Much has been made of the so-called gig economy in recent years — workers enjoy the flexibility of setting their own hours, and many gig workers bring in an income that’s significantly higher than the federal minimum wage. But those perks come with a price, and many policymakers and workers’ advocates are raising concerns about workplace protections in the gig economy.
By classifying workers as independent contractors rather than employees, a company effectively distances itself from those workers, both financially and socially. The workplace protections that our predecessors fought so hard for are effectively being wiped out as more and more companies choose to take the cheaper, easier route of classifying workers as independent contractors rather than traditional employees. Independent contractors are not entitled to sick leave, worker’s compensation, overtime pay, or healthcare.
Ensuring Workplace Protections for Gig Workers
State lawmakers have begun to take notice of the lack of workplace protections afforded to gig workers, and many are fighting for policy changes for those independent contractors. For example, the California legislature passed a bill known as AB5 in September 2019, which aims to convert hundreds of thousands of contract workers in the state to employee status, especially within the rideshare industry. While AB5 still needs Governor Gavin Newsom’s signature to officially become law, both Lyft and Uber have decried the bill as detrimental to their business model.
Under AB5, if an independent contractor’s duties are core to a company’s business and works more than 30 hours per week, he or she must be classified as a company employee. And full-time employees are eligible for benefits, which is an important consideration for those contractors who drive for a living. In fact, driving is one of the most dangerous jobs in America, with 18.3 reported fatalities per 100,000 workers. Therefore, re-classifying drivers as employees rather than contractors can help keep those workers safe and better protected.
Embracing All Aspects of the Gig Economy
According to Business News Daily, nearly 16 percent of the American workforce was employed within the gig economy in 2015. That number represents a nearly 6 percent increase in the decade from 2005 to 2015, and the gig economy shows no signs of slowing down. Gig workers are the most prominent in Florida, California, and New York, and more gig workers apply for delivery jobs than any other type of work. That includes delivery via personal vehicle or bicycle, and staying safe while on the job is the sole responsibility of the gig worker, rather than the company he or she contracts for.
Rideshare companies, especially Uber and Lyft, are widely touted as innovative juggernauts that helped transform the traditional taxi industry, and a big part of their success is the money saved by classifying workers as contractors rather than employees. Ohio University reports that, in 2016, Uber alone was valued at $62.5 billion. Legislation such as AB5 is undermining that significant profit margin, and it remains to be seen how ridesharing and other companies that comprise the backbone of the gig economy will respond to continued worker protection efforts.
For now, it’s easy to see how Lyft and Uber focus on improving customer experience while leaving independent contractors behind. Recently, these top rideshare companies have partnered with media outlets including Pandora and the Sundance Film Festival, and updated software to make tipping options more accessible. Yet Uber and Lyft are reluctant to provide benefits to their loyal base of drivers, an oversight that indicates that the gig economy as a whole favors profits over worker protection.
The Inherent Dangers of Working as an “Independent Contractor”
As previously mentioned, driving is one of the most dangerous occupations in the U.S. Along with significant fatality rates, drivers are also subject to injury while on the job. Common types of car accident injuries include whiplash, head injuries, internal bleeding, and post-traumatic stress disorder (PTSD). Unfortunately for contract workers who drive for a living, any injuries or property damage incurred on the job are the sole responsibility of the contractor rather than the company.
The Economic Policy Institute (EPI) recommends that self-employed drivers obtain their own workers’ compensation and insurance coverage to better protect themselves. However, those benefits will ultimately impact the final take-home pay among contract workers, often brining hourly wages well below the federal minimum. For this reason, some independent contractors will eschew paying for benefits out of their own pocket in order to ensure they make a living wage.
That mindset is detrimental to rideshare workers and customers alike. Even the most diligent and safe drivers are at risk of collision every time they get behind the wheel, and issues such as driver fatigue can compound those chances. Those who are behind the wheel for more than six hours, which is common among rideshare drivers, are at greatest risk of getting into a roadway accident. In fact, the risk of accident increases by 8.3 percent when a driver is fatigued.
Contract Workers: Rights and Responsibilities
No matter if an independent contractor works in the rideshare, housekeeping, or food delivery industries, he or she isn’t afforded the same workplace protections as a traditional employee. Contract workers are typically required to pay for their own health insurance and are not entitled to sick or overtime pay. While there are numerous benefits to the gig economy, most notability the ability to set personalized hours, contract workers are typically left behind when it comes to workplace safety.
Written by: Indiana Lee, BOSS Contributor
This post was originally posted in Boss Magazine.