Navigating the Gig Economy: Employer Considerations

The gig economy has created many opportunities for companies to utilize the cost savings, efficiency, and availability of an on-demand workforce. The growth of the gig economy isn’t predicted to slow down any time soon. In fact, If the gig economy keeps growing at its current rate, more than 50% of the US workforce will participate in it by 2027. As new gig economy options to engage employees to emerge, here are some areas of concern that employers may want to consider.

Employee or Independent Contractor?

One of the top questions an employer has is whether or not an individual should be classified as a W2 employee or independent contractor. In both classifications, misclassifying employees as contractors or vice versa can have serious consequences for employers. You must ensure that you are legally compliant with different state and federal tax laws when dealing with gig workers – whether they are W2 employees or ICs.

Workers’ Compensation

Laws vary, but most states have strict rules requiring employers to provide workers’ compensation coverage. But, there is a loophole. The gig economy refers to employment that is outside a permanent job, often through short term engagements, and without labor protections such as unemployment compensation, workers’ compensation, and a plethora of so-called wage and hour provisions such as overtime. While some app-based temporary staffing models may suggest that workers’ compensation coverage isn’t provided, it might be helpful to verify coverage as lawmakers continue to take notice and investigate ways to regulate workers and companies in this growing sector.

Other Considerations for the Gig Economy?

In the age of contingent and gig economy work, creating a cohesive culture is hard but essential to your company.  Similarly, onboarding is your employee’s first experience with your company. Ensuring a positive onboarding experience is crucial. Someone who has a bad experience is likely to share it with others, damaging future recruitment. Another item to consider, if your company hires gig workers frequently or is planning an influx of workers, how will you payroll them? Does your HR and payroll team have the bandwidth to take on these new employees?

How to Protect Your Company and Keep Your Peace of Mind

The best way to ensure compliance while utilizing an on-demand, gig economy workforce? This is where employer of record (EOR) services, particularly those that specialize in high-hazard payrolling, can step in and provide relief. An EOR takes over as an employer for tax purposes. You can use an EOR to payroll your workers and alleviate burdens such as payroll processing and funding, tax deposits and filings, I-9 and E-Verify compliance, unemployment insurance, employment contracts and paperwork, and even worker’s compensation.

You retain control over business operations and responsibility for workplace safety guidelines. Meanwhile, the EOR handles all things compliance and HR administration tasks.


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