports Commission has requested Kent County for 2 million dollars, that they could get. It is a high priority or an important priority by Kent County commissioners, or at least by some of them. There's also an earmark in the federal budget for 1.5 million dollars and 3.5 million dollars from the state appropriation, to help this project. So, it's a new project and new expansion for the Sports Complex up there in Rockford, the 11 million dollars Capital campaign will run into 2023 and they hope to start construction on the expansion in 2024.
PC: Is there a focus on a sport or a facility?
MS: Well, it will really support 3 flexible fields for baseball, softball, some pickle ball courts, resourcing the base field. Kind of a new playground area and of course, you always need more parking when expand. So, this is quite a complex up there and the information they put out yesterday. So, they generated about 8 million dollars in direct spending for the rest of their [unintelligible] each year, and that’s about a 40% increase over 2021. That, yes, was affected by the pandemic. So it's kind of a draw for the region. You know, the folks behind the sports Commission are gearing up, as planned several years ago, to roll out this capital campaign to pay for this expansion.
PC: MiBiz Senior writer Mark Sanchez, thank you so much.
MS: Thank you, Patrick.