The term ‘Gig’ has long been used by musicians to reference the job of performing in a club or at a concert venue. However, over the last decade, the word gig has evolved into nomenclature, principally used to describe work performed by a group of people who participate in the workforce but are considered non-employees.
Sometimes referred to as self-employed, this collection of independent workers usually includes artists, writers, photographers, craftspeople, salespeople, contractors, non-live-in domestic help, or childcare workers. More recently, others have joined the ranks by way of the tech explosion, and now make a living by delivering food and people.
For clarity, anyone who works for themselves and is not classified as an employee could very well be known as a ‘gig-worker,’ and with this identification, comes the freedom to enjoy—or suffer—depending on your view of what job security is—the flexibility and constant search for work and reward.
Seldom do these folks become incorporated or form an LLC, primarily because they know how to do their job and have zero interest in the legal or accounting practices of owning a business. As for others, they do set up the legal and financial structure that enables them to be considered a small business and a separate entity from themselves.
Know thy Self
Once armed with information, it is important to understand who and what differentiates a subcontractor, independent contractor, day laborer, or often referred to as freelancer from employee status. The determination depends on who you ask, the state you live in, and if someone is out to get you by claiming ignorance—more on this later. In the past, if you didn’t want the restrictions mandated by an employer who tells you when to show up at work, how long you would be stationed to a task, and dictate your pay rate, you had an option. For practicing gig-workers, they often show up for a day, ask if there is work to be done, and it’s out the door once the job is completed.
As for other job-seekers, many never leave home or a communal workspace; an email or phone call is all that is necessary, accompanied by a discussion of the work to be performed and an agreed-upon price for the labor; this would be enough to consummate the deal. Once finished, the worker and their client part—no strings attached.
While most people are happy with this arrangement, you can bet that the government dislikes every working part of this business relationship and are making caustic decisions when it comes to punishing businesses through selective and bias rules of conduct, combined with harsh fiscal punishment.
During the last decade, much has changed, both good and bad. As expenses rise for maintaining a workforce through higher employment taxes, health insurance, and minimum wage requirements, many business owners find it attractive—if not necessary—to label some of the people who worked for them as outside labor; a catchphrase for those clumped into the ‘gig’ economy. Through this backdoor of sorts, employers have been found to cheat the system, by reclassifying the people working for them. Freelancers noticed they were carrying out the same duties, keeping the same hours, taking breaks, and most importantly—reporting to the office, yet when it came to paying taxes and receiving benefits, they were being treated differently.
Due to the abuse, the process of hiring and labeling freelance workers caused the Labor Department, and various state institutions, to look closer at these violations of labor laws.
Follow the Money
Freelancers et al., are supposed to be paid on a per-project basis rather than an hourly rate decided upon by the employer; while employment taxes are deducted from regular employees, the gig-worker assumes responsibility for paying a self-employment tax—which is sometimes forgotten until a threatening letter is received by the IRS or state revenue office, and then suddenly these workers decide they’d like to switch teams and claim they “thought” they were employees (more on this later).
As mentioned earlier, for a while, graphic artists, photographers, bookkeepers, day-workers, and those providing similar one-time or per-project solutions, were left alone to earn a reasonable living. But, with the advent of new business models such as Uber, Lyft, TaskRabbit, DoorDash, and others, the idea of slicing off a large segment of dutiful workers all becoming self-employed has pissed-off the tax collectors, labor unions, and political elites.
Exceptions to the Rules
One of the biggest problems facing gig-workers is how unfair and unbalanced the law is when it comes to defining who is self-employed and who is an employee.
Real estate agents, have long fit into the category of subcontractor and have avoided penalties as it relates to independent sales contracting. Seldom, if at all, have these individuals gone to court to argue the legality of their position; however, there are plenty of other salespeople who start out claiming independence, until such time they are caught not paying self-employment taxes—mentioned earlier—only to turn 180° and claim they were employees and the ‘boss’ didn’t correctly withhold the money due to the state and feds. Unfortunately, this scam continues to be allowed, and the culprits are left to repeat their corrupted activities over and over again.
Moreover, pressure from state officials has caused considerable confusion over hiring domestic help, with many homeowners forced to employ housekeepers, landscapers, and those who have always been considered ‘outside help.’
It is a struggle to be self-employed, with two sides of the coin to consider; some people vow to never report to an office and a supervisor—they are pretty much free-spirts and don’t want that to change. Conversely, we find an equally insistent group who wouldn’t know what to do if their weekly paycheck were to stop; these people are often in search of protection and security—gravitating to unionization.
With the proliferation of a gig economy, several organizations and unions are hoping to push government officials into investigating what they see as the evils of self-employment. At the same time, other well-meaning groups are attempting to organize and create loosely held pseudo unions for freelancers. In both of these cases, the people behind the scenes are making a ton of money from membership fees, while gaining significant influence over groups of people who never asked for their help.
A couple of weeks ago, opinion writer, E. Tammy Kim, for the New York Times (who may very well be a freelancer), penned a piece; The Gig Economy Is Coming for Your Job. The author uses an interesting example to support her thesis, a story about full-time union hotel workers [who] are watching app-based services replace them.
Kim informs her readers that because food delivery companies, such as Uber, Uber Eats, and DoorDash are making trips to hotels and replacing the need to order room service, workers who used to have the security of well-paying jobs and generous tips, are losing out to tech workers; who, are freelancers and could justifiably be viewed as the enemy.
The well-meaning opinion piece also touches on how taxis—usually summoned by hotel staff, with their hands open for a tip, are going the way of the typewriter. Today’s guests are pushing a couple of buttons on their smartphones, meeting a driver, then whisked to their destinations for a lot less cash.
The story, while attempting to vilify the freelancer, does make a U-turn and points out that the large corporations are using the gig economy to circumvent the identity of their workers by misclassification.
Through the words of Aaron Benanav, a labor historian from the University of Chicago, Kim refers to the new wave of workers as cloaked employees and not self-employed. She then tears at heart-strings by rekindling the sad fact that Uber has resulted in a decrease of taxi drivers, directly causing—at least a few incidences—drivers ending their lives.
Her point does cause pause and begs the question of whether the use of a phone app declassifies an employee’s status?
Interestingly, we learn from the author’s investigation that Uber has a little known “platform” called Uber Works. The app directs lower-paid workers who may need added income, to temp agencies. Kim argues that if this “legal turnstile,” works for this experimental group, what is to prevent it from taking over and eliminating the concept of “employee?”
Underlying this informative exposé are questions specific to personal freedom, government overreach, and the right to choose one’s destiny. Imagine—you can’t arrest or detain a homeless person who begs, sells drugs, camps, and defecates in public—but officials can force someone to work within the confines they enact or be left to starve!
In California, the courts have handed down a decision that makes it difficult to classify those who wish to be an independent contractor as self-employed. With the casting of a huge net, we find that it isn’t only the tech industry being affected; these actions will ostensibly include those who have enjoyed worker’s freedom, such as photographers, writers, actors, and those in the beauty industry. All who used to be considered freelancers, and are not interested in becoming employees, no longer have a choice.
Of course, this action has filled dockets with complaints causing heels to dig-in, and the fight to overturn this injustice is just beginning.
Back to Square One
So, without partisanship, let’s identify where big-brother has begun to flex its muscle. We’ve mentioned California, so logically, the state of New York can’t be far behind—correct?
Yes, unfortunately, Governor Cuomo is pushing for what is too often referred to as reform when it seems more like taking someone’s rights away.
We’ve heard from freelancers in Buffalo, New York, about the possibility they will be forced to turn into employees rather than be allowed the freedom to work for more than a single client and remain a self-employed freelancer.
A resounding “no way” was shared and repeated many times over. In every case, those working in the media, news, and those who serve as photojournalists were shocked to hear of this intrusion into their lives.
Most of their concerns were not about minimum wage, unemployment, and Social Security, but more about having a choice in the matter. In each case, our questions were quickly answered; “No, I don’t need someone telling me how much I’m worth,” and from others, we spoke to, a similar response, “The market determines what I can charge, and it worked out fine for me.”
People benefitting from the gig economy are complaining about the government prying and interfering with their business, which could have catastrophic results for the small guys and gals who enjoy their current status.
Recently, Cuomo has announced a call to arms, and in a veiled attempt to control those he describes as helpless workers posted: “We must end the exploitation of ‘independent contractors’ by passing legislation that appropriately classifies workers and reaffirms their rights.”
With his unnecessary exploitation of privacy between freelance workers and their clients, many live in fear while participating in an uproar of defiance.
For the most part, those working as independent contractors are happy, and they don’t like anyone coming between them and their livelihood. Some are pointing to the fact that on the West Coast, the new law is causing severe problems throughout specific disciplines, with companies having to show that they meet new stringent guidelines.
Stories circulate about media companies, some entrenched in far-left politics, being pressured by their like-minded communities, to find workers out-of-state so they can continue to squeeze out a meager existence.
No End in Sight
This fight is nowhere near ending; Massachusetts has long been known for attempting to break the backs of independent contractors, and now they are getting support from other states. As the push to take away freelance workers’ rights and money from their pockets, industries are putting more fiscal responsibility on the backs of their employees through shared health care expenses, the elimination of pensions, and the exclusion of other benefits.
In the larger picture, the pendulum has swung too far, with the momentum, hammering those in the middle.
The country is enjoying a rejuvenated economy, yet, independent contractors and small businesses can only survive if government crackdowns and forced legislation are relaxed. Changes made to the fragile
relationship between freelancers and their clients is tenuous. Unfortunately, companies may be forced to disqualify a group of hard-working citizens from participation wanting nothing more than to be the boss
and to determine their futures.
In the end, perhaps we should consider making progress by opting for more freedom and less government interference.
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