1099, Being Freelancer, Companies, Finding Jobs, Freelancers, Future of Work, Income, Industry Research, Insurance, News, On Your Own, People, Self-Employed, Uber, Your rights: Presidential Election, Laws, etc.

Portable Benefits for the On-Demand Worker

The emergence of the gig economy has opened an important debate about having portable health and other benefits for the On-Demand Worker. There has been a number of calls for a new category for those who occupy the gray area between employees and independent contractors. Freelancers often work through a middle man or a marketplace (think Upwork.com or 99Designs) or an intermediary, typically an “app,” that customers use to identify themselves as needing a service—for example, a car ride, landscaping service, etc. This enables the employer to maintain some sort of arms-length distance from the worker. (We all know this is often broken, however). How can you work for someone without them giving you some sort of direction?

It’s increasing, but today it appears that at least about 600,000 or .4% of the US Workforce work with an online intermediator. The Hamilton Project at Brookings (I once interned there while I was a student across the street at Johns Hopkin’s University’s SAIS program across the street), recently hosted a gig economy event where Brookings made a proposal for  Modernizing Labor Laws in the Online Gig Economy. The talk focused on health and other benefits, and how to ‘force these new forms of work (from Uber, etc.) into a traditional employment relationship could be an existential threat to the emergence of online-intermediated work, with adverse consequences for workers, consumers, businesses, and the economy. “One of their One of the key benefits they proposed was portable benefits, which is a fascinating idea because (Independent contractors tend to have multiple gigs at one time). Their definition:

As we are defining it, the online gig economy involves the use of an Internet-based app to match customers to workers who perform discrete personal tasks, such as driving a passenger from point A to point B, or delivering a meal to a customer’s house. Note that this definition excludes intermediaries that facilitate the sale of goods and impersonal services to customers, such as TeacherPayTeachers.com, a Web site where teachers sell lesson plans and other non-personal services to other teachers, and Etsy.com, a Web site where individuals sell handmade or vintage goods. It also excludes Airbnb, a Web site where people can rent apartments, houses, and other accommodations.

The authors of the Hamilton Report highlight that ‘because it is conceptually impossible to attribute their (workers’s) work hours to any single intermediary.” Today, these independent workers do not qualify for hours-based benefits, including overtime or minimum wage requirements. These independent contractors rarely, if ever, qualify for unemployment insurance benefits. If intermediaries could pool independent workers, however, for purposes of purchasing and providing insurance and other benefits at lower cost and higher quality without the risk that their relationship will be transformed into an employment relationship, then they might be open to pooling their resources and having portable benefits for the contingent workforce.

The Ubers of the worls could then save on the costs if they have to eventually hire these workers full-time and on legal fees (although Uber has changed their driver terms of service agreement that bars drivers from participating in class action lawsuits against the company and instead requires them to enter into arbitration in the case of disputes).

As Steve King points out in his short analysis of this proposal, this new portable benefits law probably should include gig economy workers who work in the B2B sector, or sell goods, or rent real estate, but they do. But even though they are excluded from their analysis, they would likely be included in any portable benefit laws. Portable benefits seems to be a hot topic. Next week the Aspen Institute is holding a workshop on portable benefits.

Protection of the 1099 is important. I have heard of companies (the employer and the intermediary) using algorithmic scheduling to ensure their works never go beyond 29 hours of work a week, which ensures they don’t have to pay them health benefits or provide the other goodies full-time employees receive. It’s important to figure out how to address this barrier to benefits.  Ouch! Talk about Big Data hurting the worker!

Another reason to address this is that Brad Smith, the CEO of Intuit and one of the best leaders I have ever worked for, has indicated that his company’s data data shows that 40% of their self-employed customers also have income from a W2 job. (I know several people who wear these two hats). So this problem of multiple employers with different tax and benefit regimes started way before the Ubers, Lyfts, Instacarts came on the scene.

Portable Benefits basically means a person should be able to use the same benefits when they work for different on-demand companies. The Hamilton proposal is a start – it has accelerated the discussion about a new class of employees or at least the call for examining how workers are currently classified. Their proposal really doesn’t focus on online or offline, but instead stresses that workers should be protected and receive benefits. As the chart below indicates, this will continue to become an increasingly important issue to address in our On-Demand Society.

You can read The Hamilton Report here

1099, Companies, Freelancers, Health Care, Your rights: Presidential Election, Laws, etc.

On-Demand Economy’s Companies Need to Provide Job Benefits

You’ve probably heard of Uber, Airbnb and Handy before. These are just a few companies in the on-demand economy that have grown rapidly over these past few years. As a result of the increased demand, more and more freelancers are taking on multiple ‘on-demand gigs’, even stringing together multiple gigs to replace a full-time salary. While these jobs provide flexibility, one of the main drawbacks is lack of benefits. On-demand workers aren’t protected like their salaried counterparts.

In the On-Demand Economy, the need to improve job benefits and workers’ protection for self-employed workers and independent contractors is now being noticed. Recently, the labor group National Domestic Workers Association (NDWA) announced the “Good Work Code”, a pledge to help freelancers and improve their jobs with more transparency, better wages, and increased support. Twelve companies have now signed it, including DoorDash, Care.com and LeadGenius.

While more and more companies are joining this pledge and those similar to it, the largest ones have yet to make an effort, including Uber, Lyft and Handy. Time will tell if the increased pressure from other groups and on-demand companies, as well as support from political powers, will change their minds.

The Good Work Code is seen as a step in the right direction for on-demand workers. It addresses many of freelancers’ concerns and challenges but at the same time, also fails to make actionable steps to fix them. Their goal is to get politicians and companies talking about to fix this larger problem and more importantly, how to change it.

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Freelancers
1099, Being Freelancer, Companies, People

Risk Profiles of Freelancers Versus Non-Freelancers

Originally published by Steven King at Emergent Research

There’s lots of people criticizing independent work these days as being too unpredictable, risky and all around bad for both workers and the economy.

But a pattern we’ve noticed is almost all the criticism comes from people with traditional jobs. This got us thinking about risk profile differences between independent workers and those with traditional jobs.

In the 2013 MBO Partners State of Independence study we surveyed non-independent workers asking them about their views of independent work. The results were quite interesting.

First, non-independent workers see the advantages of independent work as, well, less advantageous than independent workers do.

Risk profiles 1

Second, non-independent workers see the disadvantages as being much greater. As the chart below shows, for every category mentioned non-independents see bigger challenges than independent workers.

Risk profiles 2

One of the more fascinating findings was that half of the non-independents considered “having to invest their own money” as a major challenge. For independent workers, so few listed this as a challenge it didn’t make the top 10 challenges list, so it was scored as “not applicable”.

It’s clear from this an other research that, on average, independent workers and non-independent workers have different risk profiles. The bottom line is:

Independent workers are more comfortable than non-independents with the risks associated with being independent and more willing to accept these risks in return for greater work autonomy, control and flexibility.

This is why the majority of independent workers are satisfied and happy as independents and prefer independent work over traditional employment.

Going forward these risk profile differences raise a very important issue.

Our work indicates most Americans fall into the more conservative risk profile category. Our work also indicates those with conservative risk profiles are less likely to be successful as independent workers.

But as the economy shifts to greater levels of contingent employment, more people with risk profiles not suited for independent work will become independent workers. This is a key reason we need new policies and programs to make independent work safer and more secure.

So when reading or hearing people talking about how bad independent work is, keep in mind risk profiles. The chances are the critic has a risk profile that biases them against independent work.

But also keep mind without making independent work safer and more secure, growing numbers of Americans will likely struggle at work going forward.

Demand and supply: Independent Contractors
Companies, Flexibility: Hours, Family, etc., Freelancers, Self-Employed, Services

Supply and Demand: Independent Contractors

Interview with Steven King of Emergent Research and someone who I consider one of the go-to-guys for information about the Freelance economy. During the Interview, Steve state that:

  • 30% of the workforce are Independent Contractors and Freelancers… Many of these people are doing part-time work
  • 60% of Freelancers do this work by choice and 25% are doing it based on necessity
  • People are becoming Independent Contractors because they want autonomy
  • Biggest issues and concerns center on the fact they have no benefits, do not get reimbursed for expenses and always have to find their next gig
  • Freelancers have to be a jack of all trades and wear many hats, but it does help fi they can find an accountant and a lawyer to assist them.
  • More and more companies and developers focus on creating solutions for this market. QuickBooks for the Self-Employed is an example.
  • Both companies and developers need to think about what platforms, such as Intuit or Google, do you want to associate yourself with. More and more developers are focusing on vertical markets and areas where they have experience and expertise.
  • Big companies are relying increasingly on a contingent workforce where they can scale up and down quickly, hiring independent contractors when they need them. The demand-side (Companies:) get a significant cost savings because they save 10%-20% in hiring a part-time worker vs. a full-time employee. Conversely, the Supply Side (the Contractors) gets autonomy and flexibility because they can pick their assignments and when they do these assignments..

Steve finishes the interview with this piece of wisdom:

  • Start part-time and don’t give you your day job
  • Give yourself a financial cushion
  • Show up for work every day (you need to treat it like an everyday job)

 

Companies, Freelancers, Future of Work, Politics, The American Dream

Building a Team with Free Agents and Freelancers

Many Millennials are freelancers and free agents. Unfortunately, the people hiring them are older ‘fuddy duddies’ leaders who view Gen Y as  lazy and unloyal. While they do have some unique characteristics (which I outlined in my book, Millennial Leaders), it is important for both parties – the young folks and the older folks – to work together to create a good on-demand relationship between the free agent and the manager.

Duke University’s Basketball Coach, Mike Krzyzewski recently provided some great guidance on how to work with the younger generation. His basketball players and the rest of today’s college athletes  are free agents and freelancers. More and more of them adopt a one-and-done approach, playing with one team for one year and then going pro. Or, if they don’t like their school’s program, they transfer to another university. And it’s not just basketball players who are doing this. More and more white collar professionals are also free agents, riding the trend of a contract-based career.

In this On-Demand Society, Coach K indicated that coaches and leaders need to be more adaptable and allow for some slippage, a word he uses to describe that there is less time to work on fundamentals and to develop the perfect team. Corporate America will increasingly deal with the same issue — the free-agent culture makes it more difficult to build and maintain institutional knowledge and company team-work.

Today’s leaders and young workers both need to be flexible. Corporate leaders can’t just say ‘millennials are spoiled and therefore they can’t learn company’s system or way of doing things. Every generation is different and as Coach K states ‘I have to be in their world and they have to be in my world and there has to be a good common ground where we both meet.’ Coach K tries to understand his younger players perspective on life — to understand their culture, such as their music, their language and event their use of social media. Now is the time for corporate leaders to do the same and to try and understand the needs and wants of Freelancers.

Too many on-demand companies need to be schooled by Coach K. Too many treat 1099s as ‘replaceable parts.’  Although this approach is not new, it will backfire and will come back to haunt them later on. They need to understand that we are in what Reid Hoffman calls a Tour-of-Duty economy (although he used the term to describe full-time employees). Since close to 40% of our workforce will be independent contractors by 2020, their voices at center court (and in superior court) will become louder and louder.  Hopefully, the Uber’s of the world will listen to them.

Click here a good interview with Coach K.