Postmates, Other Companies Driven to Offer Gig Worker Benefits

Happy contingent workers less likely to demand they be treated as employees

Stephen Miller, CEBS By Stephen Miller, CEBS August 15, 2019
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Postmates, an on-demand service that delivers food, groceries and alcohol from local restaurants and stores, announced on Aug. 13 it will offer certain benefits to its drivers, who are nonemployee gig workers. "We're excited to roll out a package of new benefits, including free occupational accident insurance, new health care options, free access to online college courses and professional certifications, and a flexible toolkit that pulls them all together in one easy-to-use site," the company posted on its website.

These benefits "build on the services we already offer, from help enrolling in Obamacare to innovative ways to access cash on-demand in the case of a personal emergency. But most of all, these new benefits are a down payment on a bigger vision for the future of our company and the entire gig economy."

Postmates is also calling for an industry-wide benefits fund, "paid for by companies like ours…to make sure all workers have access to benefits like health, on-the-job accident insurance, career development programs, and disability and long-term retirement savings."

Last month, Postmates founder and CEO Bastian Lehmann wrote:

We're already seeing some companies develop successful new benefit models. For example, Thumbtack, a company that helps consumers find local service professionals, has partnered with the National Domestic Workers Alliance to let customers contribute directly to workers' health care and life insurance. Postmates has partnered with Stride and the Workers Lab to enroll our fleet in health care plans, help them file their taxes and pilot new ways to access cash on-demand in the case of a personal emergency. But we need to think bigger.

We've rounded up articles from SHRM Online and other trusted news sources on the gig economy and gig workers' benefits. 

Dissuading Gig Workers from Seeking Employee Status

Postmates may be trying to get ahead of a contentious debate playing out in California, where Postmates is headquartered, over whether app-based workers should be classified as independent contractors or employees. The state legislature is preparing a bill that would make it harder for ride-sharing companies to avoid classifying drivers as employees, but gig companies Uber and Lyft are pushing for a compromise with labor organizations and the legislature. They seek a guarantee that their workers will continue to be independent contractors in exchange for basic commitments on driver earnings and allowing drivers to opt in to benefits. Postmates says it is engaged in the discussions in California.

(Politico Morning Shift

When Gig Workers Want Benefits, Should You Offer Them?

Health care coverage tops the list of valued benefits for employees and the same is true for contract staff. Providing employer-paid health care coverage for contingent workers, however, risks appearing to treat these workers as employees, employment lawyers advise.

Companies can, however, provide access to health care coverage—as Uber does—by letting gig workers pay monthly premiums to participate in a group health plan. That is often less expensive than the cost of individual market coverage.

"Gig workers fall outside the regular company-insurance world, but they do still need basic coverage," said Matt Jackson, vice president of client solutions at Thomsons Online Benefits, a benefits-management software firm. Employee-paid voluntary benefits offered month to month "will give gig workers the opportunity to ensure a certain level of protection and economic security."

Even so, giving gig workers access to benefits can be a slippery slope, said Mike Boro, a partner on PwC's workforce of the future team and an attorney who specializes in HR compliance. "If we find that clients are offering benefits, we actually raise it as a risk," he said.

(SHRM Online

Gig Workers on the Rise

Gallup research last year found that 29 percent of U.S. workers have an alternative work arrangement as their primary job—including one in four full-time workers (24 percent). When Gallup included workers who have any connection with gig work—for example, those who work multiple jobs—that proportion is 36 percent, meaning more than 1 in 3 workers have some type of gig economy job.

"The gig economy presents unique challenges for organizations with traditional management practices, but it also provides opportunities for companies seeking talent in a fast-paced, competitive marketplace," according to Gallup's report. "Managers have limited control over gig workers' performance and engagement compared with traditional team members. Leaders must identify the best projects for gig workers and communicate a compelling value proposition for them."

(SHRM Online

DOL Says Certain Gig-Economy Workers Aren't Employees

According to a recent opinion letter from the U.S. Department of Labor (DOL), at least some gig-economy workers who find jobs through smartphone apps—such as drivers for ride-hailing services—are not covered by the federal Fair Labor Standards Act (FLSA).

The distinction between an employee and an independent contractor is significant: Employees are entitled to minimum wage, overtime pay and other benefits that are not afforded to independent contractors, who may work for themselves or for several businesses.

The DOL concluded that the workers who use a technology platform or "virtual marketplace" to connect with consumers—as described in the request for an opinion letter— are independent contractors rather than employees of the platform provider.

(SHRM Online)

[SHRM members-only toolkit: Employing Independent Contractors]

Gig Workers Challenge Old Order

There are two types of gig workers, says Dianne Mulcahy, who writes about the gig economy. First, those who are searching for full-time work and need to make some cash and contacts while they job-hunt and, second, those who simply don't want or need full-time employment. 

The latter group includes a lot of younger people, for whom the idea of a 40-years-and-you-get-a-gold-watch kind of job is something their grandparents did. They aren't attracted to what they see as an outdated model of sticking with one company―or even one profession―for an extended time. But this group also includes retired or semi-retired people who may or may not need the money but who want to stay engaged and active regardless. And there are also mid-career folks who want the flexibility and freedom of doing what they want more or less when they want, drawing on years of experience to cherry-pick appealing projects.

(SHRM Online

What Are Employers' Ethical Obligations to Gig Workers?

People engaged in gig work are actually performing what Mary Gray calls "ghost work." The senior researcher at Microsoft Research defined ghost work as task-based, contract-driven work that can be sourced, scheduled, managed, shipped and billed on demand through the Internet.

"It's not a specific kind of work," she explained. "It's the work conditions." Essentially, "it's any job where you see the human contribution effectively being erased or devalued" in favor of the platform or the technology that makes the arrangement possible.

Prayag Narula, founder and president of LeadGenius, saw this devaluation of human workers firsthand when he was getting the company off the ground. The valuation of startups is often tied to the perceived viability of the technology as opposed to the quality of the workforce, he noted.

(SHRM Online)


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