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The Gig Economy and Workers’ Rights

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What is important to most people when they think about their job? Comfort and happiness are big parts of it, but when it comes to practicality, the things people focus on are what the job provides: dental and health insurance, 401k, sick leave, social security, and worker’s compensation in the event of an injury. But the economy is in such a state that these benefits, which most people working full-time hours would accept as automatic, may not be there anymore.

What Is a Gig Economy?

There are a lot of names for it, actually; on-demand, sharing, freelance. Many companies are firing their full-time employees, and hiring them back as independent contractors to do the exact same work for a lower salary and no benefits. Merck, a large pharmaceutical company, did precisely this to 400 of its workers at their Philadelphia factory. So why is the “gig” economy growing?

Part of the reason is there are more avenues for extra income, particularly with ride-share services such as Uber and Lyft. Research shows that 81 percent of these company’s drivers work part time hours (fewer than 34 hours per week). In professions such as these where the turnover rate is high and there is always a plethora of available part-time workers, companies are feeling less pressure to actually provide for their most dedicated workers.

Another part of the reason is larger companies and corporations cutting back on expenses. The Bureau of Labor Statistics estimates that a company can reduce labor costs by as much as 30 percent, purely by not providing benefits. This is even higher for state and local government employers, at 36 percent. So if a company fires full-time workers and hires them back as “freelancers” for the exact same type and amount of work, they can save a lot of money.

How Does the Gig Economy Affect Worker’s Compensation?

It’s not just health benefits that are lost in a gig economy; the ability to hold employers accountable and be fairly compensated when you are injured on the job is severely hindered as well. If you are hurt on the job you could potentially sue the company, or be compensated for medical expenses; but of the lost wages for missed time at work, you may be out of luck there.

Businesses are not required to pay their freelancers or independent contractors any worker’s compensation. If you are injured on the job, you would be left to fend for your own medical bills and would not receive any lost wages. Until the law is adjusted to account for this shift in the economy and how more and more people are finding work, this will unfortunately never change.

There are some benefits to this type of economy; someone who works as an independent contractor can theoretically enjoy a little bit of extra freedom and flexibility in choosing their own hours. But should an injury happen while on the job, getting a worker’s compensation claim approved will be more difficult than it would be if they were considered a full-time employee.