Avoid Misclassification by Understanding the Role of the Gig Worker

Avoid Misclassification by Understanding the Role of the Gig Worker
From Recruiter - August 11, 2017

In my capacity as both a regular contributor to and afreelance writer, I spend a fair amount of time cruising job postings. In doing so, Ive noticed a dangerous trend cropping up over the past few years: Employers commonly blur the lines between various types of gig workers, which can have nastyrepercussion for both the workers and the companies themselves.

The freelance workforce topped 55 million workers at the end of 2016, making up 35 percent of the American workforce.However, one quick look at LinkedIn, Indeed, FlexJobs, and other top job sites shows a fundamental lack of understanding when it comes to gig workers.

Misclassification of workers can have seriousconsequences. Just ask the trucking companies that serve the Port of Los Angeles/Long Beach, who have paid out millions of dollars in settlements for classifying drivers as contractors instead of employees. In 2016, Uber drivers in California and Massachusetts won a misclassification suit that cost the company more than $100 million. In 2015, FedEx paid $228 million for misclassifying drivers. These are only a few of thousands of examples, with thousands more going unreported. On top of the risk of lawsuits, the IRS has also begun cracking down on the issue, which could mean more legal fees, audits, and back taxes.

Know What Type of Worker You Need Before You Post

Unfortunately for executives and hiring managers, the line between employee and contractor can be as blurry as the lines between worker types. According to the IRS website, There is no magic or set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

With only vague legal criteria standing between your company and a lawsuit, its important for recruiters and HR departments to know exactly what it is they need from a worker before posting a job. Here are a few terms commonly misused in job postings, along with theiractual meanings:

1. Freelancer

The primary focus should be on the free prefix in this word. Freelancers are self-employed, and as such, are their own bosses. They withhold their own taxes and handle their own benefits. There should be a contract and a 1099 on file. Your relationship here should be client/vendor, not employer/employee.

A freelancer is someone who plugs a specific hole in your workflow. They can and should be used for both temporary and permanent assignments, but with the important distinction that the company does not control how they spend their time. You tell a freelancer what you need and when you need it. The freelancer is then free to determine how and where they go about meeting those deadlines. A job post seeking a freelancer should never be paired with terms such as full-time or on location. If you need a full-time worker to provide a range of skills in your office on a long-term basis, you arent looking for a freelancer.

Example: I work as a full-time freelancer. I receive monthly assignments from my regular clients and one-off assignments from other clients. I meet deadlines per the terms of my various contracts, but I get the work done from my home office on my own daily schedule. I invoice clients upon completion of the work; upon payment, I withhold my own taxes, which I pay quarterly without client involvement.


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