Even though so-called “gig workers” are not generally entitled to the same benefits and perks as regular employees, as contingent labor makes up a greater portion of the workforce, many employers are concerned about how they will provide benefits like health insurance or retirement savings plans to this new and different type of worker, for whom many existing benefit systems and regulations do not account. Companies like Uber and Care.com, whose business models depend on drivers or caregivers being classified as independent contractors rather than employees, have been experimenting since last year with ways to deliver retirement and health insurance benefits to those who are employed through their platforms, but not by them.
This issue is also entering discussions about public policy: Last September, the online handicraft retailer Etsy published a proposal imagining a new form of “social safety net” for gig workers, and recommending a series of policy changes to that end, and since last year, New York State has been developing legislation that would establish a model for gig economy workers to receive portable benefits while remaining independent contractors under state law. In the meantime, Mark Feffer at SHRM offers employers some suggestions on how to give contingent workers benefits without running the risk of causing them to be reclassified as full-time employees:
Experts say there are two central elements to fashioning a benefits package that will attract the best gig workers with minimal risk to the company:
- First, understand that independents consider more than money when deciding whether or not to take an assignment.
- Second, make sure whatever you offer is portable, something the worker can access even after his or her assignment has ended.
For example, independent workers can have a hard time obtaining health insurance, said Yvette Cameron, global vice president of strategy for SAP SuccessFactors in Denver, who has been closely studying the gig economy. However, offering coverage under a company’s health plan seriously risks having the worker be seen as a full-time employee.
There are a lot of assumptions out there about the pros and cons of gig work and why workers are (or are not) engaged in it. In the latest issue of HRBP Quarterly, CEB’s magazine for HR business partners, my colleague Becca Brown explains the four different types of contingent workers who comprise the gig economy. According to our research, 30 percent of those who work in the gig economy do so out of necessity, not by choice. (CEB Corporate Leadership Council members can read the full article here.)
Those who “gig” for different reasons and with different goals will not necessarily have the same needs. That has critical implications for how organizations should think about the benefits they offer gig workers. A one-size-fits-all approach won’t work for all organizations. Instead, they need to gain a more specific understanding of who their gig workers are and what motivates them before they make decisions about benefits.