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Your Gig Workers Want Benefits. Should You Offer Them?

Last December, when many of Google's temporary and contract workers demanded benefits and improved communication, it made not only the media take notice but a number of employers as well. They found themselves asking, in the face of a rise in the gig economy and a tight labor market if they too should be offering more benefits to make their 'gig workers' feel more valued and engaged.

Not All Gig Workers Are Created Equal

According to The Bureau of Labor Statistics' Contingent Worker Supplement just over 10 percent of U.S. workers take advantage of alternative work in some way, including temporary, on-call, contracted and freelance work.

In terms of access to employee benefits, gig workers fall into one of three groups:

  • Those who receive full benefits through a staffing firm or professional employer organization.
  • Those working with organizations, such as Uber, that offer gig workers the opportunity to pay for health and retirement benefits.
  • Independent contractors and freelancers who don't get traditional benefits from an employer and must find a way to fund their own healthcare protections.

Gig workers are more becoming disgruntled, as Google recently discovered, and often their top concern is not having access to the benefits that full-time employees enjoy. However, for employers to do so it can be a major legal minefield to navigate.

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This is because the U.S. government has drawn a line in the sand when it comes to how employees and contractors are treated. Cross that line, and face what can be stiff penalties.

Companies take great economic risks when they misclassify a worker as independent The IRS and Department of Labor will seek payroll taxes, income taxes, FICA [Federal Insurance Contributions Act] contributions, unemployment and disability insurance contributions, and levy penalties on top of it.

Providing employer-paid health care coverage for contingent workers risks appearing to treat these workers as employees and facing all these problems and penalties.

A Safer Alternative?

Employers can, however, provide access to health care coverage, as Uber is doing, by letting gig workers pay monthly premiums to take part in a group health plan, which is often less expensive than the cost of individual market coverage.

Even so, giving gig workers access to benefits can be a slippery slope, and experts advise that before they even consider offering benefits to gig workers – even if the employees pay for them – they should have all the legal ramifications checked out first.

Gig-Worker Bonuses

Bonuses are another way to motivate and reward gig workers. There is no reason that a company cannot offer bonuses to independent contractors, and they can even build them into the contract with the worker.

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Companies like Uber incentivize gig workers with bonuses for completing a set number of rides in a certain time period or earning higher fares during busy hours in specific areas. Bonuses can be offered, for example, for high-quality work, early delivery of a project and when a gig worker helps control costs. Clients are also free to provide gift cards, apparel and other forms of recognition to contractors.

Those Intangible Incentives

Employers can also offer gig workers training and certification assistance. This helps workers learn new skills they can use in other settings and with other clients.

Caution must still be exercised, however.

The more a worker looks and appears to be treated like an employee, the more likely federal and state agencies are to determine that they are an employee. Business cards, e-mail addresses, telephone extensions and even participation in company social events can play a role in that analysis, so even these should be utilized cautiously.

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