Editor’s note: Paul Ryan sits on the board for the MSPA-North America and has legislative chair responsibilities. He is the owner and president of Secret Shopper. He can be contacted at legislative@mspa-na.org. 

The sentiment in Congress is building to understand, regulate and tax the growing digital economy. The chatter around the issue is substantial. You’ve probably seen the articles regarding the labor disagreements between firms such as Uber and Lyft and a number of state jurisdictions over worker classifications as either an employee or independent contractor. The rules and regulations are all over the place and, to make matters even more confusing, 50 states and one federal government each have their own set of regulations. Is the market research industry ready to ride this wave or wipe out?

Since this situation is about as clear as mud, let’s further muddy the waters by recognizing that market research today has one foot in the traditional economy and one foot in the digital economy. So, does that make your respondents, online panelists, focus group members, secret shoppers or evaluators part of the digital economy? Are they independent contractors or employees? Will our business model survive? Lots of questions, quite a bit of confusion and a lot of small business owners and corporate leaders not sleeping very well. Sound familiar?

OK, how about some good news? Well let’s start by stating the obvious: Our industry is driving cutting-edge research technology in a digital age but the tasks we are completing harken back to the traditional economy. Our industry is about how and why people do things. In short, our customer experience, research and insight objectives haven’t substantially changed but the tools to accomplish our work sure have gone digital. Kind of cool, don’t you think? As governmental regulation begins to change, will our respondents, online panelists, focus group members, secret shoppers and evaluators be employees or independent contractors? Currently they should be classified as independent contractors except in a very limited number of jurisdictions.

But in a place like Wisconsin for example, according to Howard Fienberg of the Marketing Research Association, at least one major CPG client company has its market research providers budget upwards of 30 percent more for additional costs to treat research participants in the state as employees. Obviously, our business models are under quite a bit of stress when independent contractors are reclassified as employees. When this does happen, business activity begins to drop; a small business nightmare.

The reclassification of independent contractors

When we begin looking to the reclassification of independent contractors – and the reasons behind the changes – that lack of clarity is returning to the spotlight again. Our legislators are trying to get it right but the detail is daunting for them as well. It’s also why I am so concerned with the building wave of sentiment for regulating the digital economy in Washington. The business of government regulation needs clarity to be effective, otherwise there is a tendency to regulate in very broad strokes. Those legislative broad strokes can regulate our industry right out of existence. Our industry needs very sharply defined details and clarity in the independent contractor laws in order for us to continue playing a creative and vital societal role. For example, the legislative language we are working on getting passed on behalf of our industry in the United States Congress recognizes that the independent contractors work for many companies within our industry; choose work when and where they desire; have their own equipment and tools; undertake training on their own; and are not engaged in full-time work with any single firm. In short, independent contractors in the market research industry are the poster children for what it truly means to be an independent contractor. Since bringing clarity to the marketplace is our industry mantra, we have the know-how to pull this together, right?

It’s actually pretty straightforward. The key is educating our leaders about our industry. Remember: Our legislators are looking for clarity just like the rest of us. They have so many issues coming at them with so many nuances trying to be conveyed and worked into legislation that, without industry input, the default ends up being the legislation by broad strokes mentioned earlier. 

A wave of change is coming. Our legislators are trying to get a handle on the fast-moving digital economy. In all the meetings on the hill they are asking for more support from their colleagues from different states. This is where you can make a difference. If you feel passionate about this, you can contact your U.S. senators and representatives and also ask your peers to contact theirs as well. Not sure what to say? Contact myself or Russ Hollrah*, our MSPA-North America representative in Washington, D.C., for some talking points and letters you can use. If you really want to see how the Congress works, MSPA-NA is organizing a fly-in to Washington, D.C., on May 16 and 17 this year to meet and tell our story to our congresspeople.

 

*Russ Hollrah, an attorney with Hollrah LLC whose practice is focused principally on advising and representing firms that do business with independent contractors, is the MSPA-North America representative in Washington, D.C. He can be contacted at rhollrah@hollrahllc.com.
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