Legislative efforts to extend rules to reclassify independent contractors will have serious consequences for those in the Gig Economy. The number people who work periodically as an independent more than doubled from 2020 to 2022, rising from 15.8 million to 31.9 million. The number of independent contractors working full-time is increasing because the macroeconomic climate, the infrastructure, and the attitudes surrounding independent work are becoming more supportive. The value of flexibility has increased astronomically throughout the pandemic. Gig income is critical for many Americans, and the government doesn’t consider the losses these workers will face.
Liya Palagashvili, a Senior Research Fellow at the Mercatus Center commented: “At first glance, this change portends significant gains for workers who are reclassified as employees and receive proper benefits and protections. But there are reasons to doubt that independent workers will benefit from the new restrictions.”
Palagashvili argues that companies facing the reclassification of independent contractors as employees will result in a loss of jobs altogether. Companies will hire fewer workers and pay lower compensation to offset the newly required benefits. She believes that more needs to be done to improve the gig economy instead of dismantling it. ‘Portable benefits’ are suggested to allow gig workers and independent contractors protections that are similar to employees’ while maintaining the flexible work that they desire.
Current federal regulations restrict the use of portable benefits. To protect workers, a bipartisan bill was introduced to initiate them into the workforce. The Portable Benefits for Independent Workers Pilot Program Act would establish a $20 million grant within the U.S. Department of Labor to incentivize states, localities, and nonprofits to provide workers with access to benefits usually reserved for full-time employment.
“This program will encourage experimentation at the state and local levels to find ways we can better support our independent, 21st-century workforce.” – Sens. Mark. R. Warner
SCI is the nation’s only full-service Third-Party Administrator that supports independent contractors in the final-mile delivery space with programs and access to coverages that are affordable, convenient, and comprehensive and provide the protections needed for independent contractors.