Benefits for gig workers remain a cloudy and evolving question, one that's getting more attention as the number of gig workers grows. Also called independent contractors, on-demand workers or freelancers, gig workers enjoy a large degree of flexibility that can enable work-life balance. An Uber or Lyft driver, for example, works whenever they want, so a struggling actor might be able to line up auditions and then take Uber fares when his schedule allows.
According to ADP Research Institute's® 2016 Evolution of Work study, 88% of employers and employees believe that companies will exclusively hire contract workers on a project-by-project basis. You'll need to be prepared to answer questions around benefits for this growing group of workers.
Flexibility Comes With a Price
Gig workers aren't considered employees — although several pending court cases might change that, according to the San Francisco Chronicle. They aren't guaranteed a schedule, aren't covered by the Fair Labor Standard Act's protections regarding minimum wage and overtime pay and aren't protected by the National Labor Relations Act (NLRA), which allows workers to bargain collectively with employers. Most of all, the employers of gig workers aren't required to offer them benefits such as health insurance, unemployment insurance, paid vacation time, pension plans or sick leave — at least for now.
As the number of gig workers grows, the demand for benefits increases. Some major trends in gig worker benefits have risen up to answer that demand. Some of those trends take the burden off of employers, while others put that burden squarely on their shoulders.
How, then, can you develop a benefits strategy for gig workers? You may need to monitor current trends and respond accordingly.
Here are some of the major trends in gig worker benefits:
Impact of the ACA
The Affordable Care Act has helped boost the gig economy by making health insurance available (and often subsidized) to gig workers over public exchanges, removing a big burden from organizations who use gig workers. According to Wired, 82 percent of gig workers had health coverage in 2015, compared to 64 percent in 2013.
The Freelancers Union
Another trend supporting the provision of benefits to gig workers is the Freelancers Union, an entity that pools the benefit needs of gig workers and negotiates with providers to gain better prices and conditions for buying health insurance, dental insurance, disability insurance and other benefits. The Freelancers Union, which represents some 50 million U.S. workers who freelance at least on an occasional basis, ultimately seeks to uncouple benefits like health insurance and unemployment insurance from long-term, full-time employment relationships.
New "Gig" Rules in Seattle and California
In Seattle, the city council has passed first-in-the-nation legislation that allows app-based drivers to bargain collectively with the organizations they work for. As labor news outlet In These Times explains, it's a "breakthrough for those advocating just working conditions in the modern economy ... the Seattle bargaining law recognizes that policies around better pay or mandated benefits alone won't solve matters. Since the problem originates from the overwhelming power and control held by Uber and its ilk, the solution is for workers to win a voice" at the bargaining table. Once gig workers organize, benefits will follow (the thinking goes).
Just weeks after the Seattle law, a California legislator introduced the California 1099 Self-Organizing Act, which would have a similar impact and, if passed, allow, gig workers (not just drivers) to bargain collectively.
Former Department of Labor Secretary Robert Rubin's proposal, expressed fully on Alternet, is to create a new legal status for some gig workers, making them like "dependent workers" who have a right to benefits. As the Rubin proposal explains it, "whatever party — contractor, client, customer, agent, or intermediary — pays more than half of someone's income, or provides more than half their working hours, should be responsible for all the labor protections and insurance an employee is entitled to."
The dependent worker would have fewer benefits than a full-time employee, but more than a freelancer. Of course, implementing the rule would be problematic because organizations may have difficulties determining whether they're paying more than half of a gig worker's income, which also depends on the gig worker's other client relationships.
According to Medium, another portable benefits proposal, signed by a coalition of gig economy executives, labor leaders, venture capitalists, business people, academics and policy professionals, seeks to provide a "common ground for independent workers" by "delivering a stable and flexible safety net" for gig workers. Although the proposal lacks many specifics, it seems to adopt the public, collective and subsidy-based approach of the Affordable Care Act's public exchanges. As an article in the New York Times reports, the coalition members "raised the idea of centralized human resource platforms, essentially easier ways for workers to connect to vendors of insurance and other benefits."
HR leaders faced with hiring gig workers, and trying to craft a benefits strategy, should keep monitoring the fast-evolving regulatory and benefit-related trends happening in the gig economy. Whichever proposals for ensuring some level of benefits prevail, the gig economy isn't going anywhere, so you'll need to evolve your benefits strategy accordingly. Employers using gig workers should consult with their employment and legal counsel to make certain their gig worker strategy complies with all applicable laws.
Featured on SPARK
SIGN UP FOR THE SPARK NEWSLETTER