How Uber Is Pushing Us to Answer the Challenges of the “Freelancer Economy”

Jul 10, 2015

While reviewing a client’s policy manual the other day, I asked whether the sick leave policy — which allows employees to use sick time to care for unwell family members — should more clearly define the word “family.”

The client told me “no.” She said family structures have evolved so much in recent years it would be better to leave the meaning open. I didn’t disagree.

The exchange is an example of how employers are slowly but surely coming around to the idea that company benefits need to serve more than the “traditional” family unit to be of maximum value to the employee, and this brings to mind another reality that needs addressing — the very landscape of traditional workers is quickly changing.

When will more employers begin to address that?

Independent contractor or employee? Wrong question

Recently, a Harvard Business Review article declared, We Need to Move Beyond the Employee vs. Contractor Debate, and again, I don’t disagree.

In the article, author John Boudreau referenced the recent California court decision that at least one Uber driver is an employee, not a contractor, and then declared:

In a world of constant change, we should be asking not simply whether a worker should be categorized as an employee or a contractor but whether regular full-time employment is really the only way to deliver high pay and marketable skills. Shouldn’t we be developing more options outside of traditional employment that do just that?”

Every HR professional who knows anything knows that all independent contractors aren’t created equal.

I’ve unfortunately worked in organizations where the designation was unquestionably abused, sometimes with the consent of the pseudo-contractor, who wanted the benefits of self-employment and to hell with the true nature of the relationship. One such fake contractor would routinely and proudly introduce herself to new hires as the “Most senior XYZ employee.”

Other times, the “contractor” was completely naïve and simply accepted what was being offered.

Not your father’s independent contractor

Raise your hand if you think your coworker Betty Sue’s 17-year-old niece Nadine, who’s working through the summer as a file clerk in Procurement, is an “independent contractor” as defined by the IRS. Come on.

For this reason and because:

  • Whether through necessity or design, alternative work arrangements are becoming more the norm;
  • Employers are increasingly relying on supplemental labor to meet their objectives;
  • Younger workers in particular are becoming more comfortable with the idea of  “cobbling together” a viable career from multiple income streams.

One has to begin to wonder, along with Boudreau, when we’re going to start taking a more 21st century look at labor classifications? At this point in the game, “full-time regular employee” as the standard by which every other classification gets judged seems a little old fashioned and a little too mired in old ways of thinking.

More protections and benefits needed?

According to one report, 34 percent of the total national workforce “engaged in supplemental, temporary, or project- or contract-based work in the past 12 months.”

The Tax Foundation, citing data from the IRS, claims there are 23 million sole proprietorships in the United States. And Forbes recently reported that 40 percent of workers have “contingent” jobs.

Is it past time to consider more employee-like legal protections for independent contractors? Some say the answer is definitely yes.

Regardless of your answer today, I’m guessing we’ll be reviewing this question and others like it as the so called “freelancer economy” inevitably continues to takes hold.