Workers’ Compensation in a Gig Economy and What It Means for Workers

by | Published on Jul 29, 2019 | Workers Compensation

With the many conveniences offered by technology, an increasing number of jobs are coming under the gig economy. This employment model is adopted by large corporations as well as small businesses with a limited HR budget. Businesses prefer to outsource jobs as gigs to benefit from the lower operating costs and reduces expenses associated with providing benefits to the employee. Consequently, a number of workers in the gig economy are kept out of the workers’ compensation program as well. This is because such workers are classified as independent contractors who are required to manage their taxes and benefits. As a program that supports workers injured on the job, and provided on the basis of a detailed medical record analysis, workers’ comp is a virtual lifeline for many employees.

Though it is not easy to obtain workers’ compensation with all the rigorous scrutiny involved, a good lawyer with the support of a medical review company can extract the medical information that is so crucial to win such a case. It is unfortunate that gig workers fall outside the purview of workers’ compensation and such other benefits.

What is different about the current workforce? Jobs related to software are numerous now and they offer flexibility to the workforce apart from good pay. Examples of popular businesses in the gig economy with a number of workers are Airbnb, Uber, and Handy among others. They offer the required platform for a person to join and work in an environment wherein they are their own boss. These virtual jobs also allow workers to have multiple gigs based on their schedule. However, such jobs do not give the necessary financial protection.

Here’s a real-life example. Last year, The Philadelphia Inquirer reported the case of a 34-year-old bike messenger who in the midst of making a food delivery in Philadelphia was struck by car and killed. If he had been working for a company that categorized him as an employee, his family would have received workers’ compensation and therefore entitled to part of his wages. However, he was a contractor for a San Francisco-based on-demand delivery service. As such, he was not eligible for benefits such as health insurance, workers’ compensation or paid time off.

The legal protections an employee receives is different from that an independent contractor receives. The cost for an employer to utilize one type of worker over the other is also different. Gig workers also reduce the employer’s potential for legal liability in instances such as – the worker harms a customer, the worker gets hurt, or the employer discriminates against the worker. When employing gig workers, companies have less control over how the worker provides services to customers.

The gig economy may be poised for growth with advancements in technology and businesses looking to cut operating costs. It is important that companies identify ways to improve the protection and benefits of gig workers in the current, internet-based marketplace. There should be efforts at the government level also to provide more protection to workers in the gig economy.

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