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HR Leadership Column

Digging in for the Gig Economy

As nontraditional worker models continue to grow in popularity, HR leaders are going to need to brace for changes on the legislative front, as policymakers and the courts begin to weigh in.

Tuesday, October 27, 2015
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I used to live in a nice area of northern Virginia, in a neighborhood of business executives, senior government officials, association executives, doctors and lawyers.

One day, I was chatting with a neighbor and I asked her what she was up to now that she had retired from her government position. I knew that she was an empty nester and wondered how she planned to keep busy.

She grinned and gleefully said "I'm an Uber driver!" She went on to explain that she had developed a loyal clientele of female students who attended a nearby university. They called her regularly, especially when they planned to go out at night, knowing they'd be drinking and shouldn't be driving.  

It was the perfect "gig" for her: She was a night owl, so the hours didn't bother her. She only worked when she wanted to, and she enjoyed the students. In short, she had become a member of the growing cadre of workers who want more control over when they work, where they work, and for whom they work. She was part of the "gig economy."

Most experts predict that the trend in the use of freelancers, independent contractors, and other new models for how employers get work done, is going to continue to grow.

According to a recently issued i4cp research report from the Institute for Corporate Productivity, Beyond Uber: Driving the Evolution of Work, 95 percent of the executives interviewed were using, or anticipated using, more non-traditional (non-employee) skilled workers.

A Society for Human Resource Management research report issued about the same time came to a similar conclusion. Surveys of HR and non-HR C-suite executives found that both groups believed that many organizations will attempt to shift to the use of different, less traditional employment models in the coming decade. While 86 percent of the HR professionals surveyed said that their organization used a traditional employment model, fewer (60 percent) anticipated that this would be the model they would use in the next 10 years. Although 19 percent of survey respondents said their companies currently used a non-traditional employment model (or project-based employment), 40 percent anticipated that this would be the employment model used in the next decade.

The i4cp report notes that while the use of non-traditional workers isn't necessarily new, there's a shift in the type of non-traditional worker employers are seeking, as well as the strategies employed to use these workers:

 

"In the past, the use of contingent, contract, or other nontraditional workers was largely reserved for tactical purposes, centering primarily on cost savings. But the new shift is more strategic than tactical, focusing more on the creative utilization of talent. The objective is simple: to increase organizational capability, capacity, and agility."

LinkedIn has also acknowledged the trend -- and the business opportunity it presents – by recently joining the host of existing websites designed to help freelancers find gigs. This month, LinkedIn launched a pilot project called "LinkedIn ProFinder," designed to connect freelancers and contractors with companies needing work done. While the effort will initially be limited to the San Francisco bay area for just accounting, graphic design, and writing and editing jobs, it hopes to include more white-collar positions in other regions in the future.

I've thought about my neighbor often as I've followed news reports about Uber being sued in California by its drivers. The drivers are claiming they're employees of the firm and have been misclassified as independent contractors. As such, they're seeking reimbursement for expenses such as gas and vehicle maintenance and payment of tips that they claim were not passed on to them.

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Last month, the California court hearing the case ruled that the lawsuit could be brought as a class action, significantly raising the stakes for Uber. If the courts ultimately rule that Uber drivers are employees, and not independent contractors, Uber will be liable for the costs of Social Security, workers' compensation and unemployment insurance. Uber and other businesses that have adopted a gig-based business model, or plan to in the future, may have to rethink their strategy.

On the regulatory front, the U.S. Department of Labor has increased enforcement efforts to stop employers from misclassifying employees as independent contractors, while a recent ruling from the National Labor Relations Board has found joint-employment relationships in situations where they did not exist before.

As HR professionals look to a future where businesses place greater reliance on non-traditional workers, they'll also have to be mindful of how public-policy makers and the courts are reacting to the new models.

An on-demand or gig economy is certainly creating exciting new work opportunities for some. But it's also raising hard questions about what new worker protections might -- or might not -- be necessary in the future.    

HR executives need to be prepared to provide the right answers.

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

 

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