February 1, 2018

The Rise of the Gig Economy

In 2005, the Bureau of Labor Statistics (BLS) estimated that 2-4% of the workforce was part of the gig economy, a labor force that, with no exact definition, is frequently characterized by an environment of short-term jobs or temporary contracts.

However, the BLS estimates that between 2003 and 2013, at least one million employees joined the gig economy, and the National Bureau of Economic Research found that in 2015, 15.8% of American workers were employed within the gig economy. The Government Accountability Office estimated that, depending on the definition of gig work, as many as 40% of American workers are part of the gig economy.

Gig work can include traditional labor such as construction, painting and carpentry, along with transportation jobs and ridesharing services, and even positions at temp agencies and contract-based IT services. While positions vary greatly, a common feature of gig employment is that, due to the temporary nature, employees are often classified as independent contractors, depriving them of employee benefits, including workers' compensation.

In fact, in the case of Lawson v Grubhub Inc., a U.S. District Court ruled that independent drivers were not company employees, and were not entitled to legal rights of employment such as minimum wage or workers' compensation.

But as the gig economy continues to grow, employees' demands for benefits has grown as well, and will likely trigger industry and legislative action in the near future. This changing landscape, partially attributed to the recession, may require a new approach to workers' compensation as traditional practices were not designed for work of this nature.

For example, many have argued that portable benefits should follow employees, allowing various employers to pay partial premiums. In Wisconsin, a Third District Court of Appeals recently declared that temporary workers have the right to either file suit against their employers or claim workers' compensation benefits if they are injured on the job. Meanwhile, the City of Seattle gave taxi and ride-sharing drivers the ability to unionize and negotiate their benefits with employers.

Going a step further, Washington State recently introduced House Bill 2812, which aims to provide workers in the gig economy access to workers' compensation and other benefits, while New York City, home to 1.5 million freelance workers, created a portable benefits taskforce to study creative options to help contract workers gain access to benefits. New York officials are even hopeful that such programs can be modeled after the Black Car Fund, which adds a surcharge to all cab rides in order to fund health insurance, workers' compensation, and other benefits for cab drivers.

However, there are few if any solid models for what workers' compensation would look like in the face of the gig economy. Unanswered questions include who would manage care, how benefits would be brokered, what practices would be best for different industries, and how spending can best be managed.

Regardless of the actions taken to assist the millions of gig employees, this trend will not only eventually add more patients into the workers' compensation system, but it will likely introduce new types of claims and claim questions that will require significant research to understand. It is simply a matter of time as the data continues to show how big the gig economy has become.

In 2016, Intuit, the owners of Turbo Tax, estimated that 34% of working Americans worked on-demand gig jobs, and they expect that number to hit 43% by 2020, while a poll conducted by NPR and The Marist Poll found that one in five jobs is for contract work, with estimates that contract work will make up half the workforce in a decade.

In 2017, the BLS finished collecting new data on the gig economy, and while no word yet has been announced if and when that data will be assembled into a report, it is very likely that more data will highlight the significance of this growing trend.

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