Politicized “Gig Economy” May Make Changing Status Quo More Difficult

political button with gig economyFrom Tech Crunch, Olga V. Mack discusses how the issue of classifying gig workers as employees or independent contractors may be difficult to resolve as it is becoming politicized   Olga writes:

“The so-called “sharing economy,” which some affectionately (or pejoratively) describe as the “gig economy,” is becoming a highly politicized issue in the 2016 presidential election. As the “sharing economy” capitalizes on crowdsourcing everyday tasks or “gigs,” lawmakers and politicians alike are chiming in.

The issue of whether to classify workers as independent contractors or “1099 workers” instead of full-time W2 workers is already in the national debate. For example, Hillary Clinton recently made a few statements on the topic as she has been trying to figure out the best stance to take.

The debate highlights a tradeoff between innovation and employee protection — both important public policy interests. In a nutshell, while many “sharing economy” startups such as Uber, Lyft and Airbnb rely on the 1099 independent contractor classification, such independent contractors or “1099 workers” do not get the same benefits as W2 employees, such as health benefits, overtime pay and sick leave pay.

Under the current legal climate, there is inherent tension between innovation and employee protection, especially for “sharing economy” startups and technology companies. For “sharing economy” startups and technology companies, navigating the thin line between 1099 independent contractors and full-time W2 workers is very important, because a misclassification may threaten a company’s entire existence. This is illustrated in the recent demise of Homejoy.

Clearly, addressing this issue in a timely manner is crucial. Given how polarizing this issue is, however, reaching a timely solution has become increasingly unlikely…”

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