4 Questions About Gig Workers That Make Companies Squirm

As gig workers become more prevalent, companies must increasingly consider — and often reconsider — all sorts of questions related to employing such individuals. Here are four of the most contentious:

1. Are gig workers actually gig workers?

This may seem like an odd question, but before you can create policies around employing independent contractors, it’s important to recognize whether a worker is, indeed, an independent contractor. This issue is currently being debated most prominently in California, as gig-economy companies wrestle with the state’s AB5 law, which has redefined the definition of an independent contractor.

The law is an example of how we’re dealing with the consequences of both workers and employers seeking the advantages of gig work but not the disadvantages.  

For those individuals who need the protections of a traditional job but aren’t really out to create a genuine business with many customers and true risk of profit or loss, AB5 is probably a positive. I say “probably” because regulations of this sort tend to reduce the overall utilization of freelance talent, so some current gig workers are likely to be left out. But for others, it means new protections — though perhaps with some unintended consequences such as buyers shutting down entire threads of gig work within their organization. Meanwhile many gig workers won’t be materially affected.

2. Should gig workers get the same benefits as full-time employees? 

We need to remember a principle that is still the basis for gig-work regulation: Companies engage talent either through employment of individuals or through contracts with other companies. Gig workers are supposed to be bona-fide companies; separate and independent.  

With this in mind, the logically correct answer is, of course they should not get the same benefits as full-time employees.

For example, if you hire a roofing company, you don’t arrange medical benefits for workers just for the week they are on the job. But try telling that to somebody who is lucky to clear $12 an hour after expenses, is contracted to the same organization week after week, and is probably in this “business” only because there isn’t a better situation available to them.  

 This predicament is a symptom of our government having offloaded to employers the obligation to provide critical benefits. We’re going to have this problem as long as employment is the necessary delivery vehicle for basic worker protections. 

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3. Is there a danger in taking on more gig workers at the expense of full-time workers? 

Yes. As companies replace employees with gig workers, especially in borderline situations, they enlarge the holes in the social safety net and accelerate the day when new one-size-fits-all rules are imposed. Moreover, independent contractors are a huge component of the U.S. labor force, but practically all of the political dialogue is limited to conventional employment or a handful of situations that are not representative of how most gig work takes place.

The larger gig worker population — including workers who are indisputably running an independent business -— has legitimate needs that aren’t being discussed, such as protection against inappropriate behaviors and outrageous payment terms.

4. Is it really true that gig workers value flexibility most in their roles?

As you move up the talent and compensation continuum, there is an increasing interest in flexible hours, keeping skills current, and optimizing the tradeoff between income and other personal ambitions. Lower-paid gig workers can’t afford to prioritize those things.

Lower-paid and relatively unskilled workers most likely simply regard gig work as a necessary alternative to conventional employment. These workers tend to be clustered in a few industries such as delivery and driving work. They most want a reliable income stream, preferably with benefits. For those working full-time, they want all the work they can handle; for those supplementing another income source, they need an accommodating work schedule.

Ultimately, all work tends to involve some tradeoff between flexibility, steadiness of income, and whether the parties are prioritizing the short run or the long run. And so when talent is scarce and differentiated, the worker enjoys more control over the circumstances of the engagement. This is true for both conventional employment and for gig work. In either situation, though, there doesn’t seem to be all that many opportunities that offer full-time, yet flexible, work hours. However, the prevalence of this does seem to be increasing as we morph toward more technology and greater acceptance of remote work.

Gary Pearce is the chief risk architect at Aclaimant, an insight-driven workflow solution for safety and risk management. In his role, Gary is engaged in product development, customer consulting, and business development, as well as launching the Aclaimant Knowledge Network, an educational forum that provides world-class risk insight to Aclaimant customers.
 
Gary recently retired from Kelly Services, where, as chief risk, privacy and compliance officer, he reported to the CEO and served as leader of the firm’s risk management functions, including the corporate Enterprise Risk Management program. Prior to joining Kelly Services, he was the risk financing manager at Trinity Health and a vice president at Marsh.
 
Gary is a past president of the RIMS Detroit Chapter. He holds the CPCU and ARM designations, and holds an MBA from the Ross School of Business at the University of Michigan.

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