Working from home is an arrangement that has been gaining momentum for a number of years. Employees like the flexibility of not having to report to an assigned location, and employers are freed from providing costly office space. The newest workplace phenomenon, however, is “gig” work.
The ride sharing company, Uber, is the most notable example of gig work. It engages drivers on an independent contractor basis and allows them to work their desired number of hours and times of day. Amazon is the latest company to offer such an arrangement through its “Amazon Flex” delivery program. It engages workers to deliver packages using their own resources as independent contractors. As with Uber, the workers can choose when they want to work, and they may choose 2, 4, or 8 hours blocks of time.
This type of arrangement offers the flexibility that many workers want, but it lacks the benefits of employment. These typically include health insurance, retirement plans, California unemployment insurance, workers compensation, and others. In addition, in a true employment situation, income taxes and Social Security contributions are withheld and paid to the federal government.
An independent contractor is responsible for submitting income and Social Security taxes from their gross receipts, obtaining health insurance, and bearing the cost of supplies and equipment. Many self-employed individuals do not attend to these traditional employee benefits as they should. The rate being offered for the service provided often looks very favorable because the person is not thinking about the additional costs of self-employment.
This type of work is under scrutiny in the federal court system as a result of Uber being sued by drivers who allege they are employees rather than independent contractors. There are various indicators that courts look at to determine whether a worker is truly an independent contractor. They focus on the degree of control over the work that is exercised by employer.
There may be various things contributing to the rise of gig and independent contractor arrangements in today’s workplace. Most recently, the Affordable Care Act requires employers of a certain size to offer health care insurance to employees. There have been reports of employers cutting employees’ hours and changing employees to contract status to avoid the Act’s requirements. On the employee side, many people desire the flexibility to set their own hours and not have to report to a particular location for work.
While employers and workers may find mutual convenience in gig and independent contracting arrangements, there may be consequences down the road as workers find they did not handle their self-employment finances in a responsible manner over the long haul. This could serve to force people to work into what they hoped would be retirement years and to live with meager retirement income.
Employers will be watching the Uber case closely to see what the future may be for contract worker arrangements. If Uber prevails, expect to see an expansion of these types of work arrangements. Call Labor Law Office, APC today to speak with an experienced wage and hour attorney in California.
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