Sarasota, FL (WorkersCompensation.com) – Should ‘gig’ workers be entitled to workers’ compensation? Should they be considered ‘employees’? And who should make such decisions?
While 59 minutes wasn’t quite enough time to resolve the myriad questions about workers in the so-called gig-economy, Bill Zachry and Michael C. Duff were able to parse out many of the issues and come up with ways to start addressing the topic. During the latest Hot Seat webinar produced by WorkersCompensation.com’s Center for Education Excellence, the industry veterans offered insights into the problems of defining gig workers, the lack of available research, and how workers’ compensation stakeholders and legislators can help ensure those most in need are covered for their work-related injuries.
Who’s a Gig Worker
“What is a gig worker? A worker whose income is earned outside the standard long-term employment/employer relationship,” said Zachry, a Board member of the California State Compensation Insurance Fund, former Senior Fellow at the Sedgwick Institute, former GVP Risk management for Safeway /Albertson’s, former Board Member California Self Insurers’ Security Fund, and former Co-Chair California Chamber of Commerce, among other accomplishments. “Freelancing, temp agencies, self-employment, sub-contracting can be considered gig workers. A defining operating mechanics is a W2 is paid to employees, a 1099 is reported to the federal government as income for most of the gig workers.”
That means gig workers are typically not entitled to benefits afforded to employees, including workers’ compensation. It raises the question of how these workers handle their medical expenses and potential time off work if they become injured.
The issue came to a head in California with the passage of AB5, which extended employee classification to many gig workers. It codified a court decision requiring a three-pronged test to prove a worker was an independent contractor rather than an employee. Companies such as Uber, Lyft and others objected, eventually leading to passage of Proposition 22, which allowed some companies to continue deeming their workers independent contractors. Legislative proposals since have sought to carve out other workers from the law.
Whom to Cover
According to Cornell University’s School of Industrial and Labor Relations between 25 percent and 35 percent of those employed have participated in the gig economy in some capacity. “So it’s much larger than many people would realize,” Zachry added. “One in 10 currently rely on gig [work] for their fulltime income.”
Not all gig workers are created equally, however. Within the gig worker population are the ‘haves’ and the ‘have nots.’
There is a “more minority-focused group who are relying on it for their entire wages and don’t make much money,” Zachry said, “and another group that are highly skilled and highly paid and think it’s the best thing since sliced bread because they can manage their lives and the social aspects of their lives very easily because they are making a lot of money doing these gigs.”
The disparity among gig workers makes the conversation that much more challenging in deciding who should be eligible for financial help if they become injured.
“As we look at this are we going to be able to tease out what I see as the imperative here: people in the gig economy earning a living, from folks that are in the gig economy because they drag a lawn mower through the neighborhood making a few extra bucks,” said Judge David Langham, deputy chief judge of Compensation Claims for the Florida Office of Judges of Compensation Claims at the Division of Administrative Hearings, and co-host of the webinars. “Do we really want to go after 15-, 18-year-olds that are babysitting? How deep are we going to dive and how do we meet that from a definitional standpoint so we study and effect what needs to be effected, which is the real breadwinner who needs the money to live?”
“What is the economic reality of what’s going on here?” asked Duff, a Distinguished Professor of Law at the University of Wyoming, a scholar-member of the Center for Progressive Reform, a member of the National Academy of Social Insurance, a fellow of both the American Bar Foundation and the Pound Civil Justice Institute, and considered a national expert on workers’ compensation law and on the National Labor Relations Act. “Is the reality that is that kid with a summer job riding his bike is the type of person we want to cover? I don’t think anybody thinks that. The problem is if that if you apply a certain definition you’re very likely to be either over-inclusive or under-inclusive.”
In addition to providing coverage for gig workers who rely more heavily on their earnings than others, another way to decide which gig workers should be covered for their injuries would be to determine those most likely to be severely injured. Part of the problem with that is the scarcity of research. Even though gig workers have existed for decades, they have been a small fraction of workforce until recently, when technology has proliferated their growth. Organizations such as the Bureau of Labor Statistics and the National Institute for Occupational Safety and Health are just beginning to delve into the statistics for these workers.
“Severity – that’s a huge issue,” Langham said. “A lot more construction workers suffer serious injuries than babysitters. So focusing on that is a great idea.”
How to Cover Gig Workers
Short of California’s AB5 method of making independent contractors employees, there may be other ways to ensure gig workers get payments to help with their injuries. One model comes from New York’s Black Car Fund.
“It’s pretty amazing in terms of how they’ve dealt with the issues because they’ve not necessarily made people employees per se, but what they have done is said ‘we will cover all the gig drivers who are driving the cars to and from airports and around New York City,’” Zachry said. “They passed a law which basically created a program that would provide workers’ compensation for all those employees and every single trip has a small surcharge that pays for the workers’ compensation…”
The Fund includes safety incentives, such as offering drivers $300 every three years for taking a safe driving course, and performing eye exams at airports.
“For my purposes, this is an extraordinarily effective template for how much of the gig economy can be covered in workers’ compensation without necessarily making them fulltime employees,” Zachry said.
However, such a model might be difficult to introduce without buy-in from workers.
“My response is, ‘look, show me what the bottom-line compensation of the person working is going to be, show me it’s roughly equivalent to what the worker has now and show me what happens if the entity that sets up this structure and makes promises doesn’t comply with the promises,’” said Duff, who said he was a blue-collar worker until 32 years of age. “The problem I have with a lot of these structures is, I tend to get weird answers when I say, “oh, well what happens if they don’t do these awesome things they said they’d do.’”
Duff said another issue is that of liability, if a 3rd party is injured in a collision with a gig worker. “That’s why this is so hard to deal with; because one structure interacts with other legal structures. It’s like a house of cards.”
Starting the Process
Whatever model is used to provide benefits to at least some workers in the gig economy must start with a conversation. “Basically, everybody has to sit down in a room and talk about this,” Duff said. “One of the remarkable things is, think about how they decided who gets covered in workers’ compensation [when the system started.] Well, legislators, people sat down and came up with solutions … for example, when we first introduced workers’ compensation it only applied to ultra-hazardous employment. So you might say, maybe given the changing nature of the economy — it’s less dangerous — maybe what you want to do is prioritize covering people however defined in particular industries where we know injury incidence is highest.”
“Also, you don’t eat the whole elephant in one bite,” Zachry added. “Right now, for example, according to statistics from Cornell, you have probably one of the highest percentages of gig workers in construction. That may be a place to start. There are studies that show which industries have high levels of gig workers.
“Another factor I’d want to be aware of is what are the industries with a high percentage of workers whose total incomes come from gig work. That creates a better safety net, if you will.”
The alternative dispute resolution system in California is another idea Zachry endorses as a possible solution.
Whatever idea is considered must be done with input from many factions involved.
“As a worker, a person from the working class, my instant reaction to alternative structures is distrust and cynicism,” said Duff. “That’s why the message I often carry is ‘this has to be transparent; whatever we’re going to think about with respect to the gig economy, we have to show this isn’t just some scheme for companies to avoid complying with employment statutes that cost them money.’”