Across the United States, gig work is on the rise. In fact, according to research by the Gig Economy Data Hub, at least 41 million Americans engage in some form of gig work. For many, this on-demand freelance work is an excellent way to bring in supplemental income while offering plenty of flexibility. Some Americans even rely on gig work as their primary source of income.
As freelance and independent work grows nationwide, businesses and HR professionals must understand the legal challenges and opportunities of this evolving workforce model. This way, they can ensure legal compliance and fair labor practices in an increasingly dynamic environment.
What is the Gig Economy
So, what is the gig economy and what kind of impact has the rise of gig work had on conventional employment models?
Defining the Gig Economy and Its Growth in the United States
In simplest terms, the gig economy refers to a labor market characterized by the availability of on-demand work, usually in the form of small tasks or projects. Compared to traditional employment models, workers in a gig economy are paid only for the specific task that they complete — and the work arrangement is only temporary.
While the concept of gig work is hardly new, advancements in technology have drastically increased the availability of this work in recent years. Today, third-party apps make it possible for freelancers to find work with ease, with some examples of popular gig work platforms including:
- Uber
- Lyft
- TaskRabbit
- Fiverhe Instacart
The Impact of Gig Work on Traditional Employment Models
Because of the increasing availability of gig work opportunities, some workers have even quit their "traditional" nine-to-five jobs in favor of the greater flexibility and versatile scheduling that gig work offers. Meanwhile, employers have begun favoring gig workers in some cases, as they tend to offer significant cost savings in areas such as recruitment and hiring. Plus, with the gig economy, businesses can enjoy access to a wider talent pool.
With all this in mind, it makes sense that some experts are predicting that the gig economy will account for approximately half of the American workforce by 2030.
Legal Challenges Facing Gig Workers
While gig workers benefit from their labor arrangements, they also face legal challenges, especially regarding potential misclassification. In many ways, these workers have a responsibility to understand their own legal rights and protections in the gig economy.
Classification of Workers: Independent Contractors vs. Employees
One of the most notable legal issues for gig workers is the potential to be misclassified by businesses. In some cases, businesses may misclassify a gig worker as an independent contractor when, legally, they should be considered an employee of the company.
Unfortunately, when misclassification occurs, workers may not receive the same pay or benefits to which they would be entitled as employees. In fact, they may not even have the same legal rights and protections. Independent contractors, for example, do not have a right to claim unemployment compensation.
Misclassification has become a widespread problem in the gig economy, and the United States Department of Labor has made efforts to clarify worker classification under the Fair Labor Standards Act (FLSA). Still, the varied nature of gig work continues to pose legal challenges for gig workers and employers alike.
Legal Rights and Protections for Gig Workers
In addition to the FLSA, which is designed to protect gig workers from misclassification, these workers have some additional legal rights and protections worth noting. In states like California, laws such as Proposition 22 ensure gig workers earn more than the local minimum wage and provide healthcare subsidies for those working a certain number of hours per week. Likewise, under Proposition 22 in California, workers are legally protected from employment discrimination.
Unfortunately, these protections do not exist uniformly across the country. However, gig workers in the United States are responsible for contributing to Social Security through self-employment taxes, though they generally do not have a nationwide legal right to collective bargaining.
Navigating Legal Issues for Gig Economy Employers
With so much grey area, many businesses relying on gig workers struggle with legal and compliance issues. By understanding how employment laws apply to gig workers and implementing some best practices for managing gig workers, businesses and HR professionals may be able to avoid needing gig economy legal services for noncompliance charges.
Compliance With Employment Laws for Gig Workers
Businesses have important legal obligations when it comes to working with independent contractors and freelancers. For instance, business professionals need to be familiar not just with federal labor laws, but state labor laws to avoid potential legal pitfalls. This is especially true when it comes to classification, as misclassification of an employee as an independent contractor can lead to serious legal troubles for businesses.
Best Practices for Managing Gig Workers Legally
Fortunately, there are some basic tips and best practices that employers can keep in mind to help them manage gig workers legally. For starters, employers should have contracts with gig workers that outline their roles, responsibilities, and expectations clearly. Meanwhile, employers are encouraged to keep detailed records of independent contractors and the work they do.
Even though gig workers may not be entitled to the same benefits as employees, employers should be aware of any state legal protections that may be in place, such as minimum wage protections or rights to health benefits.
Finally, employers should familiarize themselves with the FLSA and its guidelines for properly classifying independent contractors versus employees.
Leveraging an M.L.S. Degree for Success in the Gig Economy
For business and HR professionals who want to better understand all the complexities of working with freelancers in the gig economy, pursuing a Master of Legal Studies (M.L.S.) degree can be an excellent option.
How an M.L.S. Equips Professionals to Handle Gig Economy Legal Issues
For starters, an M.L.S. degree can provide these professionals with the necessary knowledge and skills needed to navigate gig economy legal issues, from avoiding misclassification to understanding legal protections for gig workers. Meanwhile, this type of degree program can help business and HR professionals enhance their own compliance and management strategies.
The Role of M.L.S. Graduates in Shaping Fair Labor Practices
With knowledge comes power, and those who complete an M.L.S. degree program can have a significant impact on promoting ethical labor practices and ensuring that gig workers are treated fairly and legally in workplaces across the country. With their new-found knowledge, business and HR professionals can do their part to protect the growing population of gig workers from unfair and even illegal treatment.
Ready to Advance Your Education?
More than likely, the gig economy is here to stay, but businesses and human resources professionals need to understand the potential for legal issues that may be faced when working with freelancers, independent contractors, and other gig workers. More than ever, it is essential for these professionals to be well versed in legal issues surrounding classification, employment laws, legal protections of gig workers, and more.
An online Master of Legal Studies degree from the University of Miami School of Law can provide HR and business professionals with the foundational knowledge needed to navigate the complexities of this dynamic workplace model. With six dedicated tracks to choose from (including one in HR), this online degree program is ideal for busy professionals working in law-adjacent careers.
Learn more about the University of Miami School of Law's online M.L.S. degree program by contacting us, or feel free to start your application for admission today.
Sources
https://admissions.law.miami.edu/academics/mls/
https://www.dol.gov/agencies/whd/flsa/misclassification
https://www.dol.gov/agencies/whd/flsa/misclassification
https://www.gigeconomydata.org/basics/how-many-gig-workers-are-there
https://www.naco.org/featured-resources/future-work-rise-gig-economy
https://hrforecast.com/what-is-the-gig-economy-and-why-is-it-the-future-of-work/
