Why do Benefits Matter in a Flourishing Gig Economy? | DCR Workforce Blog

Why do Benefits Matter in a Flourishing Gig Economy?

In an earlier post titled “Presidential Candidates’ Views on the Gig Economy”, we discussed how the presidential candidate, Hillary Clinton, believes that the gig economy is creating exciting opportunities and unleashing innovation. She had also committed herself to crack down on worker misclassification and lack of workplace protections to workers. In this flourishing gig economy, are the workers as happy as the businesses that use them to gain better efficiencies and flexibility and thereby, higher revenues? Is the gig economy helping workers and employers get the best out of the work arrangement, or are they beset with problems that need resolution as early as possible?

Workers without benefits

The economy smartly sidesteps the highly contentious issues of worker protections and, more importantly, the benefits that have always been a bone of contention between workers and the owners of capital and their management teams. Even as the Bureau of Labor Statistics is gearing up for a reckoning of the gig economy, researchers estimate that the number of Americans working as independent professionals at 50 million plus and rising. The issue of a safety net for them becomes a major issue when you consider that these micro-entrepreneurs are a part of the gig economy, which offers no benefits to a worker and expects the worker to plan for any bleak periods of unemployment, or inaction following a workplace injury without workplace compensation and to own the responsibility to secure his or her own future through wise investments and reliable retirement plans.

The social safety net which is assured for workers classified as W-2, full employment model to be covered by the different laws governing minimum wage, overtime pay, unemployment insurance, workers’ compensation insurance, paid vacation time, family medical leave or sick leave and disability protections. Independent workers are also responsible for their own healthcare, development needs through training, marketing their services and monetizing them efficiently. These freelancing gig workers will also need to plan for and file their own taxes and organize their working tools and work spaces. These demands prove a daunting prospect to many who would like to take up freelance gig work.

When it comes to addressing the needs of workers in the modern day workforce, the continually evolving employment and labor laws find themselves falling short! While the policymakers themselves are looking at the job market and employer-employee relations to determine the definition of an employee against an independent contractor as per regulatory requirements. Even so, the laws are not aligned with each other at federal, state and local levels and almost every law needs to catch up to ensure that every one of the workers is protected by keeping up with the changing definitions of employer-employee relationships and transcending the worker classification systems followed.

Misclassification troubles for companies

Workers are not the only ones suffering. When companies classify workers as independent contractors, they are practically under the threat of facing misclassification charges which involve massive penalties, possibility of class action lawsuits and negative publicity which hurts their brand as employers (and often with their customers), hurts their hiring efforts, impedes their growth plans and results in lost productivity and hurts revenue in the long term. These uncertainties usually make workers avoid the use of independent contractors as too risky when they are unsure of how to mitigate the risk.

But all is not lost! Watch this space as we keep bringing you updates on how these opposing needs of the government, employers and workers will get organized to forge an acceptable solution and allow this work arrangement to meet the needs of all parties.

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The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Danielle is instrumental in handling DCR’s human resources functions including benefits, worker’s compensation, unemployment claims and FMLA cases. In her downtime, she loves live music, books and the great outdoors.