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A recent court ruling threatens to disrupt multi-billion dollar language service industry nationwide.
The gig-economy and the knowledge-based economy should be evaluated under equitable standards.
Association of Language Companies (ALC) holding advocacy and policy summit in Washington August 8, 2018 to address the issue.
As the old saying goes, you get what you pay for.
But this isn’t a new phenomenon. Something as high-stakes as a diplomatic mission can hinge on just one or two translations, or the accuracy of just one interpreter. Recall “adversary” for Reagan-Gorbachev, or the “reset” button for Clinton-Putin. In each case, the quality of the translation and interpreting service directly affected the outcome of those meetings, for better or worse.
Notably, these stories are not isolated events, but a series of faux pas fueled by a central misunderstanding that many unfamiliar with the language service industry still hold: that anyone who uses a second language is up to the task of translation or interpreting. This is simply not the case. Rather, translators and interpreters constitute a knowledge-based workforce. They are highly-specialized, often certified, individuals with years of education and hands-on experience.
Consequently, this knowledge-based talent pool tends to work in various capacities for various entities, and enjoys the flexibility of contracting with multiple employers. In many cases for translators and interpreters, independent contracting is the primary means for earning a living.
Translators and interpreters constitute a knowledge-based workforce.
This is especially true for rare and not commonly used languages, as these professionals are simply unable to limit their services to one sole employer due to a lack of demand. Take, for example, that a Language Service Company (LSC) receives one request in a given month for a Malay translation project that takes eight hours to complete. Is it in the interest of either party to classify the Malay translator as a full-time employee?
Short answer: no way. But in California, there may no longer be a choice.
In a unanimous ruling, Dynamex v. Superior Court of Los Angeles greatly narrowed the definition of an independent contractor to three requisite criteria. Indeed, the Dynamex decision sets a new standard that all workers, by default, be classified as “full-time employees ” unless they meet the “ABC test,” the moniker given to the three criteria. To demonstrate justified use of independent contractors, firms must establish that the contractor is someone who:
- Is not being directed by the hirer in the performance of their job;
- Doing work outside the scope of the company’s typical business and;
- Has made the affirmative decision to go into business for themselves.
According to the court, businesses may be monetarily incentivized to misclassify workers as independent contractors thereby eroding the suite of non-cash benefits and protections that are standard under full-time employment status. The ruling was a clear attempt to expand worker protections in response to what some view as the unchecked rise of the “gig-economy.”
However, in its decision, the court’s “ABC solution” failed to distinguish between the gig economy and the knowledge economy, two disparate instances of independent contractor use. This ambiguity has far-reaching consequences for the language service industry that are more aptly characterized as belonging to the knowledge economy for their utilization of independent contractors in a hyper-specialized, non-traditional work arrangement.
What’s the difference? The knowledge economy differs fundamentally from the gig economy in that “gig jobs” are often repetitive assignments with a low barrier of entry for non-specialists. Think drivers for car-sharing services like Uber, or food delivery services like Grubhub. Knowledge jobs on the other hand, while typically temporary, exclusively admit highly trained professionals whose success is dependent upon the highest quality of work. Think State Department contractors, for example.
The court’s “ABC solution” failed to distinguish between the gig economy and the knowledge economy.
This shake-up could be more than a disruption for the 4th fastest-growing industry US, with a steady growth projection of over 6% per annum: it could be catastrophic. Nationally, the language service industry is worth approximately $40-45 billion, and over 80% of that revenue comes from around 6,000 small businesses. In addition, the vast majority of those companies are located in California.
According to an expert analysis of the decision, “the effects of the cost increases triggered by Dynamex are at once predictable and lamentable.” It goes on:
Some business models will be rendered unviable outright. As a result, many will be pushed out of the work upon which they rely. In other instances, where contractors are retained, employers will reduce pay for existing full-time workers to cover increased outlays for converted contractors. Overall, the Dynamex decision will likely lead to fewer and lower paying jobs in California. R Street, 2018
Predictably, businesses that once relied on contractors in California will outsource work to remote translators/interpreters to avoid the extra tax burden. The bottom line: it’s bad for business.
It is the position of JNCL-NCLIS and the Association of Language Companies (ALC) that the definition of a gig-worker for whose benefit this decision was crafted, and the definition of a knowledge-based worker are so different that they cannot be roundly compared by such a myopic “ABC test” as established in the Dynamex case. One certainty is that for businesses that rely on these alternative work arrangements, expenses will increase while opportunities for work decrease.
In response, JNCL-NCLIS and the Association of Language Companies (ALC) have developed a comprehensive strategy to address this evolving issue. On August 8th, the inaugural ALC Washington Leaders Forum will be held in Washington, DC. The event is an all-day public policy forum and advocacy day event bringing together language industry experts and business leaders for the purpose of raising industry-wide awareness and educating policymakers on this and other issues. Two additional events will be held in January and May 2019, on the margins of the ALC UnConference in California on January 17-19, 2019 and the ALC Annual Conference, May 1-4, in Washington, DC.
This information is not intended to serve as legal advice. JNCL-NCLIS does not provide legal services or legal advice. Language Service Companies are encouraged to consult a lawyer to interpret and apply this information to a particular circumstance.