Offering health, retirement, and workers’ compensation benefits to the varied gig workforce, while maintaining some affordability to the worker while also avoiding the 30 percent cost increase to businesses, has proven to be an extremely tall task. The situation gets even more complicated because gig businesses also need to be concerned that charges of worker misclassification could be supported by the offering of such benefits to their contractor workforce.
Of all the public policy debates surrounding the gig economy of late, one of the hottest topics has been “portable benefits” – the concept that gig economy workers should have flexible, portable benefits that they can take with them from job to job, or “gig to gig.” This push just got a major jumpstart that may turn out to be a game-changer.
There are obvious “benefits” to participating in the gig economy: Gig companies get to use as little or as much labor as they need. Gig workers are able to work at their chosen capacity. And customers get new products and services. But there are other “benefits” that are receiving more attention of late: “employee benefits.”
Should the legislative branch of the federal government focus its efforts on regulating the gig economy at the present time, or should they stick to bigger picture topics to occupy their time (such as healthcare or updating the federal tax code)? Should Congress step in and develop a system to provide employee benefits to gig workers? And the million dollar question: should our federal representatives take a stab at revising the independent contractor misclassification test to account for the changes in modern society brought about by the advent of gig work? Due to the growth and sheer breadth of the gig economy, these are but a few of the issues that need to be resolved.
Bloomberg BNA reporter Madison Alder has written an eye-opening article that suggests the possible repeal of the Affordable Care Act (ACA) could force many gig economy workers to abandon their freelance lifestyle and secure full-time work. Gig companies everywhere should read the piece and start planning for how this possible legislative action could impact their organizations.
Late last week, NPR aired a story discussing the governmental efforts to bring portable benefits to gig workers. You can read a transcript of the story or listen to it by clicking here. I was fortunate enough to have been interviewed by Yuki Noguchi for the story, discussing one of the biggest reasons most companies do not offer benefits to their workers benefits: “They don't want to have them categorized as ‘employees.’ Under the law, employees have more rights than independent contractors — for benefits, to unionize, and other worker protections.
Several weeks ago, we asked if the concept of portable benefits for gig economy workers was one step closer to reality, with rumors swirling of imminent federal legislation forthcoming. Well, this issue just took a big leap forward with the introduction of legislation by Senator Mark Warner (D-Virginia).
Today’s employment “Game of Life” looks very different than it used to. One of the biggest reasons: the gig economy is expanding at a rapid pace. Other factors include the fact that there are four generations competing for work and working together, while certain demographics, such as the number of single women in the workforce, are on the rise. Meanwhile, employees’ definitions of family and work/life balance are changing. Add all of these together and you have the perfect platform for the exploding sharing economy. Working in the gig “game” appeals to those interested in an alternative, more flexible, more relaxed lifestyle. According to the U.S. Bureau of Labor Statistics, gig workers like being in control, having flexibility, enjoy variety, and enjoy choosing work that they are passionate about. As a result of the growth of this area, employees’ workplace expectations are changing. So, too, should employers’ practices for utilizing and integrating such workers into their business model.
According to a great article by Tyrone Richardson in Bloomberg BNA, it appears that the concept of portable benefits for gig workers is a step closer to reality. Richardson reports that Congress is “seeking ways to fill the void of benefits offered to traditional employees,” especially given that sharing economy companies are often hesitant to offer any sort of benefits package to their workers for fear it will land them on the losing side of a misclassification battle. That has led Senator Mark Warner (D-Virginia) to craft a preliminary concept for a federal law that would assist local governments with funding and development of portable benefits for gig workers.
We’ve written before about a proposal in New York that would permit gig companies to pay into a benefit fund for workers allowing them freedom to develop portable benefits; now, Washington state is considering a similar concept. House Bill 2109, introduced in this legislative session, would take a giant leap by creating portable, prorated, universal benefits for workers in the sharing economy. Proposed by Washington state Rep. Jessyn Farrell (D), the bill would require sharing economy companies to contribute money toward a benefits system for independent contractors who work on their platforms. According to a report from the Pew Charitable trusts, she says the law would “maintain the flexibility employees and employers like about contingent work.”