When choosing to be a gig worker rather than a traditionally employed employee, one of the compromises made is to forgo the protection and economic security that employee benefits provide. It’s currently difficult for workers in the US gig economy to receive traditional healthcare and retirement benefits. But this may change in the future, and technology can help.
The mechanisms to offer comprehensive benefits to gig economy workers don’t yet exist due to a number of factors, including IRS regulations that determine whether workers are independent contractors or employees entitled to the employer-paid share of FICA taxes. Additionally, insurance providers and corporations have yet to find a way to bring traditional offerings to non-traditional workers.
The US Labor Department has signaled that gig workers are likely contractors, which puts workers in a difficult position, as often they aren’t receiving the protection or benefits of a traditional employee. However, there have been recent rulings, like the case of Dynamex Operations West, that may reclassify these workers and entitle them to benefits in the future.
Is a benefits shift coming?
Since the inception of “employee benefits,” most workers have enjoyed a certain level of protection and economic security. Workers in the gig economy present companies with a conundrum regarding whether they should or can receive the same levels of protection and economic security as fully employed employees.
With the way the market is moving, public opinion and sentiment make it difficult for us to feel comfortable about asking gig workers to compromise on protection and economic security simply because they are looking to a non-traditional form of employment for greater job satisfaction. Employers are already starting to look for ways to support gig workers in a comparable way to the traditional workforce.
The big question now is how does the market – organizations leveraging gig workers and benefit vendors – evolve to provide benefits that are fit for purpose for all involved, resulting in protection and economic security for the fast growing gig economy.
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Technology as a solution
The benefits industry has experienced an explosion in using technology to improve all aspects – from administrative efficiency, to risk mitigation, to creating exceptional employee experiences. Organizations are incorporating technology to make it as easy as possible for employees to interact with their benefits wherever they are working. This is a great opportunity to engage gig workers who are generally not office-based, with the broader benefit initiatives that they have access to in the absence of traditional insured benefits.
With the rise of AI and disruptive technologies like blockchain, the individual insurance market could become more robust, providing increased quality and value for the gig economy workers. As the gig economy continues to grow, this could mean a large portion of the future workforce bypassing the group insurance market for their protection and security needs. In the same way that our housing or banking considerations are no longer tied to our employment like they were many moons ago in some countries – imagine your benefits following you from job to job.
There is a lot of uncertainty for gig economy workers right now when it comes to how they are classified and what benefits will be available for them in the future. As the work model shifts in the US, it’s important that all workers continue to have access to protection and economic security. Technology remains at the forefront of the future of employee benefits and companies need to take advantage of it to keep their gig economy workers happy in the short term. Meanwhile, the market as a whole needs to look at the potential of technology disrupting the benefits industry with gig workers at the heart of that.