Though the COVID-19 pandemic had a significant impact on the US workforce in 2020, you have to look back 10-15 years to see the earliest developments of the so-called “gig” economy. The term describes a shift from the traditional employment environment toward alternative working relationships, such as through contingent labor, one-time gigs, and freelancers. Statistics from Fortunly, an online source for financial market news, reveal some insights about the current state and what Georgia companies can expect as the gig economy continues to evolve:
- Approximately 57 million Americans participate in the gig economy, representing 36 percent of the nation’s workforce;
- Almost half of all millennials find work through gig-based platforms;
- More than 90 percent of people in the US would consider gig economy work; and,
- Among companies who currently use gig economy workers, 85 percent indicate they would continue the arrangement for the next five years.
Based upon these figures, there is a good chance that many Georgia businesses will participate in the gig economy in the future – if you are not already. When that time comes, your company could be faced with numerous employment law issues, even in the absence of a true employer-employee relationship. You should consult with a Georgia employment law attorney about the specifics, but here are a few points to keep in mind.
- Risks of Misclassification: The biggest issue that could threaten your company’s interests is not establishing clear lines between employees and gig workers, and treating each category appropriately. Failing to make the distinction is known as misclassification, and the concept predates the gig economy by decades. A true employee misclassified as an independent contractor or gig worker is deprived of employment-related benefits; examples include wage and hour laws, civil rights protections, workers’ compensation, unemployment, and participation in employer benefits packages. For the Georgia employer, misclassification could lead to payment of back wages, damages, and even criminal penalties.
- Separating Employees from Gig Workers: Because misclassification is a serious legal issue, it is critical to prevent blurred lines from developing between employees and gig workers. Unfortunately, there are challenges in doing so: Applying the “independent contractor” label and issuing 1099s for tax purposes are not sufficient. Instead, the Fair Labor Standards Act (FLSA) provides some guidance on the characteristics of the employment relationship. Factors include:
- Whether the arrangement is permanent;
- The degree of control the company exercise over the worker’s hours, job tasks, and related conditions;
- How the worker’s job tasks relate to the principal business of the company;
- The worker’s investment in the facilities and equipment owned by the company.
- Protecting Intellectual Property: A gig or freelance arrangement means that an outsider could have access to valuable intellectual property assets, even if just on a short-term basis. This may present a problem when you seek to protect confidential information, and the potential risks are real. The US Bureau of Labor Statistics (BLS) indicates that some of the top gig economy positions are in such industries as arts and design, computers and technology, and media – all sectors where intellectual property plays a prominent role.
- Harassment and Discrimination Issues: Independent contractors are not covered by antidiscrimination laws, but Georgia business owners may still need to address their legal obligations. There can be hostile work environment implications if you retain gig workers who engage in harassment or discrimination against your regular employees.
Our Georgia Employment Law Attorneys Can Advise You on Gig Economy Issues
For more information on how employment law concepts affect your company’s relationship with a gig worker, please contact the Vaughn Law Firm in Decatur, GA. You can call 877.615.9495 or go online to set up a free consultation with one of our skilled lawyers.