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Avoid traps that could cause contingent talent to be classified as full-time employees
The proportion of gig employees—independent workers who contract for short-term assignments—is growing, and so is competition for their services.
"We're moving from the idea of an employee value proposition to a worker value proposition," said Ravin Jesuthasan, Chicago-based global leader of the talent management practice for Willis Towers Watson. As companies adopt a "plurality of means" to get work done, he says, "more and more employers are asking themselves about offering benefits to gig workers."
According to the U.S. Bureau of Labor Statistics, a "gig" describes a single project or task for which a worker is hired, often through a digital marketplace, to work on demand. Like Jesuthasan, many experts say employers want to build loyalty among the best of these independent workers. According to Gene Zaino, chief executive of Herndon, Va.-based MBO Partners, "more companies want to be perceived as 'clients of choice.' "
All in all, gig workers seem to be a happy lot. Eric Gilpin, senior vice president of the freelance marketplace Upwork in Mountain View, Calif., pointed out that 63 percent of the independent workers his company surveyed "started freelancing more by choice than necessity." According to the company's report Freelancing in America, 79 percent prefer freelancing to working as a full-time employee. They average a workweek of 36 hours, and 52 percent say that have "the right amount of work."
To maintain a healthy relationship with the best of them, employers need to offer more than good pay. But that presents a challenge: How do you offer gig workers benefits while avoiding traps that could lead to their being classified as full-time employees?
The Core of Gig Worker Benefits
Experts say there are two central elements to fashioning a benefits package that will attract the best gig workers with minimal risk to the company:
For example, independent workers can have a hard time obtaining health insurance, said Yvette Cameron, global vice president of strategy for SAP SuccessFactors in Denver, who has been closely studying the gig economy. However, offering coverage under a company's health plan seriously risks having the worker be seen as a full-time employee.
To solve that, businesses like the ride service Uber and online marketplace Etsy have partnered with San Francisco-based Stride Health to act as a health insurance broker for their gig workers. Essentially, Stride Health is a marketplace that matches users with insurance plans that the worker—not the employer—pays for. Stride Health earns commissions from the insurance companies, while the employers have simply arranged the access to Stride Health's service. Cameron said that conversations she's had with Uber drivers indicate the perk is "a big deal" to them.
[SHRM members-only how-to guide: How to Design an Employee Benefits Program]
Some Approaches Are Simple
Some of the perks that attract gig workers are surprisingly simple. "They might not be what we think of as traditional benefits," said Penny Queller, senior vice president of sales solutions at Alexander Mann Solutions in St. Louis. Instead, they involve efforts built around "engagement and processes."
To start, gig workers are attracted to well-run businesses that treat them as respected professionals. "When we ask our customers why they liked or didn't like a particular client, the No. 1 thing they talk about isn't money—it's about the client recognizing their value and treating them with respect," said Zaino, whose company provides back-office support to independent workers. "Independents want to feel as if their work is making a difference."
With that in mind, you can build stronger relationships with gig workers by:
A note of caution, however: Michael Goettig, counsel at the New York City office of law firm Davis Wright Tremaine, says businesses should take care when including gig workers in company activities or programs. He calls the question of determining whether workers are independent contractors or employees "very fact-intensive," meaning that even if your contract makes clear the gig worker is an independent contractor and not an employee, every perk you offer them could affect the relationship's balance. He suggests that, in addition to defining the contractor relationship in a written agreement, organizations be very clear in practice that happy hours, discounted prices and the like are being made available to gig workers because of their status as valued contracting counterparties, and not as something akin to a benefit of employment.
That doesn't mean gig workers aren't interested in more tangible benefits, especially ones that can increase their spending power or otherwise help them out financially. For instance, though employers can't provide paid health insurance to gig workers, they can offer access to other health and financial benefits as long as that access remains portable. Uber's and Etsy's use of Stride Health is just one example.
Other examples include allowing independents to participate in financial and health wellness programs; providing access to professional training; identity theft protection; or automobile, homeowners and other types of insurance.
"You want something that's valuable to the worker but caps the cost and risk to the employer," said John Hearn, principal of the Benefit Company, a benefits consulting firm in Atlanta, "These are easier to administer and don't have unlimited risk to them. That's not to say there's not an investment to be made, but you can manage the volatility."
You should also consider benefits tailored to a worker's specific needs, advised Jeff Yaniga, chief revenue officer of Maestro Health, a Chicago company that operates the health and benefits platform maestroEDGE. Independents, he notes, work under a range of circumstances, so a work-from-home mother may be attracted to a daycare benefit while a graduate student could take advantage of textbook reimbursements.
What's the Right Approach?
"Don't guess; ask," Yaniga said. "Effective HR leaders go to gig workers and ask about what they want." Doing so not only provides information you can use, he adds, but also it sends the message that the worker is important to the company.
It's important, so it bears repeating: Whatever you offer should be portable. In most cases, the worker must be able to continue participating in programs even after they stop working for you.
The nice thing about these approaches, said Matthew Gregson, senior vice president of data and analytics at Thomsons Online Benefits in London, is they can be "a little spend that goes a long way" as developing deeper relationships with gig workers becomes more important.
Mark Feffer is a freelance business writer based in Philadelphia.
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