Gig Workers VS Independent Contractors

Many companies require the services of outside personnel to complete jobs and tasks, or to get the job done. Traditionally, such personnel have been known as independent contractors. The gig industry, including companies such as Uber and Lyft, provide different types of services from similar types of service providers. In today's economy, it has become necessary to define contractors and gig workers, subsequently distinguishing between the two. Some light has been shed upon the issue thanks to the Federal Government, which will help employers make some important financial decisions that could adversely affect their bottom line if left unchecked.

Gig workers and Independent Contractors

An independent contractor works for a client without being the client’s employee. They provide a service to a business, allowing them a certain amount of autonomy from the requirements and some of the expectations of being regular employees. At first glance, gig workers are the same as independent contractors. They are completing tasks for a larger entity. However, their responsibilities tend to lie outside the traditional employee/employer and even independent contractor/employer relationships. In light of recent legal cases involving companies, such as Lyft, regarding employee benefits and rights, it behooves employers to know the difference between the two classifications and set appropriate policy. One such legal case has been decided by the Federal government.

In a recent decision by the Federal government, the definition of gig workers and their distinction between independent contractors has been made a bit clearer. The recent decision handed down by the US Labor Department, deciding on the status of a service provider at a particular company, helps distinguish between gig workers and independent contractors.

In a letter dated April 29, 2019, Labor Department’s acting administrator Keith E. Sonderling said that the service provider’s status depends on the level of the employer’s control over the service provider; how permanent the relationship is between the service provider and the potential employee; how much the service provider has invested in facilities, equipment, or helpers; level of initiative, skill, foresight, or judgment is needed to utilize the service provider’s services; service provider’s benefit or risk, respectively, for profit or loss; and to what extent is the service provider’s services integrated into the business of the potential employer. Distinguishing between the two is the first step. Next, employers must weigh the benefits of hiring independent contractors or gig workers based on potentially costly criteria.

What Does it Mean?

So, the difference between gig workers and contract workers will determine whether or not the service providers will be considered employees, affecting their eligibility for such perks as benefits and whether or not the employers will have to pay taxes and their share of the employees’ social security benefits.

Hiring independent contractors can save an employer on such things as benefits, but some other issues arise when the employee has to reclassify their gig workers as employees. Will the employer have to devise rules only gig workers have to follow? If gig workers are considered employees, where do employers draw the line, or is there a line between gig workers and full-time and even part-time employees? Do they get the same rights as regular employees? Chances are, depending on the type of service, the gig worker will not have an application on file, even though they may technically be more tethered to the company than independent contractors.

Many companies require the services of outside personnel to complete jobs and tasks. Traditionally, such personnel has been known as independent contractors. The gig industry, including companies such as Uber and Lyft, provide different types of services from similar types of service providers. It has become necessary to define contractors and gig workers, and distinguish between the two. Some light has been shed upon the issue thanks to the Federal Government. This helps employers make some important financial decisions that could adversely affect their bottom line.

Sometimes hiring workers outside the company structure is necessary to complete jobs and various tasks. Although traditionally this has been done through the hiring of independent contractors, that role has been satisfied through the hiring of a new kind of service provider known as the gig worker. Because the distinction between the two types of service providers can mean the difference between paying and not paying such things as benefits, employers must make the distinction between independent contractors and gig workers. With the help of the US Labor Department, this distinction has been made a bit clearer. Whether or not it is as actual employees, gig workers provide assistance that require some sort of recognition that just may save companies some money.