The Gig Economy

A recent article by Roy Maurer entitled “How Many Gig Workers Are There?” discusses the difficulties with determining the number of gig workers in the United States. According to the article, the problem begins with defining what a Gig Worker is.

“No clear consensus currently exists on what constitutes gig work,” said Mary Allard, a division chief in the BLS Office of Employment and Unemployment Statistics in Washington, D.C. “Most definitions include many self-employed workers, temporary workers and independent contractors. Many definitions also include people who do gig work as their primary source of income, as well as employed people who supplement their earnings with gig work.”

Why is this important? The discussion over who should be counted as gig workers comes as lawmakers are debating measures to address the issue and update tax and employment regulations for the gig economy, particularly around worker classification (i.e. employee, independent contractor, exempt or nonexempt from wage and hour regulations) and access to benefits.

The classification of workers has been an issue for a very long time.  I have never been comfortable with the application of the government “tests” that have applied to this matter as an experienced HR professional, and have had significant difficulty explaining them to management.

The Fair Labor Standards Act (FLSA), administered by the Wage and Hour Division of the US Department of Labor (see my previous blog explaining the role of the FLSA in the workplace) has been updated infrequently since its inception in the Roosevelt era. Changes have been proposed to update these regulations as recently as just prior to the Trump presidency, but have been stuck in the ongoing legislative quagmire. In addition, the IRS has made changes to their original 21 factor test for determining employee status, which impacts the requirement for payroll tax withholding, in an attempt to simplify the test, falling short in my opinion.

The fact is that the role of workers in the workplace is changing and the regulations which govern this relationship are way overdue for reexamination.  A major overhaul seems to be called for rather than patching up what currently exists. We need to ask whether overtime regulations and employment classifications are even needed in today’s workplace, and if they still are, how can this be simplified so that it is clear what is required.

Published by Dave the HR Compliance Guy

Human Resource and legal professional specializing in HR compliance advisory services

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