35% of U.S. workers are now involved with part-time “gigs” and it looks as if the trend is going to continue into 2020 and beyond. But with that growth, expect new regulations that both protect and limit the use of gig workers.
In California for example, a new regulation now requires employers to pay minimum wage and offer benefits to gig workers. Under the new provision, workers in California could only be considered a “contractor” if the work they do is outside of the usual course of the company’s business.
Other states have been debating similar regulations, so expect to see some legislative changes in the upcoming year or so, as well as stronger pushback from companies that rely on gig, part-time, and seasonal workers. Reclassifying “contractors” to “employees” would mean companies would have to withhold state and federal taxes, provide workman’s compensation and unemployment insurance, offer health care and retirement benefits, as well as provide additional HR services that they have never needed to offer (pay for) before. This is on top of the payroll, management, and recruitment/retention challenges that already exist.
Regardless of legislative changes and existing challenges, the gig economy is here to stay – in fact it is thriving and expected to continue to grow. But with that growth will come new challenges and new solutions, so keep an eye on California and other states as well as on the technology that is evolving so you can be prepared as we head into the new decade.
Need help navigating the new laws and regulations? Reach out to a specialist at USA Payroll.
