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The Insights Association takes public positions on legislation and regulation.

The Protecting the Right to Organize Act (PRO Act) (H.R. 842, S. 420) would, among other purposes, dramatically expand the definition of "employee" in the National Labor Relations Act (NLRA), adding an ABC test to determine if someone is an independent contractor or employee for purposes of union organizing. The legislation would thereby make it harder to defend the independent contractor status of respondents receiving incentives for participation in marketing research.

The ABC factors are hard to satisfy for any business, but dramatically more difficult for research participation, complicating the researcher-respondent relationship and the future viability of the marketing research industry.

H.R. 842 passed the House on March 9, 2021.

Background

The U.S. Department of Labor, IRS, and state labor and tax agencies sometimes claim that respondents receiving incentives for participation in marketing research[1] should be treated as employees of the companies conducting the research. This can bring responsibility for unemployment insurance payments, taxes and fees, minimum wage, overtime pay, extra recordkeeping, and more.

However, marketng research participants who receive compensation for their time and effort are independent contractors and should be treated as such.

Some participants in marketing research studies, such as focus groups or online panels, receive reimbursement for their participation in a study, depending on the length and circumstances of the study, the specialized knowledge or background of the participant, etc. However, research companies that conduct these studies sometimes face cases in which a person receiving a small reimbursement for participating in a single focus group study is characterized as an employee of the firm conducting the study.

Factor tests for employee classification did not develop with marketing research in mind; the ABC test was conceived in relation to classic professions like construction workers, and struggles with research participation, which is not a profession at all.

Research respondents are obtained according to the demographic or other specific needs of a client; participation is voluntary, and participants are free to opt-out at any time. Respondents may participate in multiple studies at the same time, but that participation is not a profession, and participants cannot easily make a living at it. In fact, the research industry goes to great lengths to prevent individuals from participating in too many research studies, referred to as “cheater-repeaters”. Individuals that attempt to make a living this way produce skewed data instead of representative data. Cheater-repeaters also threaten the integrity of research results because they frequently get onto panels using fake ID and data, and similarly provide fake or erroneous responses to questions.

The Insights Association opposes the current definition of an “employee” in the PRO Act

The prospect of respondents in the U.S. being unionized represents a serious threat to market research and data analytics studies involving incentives, a significant portion of the U.S. insights industry's work.

The PRO Act presents the perfect opportunity to clarify in federal labor law that marketing research respondents are independent contractors and should not be mistaken to be employees of research companies and organizations. The Insights Association advocates amending the definition of “employee” in the PRO Act to clarify exactly that.[2]

Absent an amendment of this nature, or one striking the redefinition of employee altogether, the Insights Association opposes the PRO Act.


[1] Market research is the process of acquiring, analyzing and understanding opinions, attitudes and experiences from the public, regarding products, services, issues, candidates and other topics. That data is used to develop new products, improve services, and guide policy. It is used by all kinds of entities, including health care providers, private businesses, academic institutions, and governments.

[2] IA recommended the following amendment to the definition of “employee” in the PRO Act: The term "employee" shall also not include a participant in marketing research receiving compensation for that participation. Marketing research involves the collection and analysis of data regarding opinions, needs, awareness, knowledge, views, experiences, or behaviors of a population, through the development and administration of surveys, interviews, focus groups, polls, observation, or other research methodologies, in which no sales, promotional, or marketing efforts are involved and through which there is no attempt to influence a participant’s attitudes or behavior..

The Insights Association, a nonprofit trade association representing the market research and data analytics industry, supports the enactment of a federal data security law requiring data security and breach notification.

Placing reasonable limits on what constitutes a breach of concern to consumers (and thus being worthy of notification in an era of over-saturation of breach notices) and on the power of the Federal Trade Commission (FTC) to write regulations (and expand definitions) are of key importance to our industry. The data our members collect and analyze, in order to understand the opinions, attitudes and behaviors of groups of consumers, would not be susceptible to criminal abuse if breached, which is why such limitations matter to us.

Our policy concerns include:

  • State preemption: A national standard that pre-empts all the conflicting patchwork of 48 state laws.
  • Equal application to both for-profit and non -profit companies/organizations.
  • No private rights of action. Avoid another litigation cottage industry.
  • Exemption for encryption/deidentification: Exempt data that is rendered unreadable or unusable.
  • Exclude public data: Exclude data that is publicly-available or part of a public record.
  • Significant risk of harm: If an entity suffering a breach runs an appropriate risk assessment and finds no significant risk of harm, notification should not be necessary.
  • Limit the data requiring notification: The definition of personal data covered by legislation should be circumscribed to only that which could most open to criminal abuse, like personally identifiable information (first name and last name with contact or location information) combined with social security numbers, or financial account or credit information, that could allow for identity theft, fraud or other kinds of tangible consumer harm. Anything further becomes a slippery slope down which almost any piece of data could ultimately be included.
  • Data security and privacy should be separate. Data that could raise privacy-specific concerns should not be covered for purposes of breach notification.
  • Don’t empower the FTC to radically expand covered data: Many data security bills seek to give the Federal Trade Commission (FTC) APA rulemaking authority (section 553 of title 5, U.S. Code) -- authority specifically denied to the regulatory agency in current statute because of abuses in the 1970’s -- to alter the definition of covered data, instead of the agency’s regular Magnuson-Moss rulemaking procedures. FTC staff and commissioners have stated for years that they consider most types of data to be ultimately personally identifiable and that they should be included in such a definition. [1] The definition should rightfully be set by Congress, not an unelected regulatory body, and set in a limited fashion.
  • Don’t set an arbitrarily brief timetable for data breach notification: Several recent bills would require breach notification within 30 days of discovery -- too short a time frame for some high-tech data security breach investigations. State laws usually require a “reasonable” amount of time. (For comparison, even HIPAA has a 60 day limit.)

[1] For example, at an Energy & Commerce CMT Subcommittee hearing on July 15, 2011: “I think that the touchstone here is information that can be uniquely tied to an individual... broader than the definition that is currently used in the draft bill.”

The Modern Worker Empowerment Act (H.R. 1523, S. 526), introduced by Rep. Elise Stefanik (R-NY-21) and Sen. Tim Scott (R-SC), would reduce the patchwork of federal tests currently used to define if someone is an employee or independent contractor by updating the definition in the Fair Labor Standards Act (FLSA) to the “common law” test, just like the Social Security Act and the National Labor Relations Act. The FLSA remains the only New Deal statue, of the three, that Congress has not yet amended to adopt a common-law test.[1]

Modernization will protect respondents receiving incentives for participation in market research and data analytics studies, and the companies conducting those studies, from having to relitigate respondents' independent contractor status under different federal laws that define the term differently, while enabling the federal government to more efficiently ensure proper worker classification.

Background

The U.S. Department of Labor, IRS, and state labor and tax agencies sometimes claim that respondents receiving incentives for participation in market research[2] should be treated as employees of the companies conducting the research. This can bring responsibility for unemployment insurance payments, taxes and fees, minimum wage, overtime pay, extra recordkeeping, and more.

However, market research participants who receive compensation for their time and effort are independent contractors and should be treated as such.

Some participants in market research studies, such as focus groups, receive reimbursement for their participation in a study, depending on the length and circumstances of the study, the specialized knowledge or background of the participant, etc. However, research companies that conduct these studies sometimes face cases in which a person receiving a small reimbursement for participating in a single focus group study is characterized as an employee of the firm conducting the study.

Research respondents are obtained according to the demographic or other specific needs of a client; participation is voluntary, and participants are free to opt-out at any time.

Respondents may participate in multiple studies at the same time, but that participation is not a profession, and participants cannot easily make a living at it. In fact, the research industry goes to great lengths to prevent individuals from participating in too many research studies, referred to as “cheater-repeaters.” Individuals that attempt to make a living this way produce skewed data instead of representative data. Cheater-repeaters also threaten the integrity of research results because they frequently get onto panels using fake ID and data, and similarly provide fake or erroneous responses to questions.

The Insights Association position: Research companies require certainty in the independent contractor status of respondents

Labor law did not develop with marketing research in mind. The FLSA’s existing factor test was conceived in relation to classic professions like construction workers and travel agents, and struggles with research participation, which is not a profession at all.

While it might appear viscerally obvious that marketing research and mystery shopping participants are not employees, the firms that contract with these individuals face troubling challenges to that nonemployee status by government agencies. The cost of defending against these challenges and the uncertainty they create has a material negative effect on the industry. It also threatens the integrity of the research process and the research results that people, companies and the government rely upon every day to be able to learn and understand consumer attitude, behavior and opinion.

The Insights Association supports the Modern Worker Empowerment Act because it would significantly lower the chances of an unjustifiable audit or enforcement against an insights company for "misclassification" of respondents.

 

[1] Under this rule, the worker is an independent contractor if the company has the right to control only the result to be accomplished by the worker’s services, and not the details and means by which that result is accomplished. Compared to the “ABC” rule, this rule requires a lesser degree of independence for the worker before the court would conclude that the worker is an independent contractor, and is therefore easier to meet.

[2] Market research is the process of acquiring, analyzing and understanding opinions, attitudes and experiences from the public, regarding products, services, issues, candidates and other topics. That data is used to develop new products, improve services, and guide policy. It is used by all kinds of entities, including health care providers, private businesses and academic institutions. In fact, government is the largest consumer of marketing research in the United States. No sales, promotional or marketing efforts are involved in bona fide research, and it is not intended to influence a participant’s attitudes or behavior.

 

Research subjects and mystery shoppers are independent contractors, not employees of research companies.

Background

The U.S. Department of Labor, IRS, and state labor and tax agencies sometimes claim that research subjects receiving incentives for participation in market research[1] or mystery shopping[2] should be treated as employees of the companies conducting the research. This can bring responsibility for unemployment insurance payments, other taxes and fees, minimum wage, overtime pay, extra recordkeeping, and more.

However, research subjects and mystery shoppers who receive compensation for their time and effort are independent contractors and should be treated as such.

Some participants in market research studies, such as focus groups, receive reimbursement for their participation in a study, depending on the length and circumstances of the study, the specialized knowledge or background of the participant, etc. However, research companies that conduct these studies sometimes face cases in which a person receiving a small reimbursement for participating in a single focus group study is characterized as an employee of the firm conducting the study.

Mystery shopping opportunities are offered on an event by event basis for a fixed fee for completing an evaluation. Because a mystery shopping visit must be conducted incognito, a firm cannot engage the same mystery shopper to conduct multiple evaluations of the same client location, but instead must engage a different shopper for each such evaluation. The mystery shopping industry operates principally online, usually without any human contact between the mystery shopper and the firm.

Research and mystery shopping participants are obtained according to the demographic or other specific needs of a client; participation is voluntary, and participants are free to opt-out at any time.

A person cannot make a living as a research subject

Research subjects and mystery shopping participants may participate in multiple studies at the same time, but that participation is not a profession, and participants cannot easily make a living at it. In fact, the research industry goes to great lengths to prevent individuals from participating in too many research studies, referred to as “cheater-repeaters.” Individuals that attempt to make a living this way produce skewed data instead of representative data. Cheater-repeaters also threaten the integrity of research results because they frequently get onto panels using fake ID and data, and similarly provide fake or erroneous responses to questions.

The Insights Association position: Research companies require certainty in independent contractor status

While it might appear viscerally obvious that marketing research and mystery shopping participants are not employees, the firms that contract with these individuals face troubling challenges to that nonemployee status by government agencies. The cost of defending against these challenges and the uncertainty they create has a material negative effect on the industry. It also threatens the integrity of the research process and the research results that people, companies and the government rely upon every day to be able to learn and understand consumer attitude, behavior and opinion.


[1] Market research is the process of acquiring, analyzing and understanding opinions, attitudes and experiences from the public, regarding products, services, issues, candidates and other topics. That data is used to develop new products, improve services, and guide policy. It is used by all kinds of entities, including health care providers, private businesses and academic institutions. In fact, government is the largest consumer of marketing research in the United States. No sales, promotional or marketing efforts are involved in bona fide research, and it is not intended to influence a participant’s attitudes or behavior.

[2] Mystery shopping is a means of measuring the extent to which a company's operating policies are being carried out in the field and of measuring company performance. A specialized type of marketing research, it is used in virtually all business sectors to capture and measure the actual customer experience compared to the experience a company desires the customer to have. The data is used to improve training, reward positive performance, reveal operational deficiencies, and otherwise enhance business operations to maximize positive customer experiences and, thus, the company's bottom line.