“Gig Economy” and Worker Classification

Sen. Mark Warner (D-VA) is focusing attention on the new sharing economy. (An article on the sharing economy can be found in Big Ideas for Small Business®, June 2015.) He estimates that about one-third of U.S. workers now participate in this on-demand economy through Uber, Airbnb, TaskRabbit, and other venues. To paraphrase him, people are monetizing their extra resources and free time.

He believes that we need to learn more about this sector by getting better data and then addressing the issues and concerns of workers in this sector. Getting this information may be challenging, as suggested in a Fusion article last summer. The reason: people may not be reporting this income and so are unwilling to share their gig information. Many gig workers have full-time jobs and are merely supplementing their income through this underground economy.

Safety nets for workers

Self-employed individuals include a wide array of workers, including unincorporated professionals, freelancers, and independent contractors. As self-employed business owners know, there is no government safety net when things go wrong. There is no unemployment insurance, workers’ compensation, or government-provided short-term disability.

Workers in the sharing economy are currently treated as self-employed individuals, although some workers are challenging this classification in an attempt to garner employee benefits and rights. For example, this past summer a former Uber driver was classified as an employee by the California Employment Development Department.

What is the solution for so-called “gig workers”?

Here are some of my questions:

  • Should gig workers be reclassified as employees in Uber-like arrangements?
  • Should gig workers have the choice of classification as an employee or independent contractor, or should the government make determinations?
  • Should there be a new worker classification for gig workers, with new rights and benefits created specifically for the class?
  • Can the government offer voluntary protections, such as allowing gig workers to opt in for workers’ compensation and short-term disability?
  • Do gig workers with full-time jobs really need any additional benefits and protections for their gig work?

I don’t have the answers, but, as Sen. Warner suggests, it’s time to have a conversation about this.

NOTE: This blog post was originally published by Barbara Weltman and is used by 1-800Accountant with permission.

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