The coronavirus pandemic shone a harsh light on some of the problems with the gig economy. Many gig workers were found to be essential, like those that drive for rideshare apps or deliver food and groceries. And as unemployment soared, questions were raised around gig workers and their rights.
This ultimate guide explains how the gig economy rose to prominence, and what classifies someone as a gig worker. It then explains all the legal rights that gig workers have (hint: it’s not that many, since gig workers are considered contractors and not afforded the same benefits and protections as full-time employees). We also talk about how gig worker rights have already changed in the age of COVID-19, and how they might continue to do so.
Julie, a Cincinnati-based single mom, drove for Uber for four years and enjoyed the work. But when the coronavirus pandemic forced many of her passengers to stay at home and Uber saw an 80 percent dip in ridership, Julie, despite being classified as an essential worker, needed to do something else to keep her bills paid. So she pivoted – instead of driving people, she started delivering food.
It didn’t go as well as she’d hoped, though.
“I applied for unemployment because I delivered to four different houses and each of the people tipped me just a little over a dollar and I’m sorry, but my life is not worth that,” Julie told the Harvard Business Review.
Julie is far from alone. The pandemic shone a harsh light on the importance of gig workers, from DoorDash and Postmates drivers to Instacart shoppers. Those gig jobs were considered essential work, meaning the people doing them were exempt from stay-at-home orders. But that raised important questions. Many gig workers, like Julie, wondered why they should have to risk their lives while also taking cuts in pay because business for some gig workers, like rideshare drivers, had fallen.
These questions aren’t new, though. Even before the pandemic, the rise of the gig economy has had industry and political leaders grappling with tough questions about the rights and protections that are — and aren’t — given to workers, particularly gig workers, who are classified differently than employees.
Ultimately, it’s up to gig workers to know all about their own rights, so they can recognize when and if they’re violated, and protect themselves from unscrupulous employers who might take advantage of them. Ready to learn all the ins and outs of your rights as a gig worker? Read on.
There’s no one perfect definition that fully captures what the gig economy is — and what it’s grown to be. To put things really simply, it’s an economy created by workers who do tasks on a project-by-project or client-by-client basis, rather than work a part- or full-time job for a single employer.
Gig workers do all kinds of jobs across many different industries. Some of those include:
- Driving for Uber, Lyft, and other rideshare services
- Freelancing, often as a writer, photographer, designer, artist, or consultant
- Working at a temp agency
- Renting out a room, your home, or your car via Airbnb, VRBO, Getaround, or other apps
- Providing services on websites like Fiverr, TaskRabbit, Guru, or Elance
The gig economy isn’t new, but it’s seen huge growth in the last couple of decades. From 2005 to 2015, the share of the U.S. workforce doing gig work rose from 10.1 percent to 15.8 percent — more than a 50 percent increase. And just two years later, in 2017, the Bureau of Labor Statistics reported 55 million Americans did some kind of gig work — that’s more than a third of the entire U.S. workforce.
One theory for why gig work has increased so much in recent years is that technology has made it much easier to connect workers directly to people who need tasks done. Think about how you’ve engaged with the gig economy. It’s likely been almost exclusively via mobile apps and websites.
One major tenet of the gig economy is that its workers are almost always classified as independent contractors, not employees.
What that means is that someone who drives for Uber, for example, is not an Uber employee. As far as the company (and the government) are concerned, that worker is self-employed, and Uber is one of their clients. Even if they drive for Uber from 9 a.m. to 5 p.m. Monday through Friday, they remain classified as an independent contractor, not an employee.
The difference between the two can be extremely case-specific, so for that, we recommend reading up on the IRS website, as the IRS is the agency that determines the differences between contractors and employees. But unfortunately, one of the biggest differences is that contractors don’t get some of the same rights and protections that employees are required to have by law.
It might make more sense in this section to talk about the rights gig workers don’t have. For example:
- Independent contractors are not entitled to any benefits, including paid vacation, paid sick leave, health insurance, or retirement benefits;
- Independent contractors often have fewer or no legal protections against discrimination or harassment;
- Independent contractors are generally not eligible for paid family leave;
- Independent contractors are typically not eligible for unemployment benefits (though that has changed — sort of. More on that below).
And we’ve already mentioned how the IRS sets standards for what differentiates an independent contractor from an employee. That’s because taxes are completely different for the two types of workers. Independent contractors are taxed as self-employed workers, which means they have to pay more in income, social security, and Medicare taxes.
While all of that might make gig work sound dangerous, there are some rights and benefits afforded to independent contractors — and other ways they can protect themselves, like lawsuits. And where gig workers are missing protections that are given to employees, some states are creating legislation that broadens how employees are defined.
One of the most attractive aspects of gig work is that the worker gets much more control over their work life. According to the IRS’ classification of independent contractors, they must:
- Have control over what work they do and when and how they do it;
- Have control over how they’re paid (though this is generally negotiated with the client);
- Have a contract that outlines the exact parameters of their work, including when it ends.
In other words, independent contractors can often work from home, set their own schedules, and choose exactly how much they want to work, whether that’s the traditional 40 hours a week, only on weekends, just while their kids are in school, or after their classes are over. That flexibility is a big part of why gig work is so appealing to many.
Federal anti-discrimination laws make it illegal to discipline, terminate, or retaliate against an employee for protected characteristics, which include race, gender, religion, national origin, disability, marital status, age, pregnancy, actual or perceived sexual orientation, military status, and veteran status.
Unfortunately, those federal laws don’t apply to independent contractors. What anti-discrimination practices gig workers have — if any — are dependent on their state laws; a small number of states have expanded anti-discrimination laws to apply to self-employed contractors.
The U.S. Department of Labor, the IRS, and some state agencies work together to create the laws that dictate things like minimum wage, overtime pay, mandatory break requirements, earned sick time, family leave, military leave, and more. And because all these wage and hour laws are enforced by government agencies, they can take reports and punish businesses that don’t follow those laws — for their employees.
Again, these protections only apply to employees and not to independent contractors. Instead, gig workers need to rely on the contracts they enter into with their clients, and in the case of a business or individual breaching that contract, independent contractors often need to rely on lawsuits for enforcement.
Independent contractors are not entitled to the same kinds of benefits as full-time employees.
When it comes to workers’ compensation, businesses are typically required to carry coverage for all their employees, but not for independent contractors. That means, if a gig worker is injured on the job or comes down with a work-related illness, they may need to sue their client to cover their lost wages and expenses. Independent contractors also have the option of carrying their own workers’ compensation policies.
Typically, independent contractors are not entitled to unemployment benefits, paid sick leave, paid family leave, or other benefits that are typical for full-time employees. The coronavirus pandemic has caused some changes to these rights, and we’ll go more into those details below.
Businesses can save a lot of money by hiring independent contractors instead of employees; they’re not required to carry the same insurance policies, they don’t have to pay the same taxes, and they don’t have to cover any benefits. So what’s to stop companies from turning all their employees into contractors?
That’s where the IRS’ classifications come in. There are companies that misclassify their workers as independent contractors, when the details of the job and their work actually fit the IRS’ classification for an employee. In this case, gig workers have the right to report an employer to the IRS, which will investigate and may charge the business back taxes and penalties if it finds any employees were actually misclassified as contractors.
The coronavirus pandemic has made more people than ever aware of the lack of protection gig workers have, even though many of them provide essential services that must continue even in dangerous times.
Since the pandemic began in early 2020, both lawmakers and private companies have taken steps to expand protections for gig workers, giving them more rights than they’ve ever had before.
In March, the federal government passed the CARES Act to provide emergency pandemic relief to Americans in all kinds of situations. Part of the law extended unemployment benefits to freelancers, gig workers, and independent contractors who were not previously eligible to file for unemployment.
Remember Julie, the Uber driver from the beginning of this story? She was able to receive unemployment when Uber ridership went down because of the CARES Act, even though she still wished she could support herself with gig work.
“I don’t feel it would be anyone’s responsibility for my finances except myself,” she said. “I am so grateful for the help, but I feel absolutely awful for having to take it. I would much rather be out driving people around and pointing out all the cool stuff and history of Cincinnati!”
Uber and other companies that rely heavily on gig workers advocated for the CARES Act to include eligibility expansions for independent contractors. However, without further action from Congress, those expansions will expire on December 31.
The fact that many gig workers had to continue to expose themselves to the coronavirus if they chose to continue working prompted public outcry about their lack of paid sick leave.
Many gig companies responded by creating funds that would pay workers their usual wages should they be diagnosed with COVID-19, or have to quarantine after being exposed to the virus.
But workers shouldn’t have to rely on companies to continue those practices. In June, Seattle became the first city to pass a local emergency ordinance that would require companies to provide sick pay for gig workers. The question now is whether other cities, states, or even the federal government will follow suit.
One of the IRS’ rules distinguishing independent contractors from employees says that employees have supplies and equipment necessary for their jobs provided for them by their employers, while independent contractors provide their own.
In the age of COVID-19, this is yet another rule we’re seeing shift. As gig workers have continued to work on the front lines and potentially expose themselves to illness, they’ve called for their companies to provide them with personal protective equipment, cleaning supplies, and other equipment to help make their jobs safer.
Companies like Instacart and Uber have answered that call, but gig workers have had mixed reviews about whether their companies are doing enough to keep them safe.
Gig workers deserve more rights and better protections, and one of the best things we can do about that now is to call for legislative change. This can be done by writing letters and emails to your congresspeople, asking them to take action on better protecting gig workers. You can also vote for candidates who support the rights of all workers.
There are also major pushes for unions to better represent gig workers in different industries. If you’re a gig worker looking for better protection, you might be able to find and join a union that represents your type of work and the protections you’d like to see.
In many cases, because legal protections are so thin, gig workers need to turn to lawsuits against companies that violate their rights or treat them unfairly. This can be expensive and time-consuming, and almost no gig worker has the kind of legal resources that a company like Uber or Instacart does.
So instead of a lawsuit, gig workers should consider another way to protect themselves: Consumer arbitration. Arbitration is a bit like small claims court, in that each side in the dispute shares their story, and then an independent third party, called an arbitrator, makes a decision about who is in the right and what compensation they should receive. Arbitration is legally binding, but often faster and more affordable than taking a company to court.
Gig work is a great alternative option to traditional employment, but this new gig economy is still in its infancy and it’s crucial to keep up on changing laws and rights. Happy gigging!