Do the right thing

The time has come. It’s time for the ‘gig economy’ companies and others exploiting employment regulations and independent contractors to step up to the plate. They need to face the facts, admit the truth, and reclassify these workers as employees. It’s time to do the right thing.

I wrote a similar article, What’s Bad for the Hive, a couple of months back. Little did I know back then that the world would change so dramatically since then. I’m going to do my best to keep this rant short, so you may want to refer back to that post first for a little background before wading into this one.

Here’s the crux of the matter. The gig economy companies and others who skirt employment regulations and laws use “independent contractor” status to avoid paying FICA, unemployment, and other taxes.

FICA is the acronym for the Federal Insurance Contributions Act. It covers social security and medicare contributions. For most workers it amounts to 15.3% of the gross wages paid. When a worker is classified as an employee, the employer and employee split the tax with each side contributing 7.65%. The taxes are withheld from the employers pay, while the employer contributes the tax in addition to the wages paid. As an independent contractor, the worker is responsible for the entire 15.3%, which is paid out of their gross compensation received while working as an IC.

In addition to FICA, employers contribute to federal and state unemployment insurance funds. The purpose of the these contributions is for all employers to contribute to a fund that is used to provide benefits when an employee loses their job. When all employers contribute to the fund, the costs of unemployment benefits are spread over a larger base so the fund can support employees who are put out of work when tough times hit a company, when a recession hits, or when a pandemic shuts down the company.

Can you see where I am going with this? If not, here’s the punchline.

Gig economy companies are looking for assistance for their “independent contractors” who are getting less work because of the on-going pandemic. While I am sympathetic to the plight of the workers, I am not sympathetic to the plight or request of the companies.

The investors, founders, and employees of these companies have benefited asymmetrically by exploiting these workers. They have lined their pockets by hiding behind IC loopholes, yet these companies give them the tools to do their job, usually in the form of an app, set their rates, and directly influence their ability to get work through a rating system.

Now, when times get tough, these same companies want the government, which in this case are businesses who are following the law and the public at large, regardless of whether they use these companies services, to foot the bill for unemployment benefits and health insurance. I would consider the request under one condition, and one condition only – these companies MUST reclassify their workers as employees starting immediately and continue to do so going forward. These companies MUST pay their fair share for the costs of unemployment insurance and be responsible for providing access to health care plans as mandated by the size of their workforce according to current and future employment law.

It comes back to “what’s good for the hive is good for the bee.” If we all do our part, if we all do the right thing, then the system works. When people manipulate the system for their personal benefit, then the system breaks down. When the government (or authorities) bail these companies out, it rewards and promotes their bad behavior, which breaks the system.

It has to stop. It must stop. It shouldn’t have take a crisis to make it happen.

We can’t change the past, but we can learn from it. Let’s not let this happen again. It’s time for the gig economy companies to step up and do the right thing, starting now.