In comparison with most other countries with large forest products industries, U.S. wood supply systems are substantially de-integrated, and contracting among their various components is crucial to their operation. The reasons lie in the historical configuration of our diverse forest resource, the many different types and sizes of landownerships, and our country’s tradition of enabling and fostering entrepreneurship at the local level.
The remote working conditions under which timber is harvested in the U.S. create great challenges for supervision. Vesting independent personnel with personal entrepreneurial goals and profit opportunities relieves the service recipient—who needs timber delivered or a forest improvement contract executed—of supervisory burdens and instead, requires simple contract administration. With today’s emphasis on excellence in environmental compliance, giving a responsible entrepreneur, qualified with appropriate education and certification, a measurable stake in project outcome can be more practical than threading a supervisory chain from the headquarters of a major corporation to the forest operation.
Independent contracting is essential to this supply chain’s working flexibly within market realities. Policies which raise uncertainties about these relationships or call into question the ability of a contractor to make independent business decisions cloud the contractor’s planning horizon, obstruct access to credit, and make business investment difficult.
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H.R. 3825--Harmonization of Coverage Act of 2017: Harmonizing the definition of an employee would eliminate uncertainty in small business planning and access to credit. This legislation would align the criteria that the federal Treasury and Labor Departments use in establishing Independent Contractor status, so that both use the common law definition to determine independence for their respective jurisdictions. This reform would relieve wood supply businesses and the entrepreneurs that support them of much of the uncertainty in their operating environment, improving their ability to plan, establish credit and enter into business relationships.
Clarity in Independent Contractor Status determination is important to the forest products supply chain.
- Entrepreneurship in logging and wood supply creates value and quality.
- Uncertainty in status determination impedes small businesses’ planning and credit access.
- Current policy already discourages illicit “underground” operators.
- Additional regulatory requirements will add costs and administrative burdens, impeding small business recovery.
Revised October 2017