US budget threatens respondent incentives

President Obama’s proposed budget wants Department of Labor and Internal Revenue Service programs to investigate and deter the “misclassification” of employees as independent contractors and to effectively eliminate the independent contractor protections provided by Section 530 of the tax code.

According to the Office of Management and Budget, the proposal would garner nearly a billion dollars in revenue for the Treasury over 10 years by eliminating the protective ‘safe harbour’ in Section 530.

Director of government affairs for the Marketing Research Association Howard Fienberg said Federal regulatory agencies had been sceptical, if not hostile to research respondents’ status as independent contractors in recent years.

He added: “These proposals represent a potential threat to every research company using respondent incentives, where they all might have to treat respondents as employees, unnecessarily increasing costs and making it even harder to attract respondents.”

The presidential move is similar to one at State level where the association successfully fought off amendments to Washington State’s new Employee Fair Classification Act, which would have forced the profession to treat respondents as employees.

Fienberg added: “We urge Congress to support the common sense Research Fairness Act and to counter the White House’s targeting of independent contractors.”