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Firms will Struggle to Differentiate between Contract and Full-Time Employees 

remote employee

Firms will Struggle to Differentiate between Contract and Full-Time Employees 

The line between a contractor and an employee may get even blurrier. The US Department of Labor has proposed to make it more difficult for someone to be classified as an independent contractor. This is expected to hit several sectors especially hard – namely the transport of goods and people. 

The Department of Labor proposal is vague. For example, contractors would be moved to full employee status once it is deemed they are “economically dependent” on a company. What constitutes dependency is not clear. Some studies suggest full-time employees (as opposed to contractors) can cost a company up to 30% more. Yet, as the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) suggests, many employers take advantage of misclassifying workers who are then deprived of federal labor protections. If employees are not aware of their rights these relationships can go undetected. 

Upwork, a freelancing marketplace, revealed in a December 2021 study that roughly 60 million people (over one-third of US workers) engaged in some type of freelance work over the previous 12 months. Many worker advocacy groups are understandably championing the Department of Labor’s proposal. Rideshare Drivers United is a group centered on protecting contract driver conditions. They frequently cite that although many Lyft and Uber drivers can make upwards of $60 per hour, their take-home pay after deducting insurance, car payments, and gas is at a minimum wage level. 

On the other end, the Associated Builders and Contractors and the largest US business lobbying group, the US Chamber of Commerce, argue that those workers who want to preserve their flexibility would be harmed by being forced into a strict full-time schedule. After all, businesses like Uber and Lyft as well as trucking companies that count on contract drivers have structured their operations on flexible scheduling. Many argue they wouldn’t be profitable otherwise. 

The prevailing argument for those policymakers and politicians advocating for reducing contract work is it is exploitative. While there is research to suggest some contractors would elect full-time employee status, that doesn’t necessarily bolster the case that the government should regulate it. Other surveys and studies such as the heavily cited BRX Research survey (1,200 people in 2019) revealed that the vast majority of respondents indicated gig or contract work was not their primary source of income. Moreover, the youngest cohort of this study was seemingly using the flexibility of their gig jobs to supplement their main employment. 

Like any law, the unintended consequences are where the focus should be. It does not seem like those advocating for the current iteration of the proposal have pondered the extent to which mandating contractors become employees could affect not only the flexibility of the position but employers as well. 



gig economy

How the Gig Economy Benefits Employees & Businesses

Gig workers now represent more than 36% of the United States workforce, which is equivalent to 59 million Americans, according to the results of Upwork’s latest “Freelance Forward: 2020”, the most comprehensive study involving the U.S. independent workforce.

The number of freelancers, self-employed professionals, independent contractors, and gig workers is continuously increasing, and by 2028, this number is expected to exceed 90 million. With these stats, there’s no denying that the gig economy is shaping the future of work.

But how exactly does the gig economy benefit employees and businesses?

1. Save Money

Availing the services of gig workers allows businesses to save money. Employee benefits such as insurance paid vacation leaves, and retirement plans can amount to thousands of dollars each year. In fact, according to the latest data from the U.S. Bureau of Labor Statistics (BLS), employee benefits make up 32% of an employee’s compensation. By hiring gig workers, you could cut these costs by more than a half and reinvest the money saved in your business.

Companies that work with freelancers can also save money on infrastructure expenses. You don’t have to maintain office space, computers, and other office supplies. Companies that fully embrace remote work can eliminate the need for offices.

2. Find the Right Person for the Job

Aside from keeping the costs down, the gig economy gives you the freedom to hire the right person for the job. Employers will be able to apply individualized skills to different areas of your business. You can hire a gig worker to develop your website, one to work on your SEO, or one to manage your social media accounts.

In this way, you’re not trying to make one or two of your employees adapt to tasks that aren’t their strengths. The gig economy allows you to use different people who can play to their expertise. This allows businesses to operate like a large company without the overhead costs.

3. Your Employees Can Do More High-Value Work

By outsourcing other tasks to self-employed professionals, your employees can focus on doing more high-value work. Employees can offload low-value tasks – like expense accounting, booking travel arrangements, and basic tasks, making time for the work that matters. Your employees can focus on what they do best, while the appointment-setting, background research, and other tasks that can be delegated are done by freelancers.

You can hire a virtual assistant from Upwork or set up a virtual assistant subscription. As a result, your employees can concentrate on more pressing tasks, improving your company’s level of efficiency and effectiveness.

4. Easily Hire Seasonal Workers

Seasonal businesses often need seasonal workers to fill in and help around during busy seasons. Business owners often turn to temp agencies, but these agencies charge fees that can quickly add up. On average, temp agencies charge a fee equal to 12% to 50% of the temp worker’s hourly rate.

The gig economy allows businesses to eliminate the middlemen and work with freelancers and independent contractors directly. Freelancers know what they’re getting into, and there’s little to no expectation that the job will end up full-time. Gig workers and freelancers prefer the flexibility of moving from one gig to the next.

5. Greater Expectations

Consumers nowadays have greater expectations. They know what they want and when they want it. This trend is what fuels the gig economy. Business owners find a way to leverage consumer expectations by hiring gig workers. This strategy is more common during peak seasons when consumer demands drastically increase.

Businesses anticipate high-quality work from freelancers as they’re more current on industry knowledge, skills, and other tools. They need to keep up with the trends to consistently draw new clients. Consumers expect more from brands, brands strive to exceed customer expectations by hiring freelancers, and freelancers constantly improve to get more business. All parties  – freelancer, business, and consumers – consistently meet greater expectations.

Where to Find Gig Workers

Now that you know how the gig economy benefits employees and businesses, the next step is to find gig workers. You can begin your search in the following places:

-Freelancing websites: Upwork, CloudPeeps, 99Designs, and Fiverr, to mention a few.


-Your network

-Freelance communities on social media

The Future is Heading Towards Gig Economy

Technology continues to revolutionize the way people do business, and judging by the drastic increase of gig workers over the past years, the gig economy is the future of business. Employees now want flexibility, a proper work-life balance, and the freedom to choose the project they want to work on.

By acknowledging what gig workers bring to the table, you’ll be able to take advantage of the opportunities the gig economy offers. Gig workers can now choose from high-paying and full-filling projects, while businesses and employers can select the best candidate for specific tasks.