Gig Economy Workers and How to Protect Them Financially

Gig Economy Workers and How to Protect Them Financially Workers’ comp benefits paid on the basis of a medical claims review and other processes do not cover gig workers.

Here’s how this group can be protected.

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Workers engaged in jobs that are part of the gig economy are not eligible for workers’ compensation benefits. Workers’ comp insurance is a major lifeline for workers injured on the job or those who develop some work-related illness. The important thing is that the benefits are paid only to deserving employees on the basis of processes such as medical claims review and medical record review. Organizations are increasingly outsourcing jobs as gigs to benefit from lower operating costs and to reduce expenses associated with providing workers’ comp benefits. Almost all aspects of business can be outsourced to gig workers. The internet allows even those activities that require an onsite presence to be performed remotely. The gig economy is appealing not only to employers but also to workers because of the flexibility it allows them. They can work from home and workers can even have multiple gigs based on their schedule. Gig workers are independent contractors who have to manage their taxes and benefits.

Workers’ Compensation and Gig Workers While flexibility and convenience make gig jobs an attractive option, these types of jobs have their downside as well. These jobs may be low-paid and the workers are not covered by workers’ comp schemes. Moreover, the difference between the cost of a regular fulltime employee with benefits and a gig worker can be 30% or more, according to studies.

The important question is whether gig economy workers can be covered under workers’ compensation systems. A July 2018 article posted in theconversation.com offers some suggestions. ➢ Workers’ compensation laws and responsibilities could be redefined to include those who work under agency arrangements and to require the intermediaries or agencies to pay premiums. If a platform economy firm supplies a worker who delivers a passenger or a meal or undertakes some other task for a third party, it would pay a workers’ comp premium to cover that worker based on a percentage of their take. These intermediary organizations gain their income by taking a proportion of the income paid to the worker by the client, i.e. they take a

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“commission.” The premiums would be set as a proportion of this commission.

Since the premiums cover outlays, the net cost to the insurers themselves would be zero. ➢ Such workers’ comp reforms would exclude labor hire businesses where these employ the gig worker as well as employees of firms that engage contractors. If other exemptions are required, these could be made via regulation. ➢ A program should be in place to help with the return to work of injured gig workers. ➢ Gig workers as well as platform firms should be made aware of any new reforms made, rights and responsibilities. ➢ State governments can act in this regard, though it would fundamentally require national attention.

Changes in U.S. Law May Help In her enlightening post in Harvard Business Review, Diane Mulcahy speaks about the need for the U.S. Law to change to support the gig economy and the self-employed. She says that a labor market that supports everyone, extending the benefits and protections given to full-time workers to all employees, is the need of the day. She recommends three policy changes that could help in this regard. ➢ Do away with the self-employment tax: Self-employed people have to pay the employee side of Medicare, and Social Security taxes just as other employees, as well as the employer side. Everyone who works independently (whether by choice, full-time, part-time of via a side gig) has to pay a tax of 15.3%.

Independent contractors end up paying double the Medicare and Social Security taxes that full-time employees do. One solution could be to require employers to pay the employer side of Medicare and Social Security taxes for all workers they hire, not just employees. Or, the tax could be completely eliminated and the revenue replaced by reducing the unrestrained and uncapped federal government tax subsidies on employer-provided health insurance.

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➢ Extend health insurance tax breaks to everyone who works: Though health insurance is a critical benefit to all workers, only full-time employees in a full time job with one employer benefit from tax breaks the federal government allows employer=provided health insurance. ➢ Extend protections to all workers: For self-employed workers, income protection and protection from harassment and discrimination are vital. Self-employed and independent workers can be paid a percentage of their former income for a defined period of time just as unemployment insurance does for employees. All workers must be provided protection against discrimination and harassment.

As providers of medical record review services for workers’ compensation attorneys, we understand how vital it is for all workers in an organization to be protected. The present day workforce is increasingly entrepreneurial and independent. New policies must be implemented to provide workers in the gig economy with access to benefits, and new institutions are needed to deliver those benefits. Ideally, the benefits should be attached to individual workers rather than their employees, according to experts in the field. They should apply to all workers and all forms of employment.

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918-221-7791