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The gig economy has exploded in recent years. Some gig economy participants cobble together an income from several different gigs, while others take on side gigs to supplement income from full-time employment.

Gig economy platforms like Upwork and Fiverr can feel convenient to companies. When you need a specific task completed, it may feel like good sense to hire a gig worker to do it – especially if it requires skills that your core team lacks or that distract them from other tasks.

Companies that hire gig workers from online platforms, however, do so at their own risk. Here’s how using gig workers in the wrong ways can cost your company dearly – and what companies can do instead.

Need flexible access to skilled candidates? Give Davis Staffing a call, and we'll deliver the people and solutions you need.

Gig Workers’ Legal Status Is in Flux

Early iterations of online gig work platforms classified workers as independent contractors. As the gig economy has spread, however, legal questions arise about whether these workers are properly categorized as independent contractors or as employees.

Currently, the status of gig workers varies by jurisdiction. California’s recent bill AB 5, for instance, changed the relationships between gig workers and the companies they work for in several – but not all – gig work instances. In February 2022, courts in the UK decided that Uber drivers there are classified as “workers,” receiving more protections than self-employed individuals but not as many as employees.

Many of these legal decisions may create lasting effects on gig platforms. As workers’ classifications change, these decisions may have trickle-down effects that impact companies seeking to hire gig workers as well. Companies can expect future decisions about gig workers’ status to affect issues like workers’ compensation and other insurance premiums, as well as hiring relationships.

Labor Regulators Are Cracking Down on Misclassification

Courts continue to discuss the status of gig workers vis a vis the platforms they access. For employers throughout the United States, however, increases in labor regulation enforcement are already changing how these companies think about the people who do their work.

In New Jersey, for example, two bills passed in 2021 authorize the state’s Department of Labor and Workforce Development to crack down on companies that misclassify workers as independent contractors when those workers fit the state’s definition of an employee. Penalties include fines, stop-work orders, and other consequences.

When a company hires a gig worker, are they truly working with an independent contractor, or did they connect with someone who should be classified as an employee? Until the legal status of these workers is resolved, companies that hire gig workers put themselves at risk of regulatory repercussions.

Companies Have Better Options Than Gig Platforms

Hiring gig workers through platforms poses risks for companies. In nearly all cases, this risk is one the company did not have to take. Other choices are available, offering proper legal and regulatory compliance as well as access to quality talent.

Alternative options to gig platform hiring include:

• Temporary, temp-to-perm, and contract workers. These workers come to a company through a staffing partner. The staffing firm serves as the employer of record, resolving questions about these workers’ legal status and clarifying their relationship to the company. Staffing firms also vet these workers’ skills and experience.
• Upskilling and reskilling existing teams. In an era of high worker turnover, companies cannot afford the constant skills and culture drain of employees leaving the team. By supporting employee skill building, companies eliminate the need to seek help on gig platforms while also improving worker loyalty and commitment.

A staffing partner can help you put these practices to work – within your existing budget.

Concerned about using gig workers? Give Davis Staffing a call, and we'll provide flexible access to great workers – without the risks.

This article offers a general perspective and does not constitute legal advice. If you have a specific legal question, consult an attorney licensed to practice law in your area.