Attempts to Make the “Gig” Economy Work Fall Short

Gig Economy
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The “new way to work” is in an all-out battle with government regulators. Uber and Lyft, among other like companies, have been hauled into court to challenge their assertions that the people providing services under their name are independent contractors. Others people are trying to make it work. I came across an article describing the “Good Work” movement. Unfortunately, in my assessment, this attempt falls short.

Government’s Argument

The US Department of Labor and the IRS have joined forces to clamp down on what they call the “misclassification” of workers. Their definitions of who is an employee and who is an independent contractor have been around for decades. The problem as they see it is that employers choose to ignore these definitions and subsequently deny employees the opportunity for the rights and benefits they would be entitled to if properly classified. What they say under their breath is that it is also harder to collect taxes from individuals than it is from companies.

They have constructed a “Memorandum of Understanding” that forms an agreement to cooperate in the prosecution of misclassification. They are enlisting state and municipal jurisdictions to sign the MOU to also pursue and prosecute misclassification.

Other Interested Parties

There are other parties interested in the clamp down on misclassification. State workers’ comp boards and insurance divisions are also interested because of the underfunding that might occur due to lack of tax collection from independent contractors.

Unions also feel they have a stake in employee misclassification. The National Labor Relations Act does not allow non-employees to organize. So there is a reason for unions to argue against independent contractors. Additionally there is the beginning of a movement on local levels to allow “unionization” of independent contractors. “Seattle is the first city in the U.S. to establish a framework for contract drivers to organize and to bargain for agreements on issues such as pay and working conditions” according to an article in the Seattle Times.

“Good to Work”

The “Good to Work” movement says it is trying to rescue the “gig” workers by getting companies to pledge to a code of ethics that includes eight touchstones:

  • Safety
  • Stability and flexibility
  • Transparency
  • Shared prosperity
  • A livable wage
  • Inclusion and input
  • Support and connection
  • Growth and development

They tout as an example the office management and cleaning company Managed by Q which offers a bonus program, base benefits including a 401(k), and stock options. The CEO and co-founder of Managed by Q, Dan Teran, says:

The way we work in the United States is undergoing a fundamental shift, but our current social structures, programs and policies have not kept pace with the realities of our 21st-century workforce. As leaders in this space, we’re in a position to help shape the future of work, and with that comes the responsibility to ensure the jobs we’re creating are good ones.” (Source: How the Good Work Movement Is Offering Security for Gig Economy Workers by Daniel Matthew)

Teran’s sentiment is a noble one and I agree with him, however, his efforts fall short of creating a new environment for independent contractors. By offering benefits and bonuses his company has redefined his workers as employees by all the standards of the IRS and USDOL.

A Better Solution?

I think a better solution would be an association of independent contractors that had defined standards, offered advice on working effectively as an IC, and offered benefits similar to what a Chamber of Commerce or even an AARP might offer to its members. This would offer the security and guidance perhaps that ICs seek. Companies could insure their correct position by contracting only with independent contractors who could show they were members of such an association.

There is the idea. Now all we need is an entrepreneur interested in creating the association of independent contractors. Can we be future ready?

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