How On-Demand Work Benefits Everyone
Technology and a shifting business landscape have slowly changed the definition of employment. As workers gain more freedom and businesses let go of the traditional “cubicle” lifestyle, what will the legal and social implications be?
The on-demand employment market is one of the hottest trends in business right now, and it does not just help freelance content writers and college kids as it did in the past. Some professionals suggest that over 9 million Americans will be on-demand employees by 2021. That is a staggering 23% compounded annual growth rate. As the definition of what employment means slowly shifts, your business will face legal implications beyond what type of workers you hire. Here is our take on the shifting job market:
Employment Trend for 2017: On-demand is now In-demand
The modern business landscape is a skills economy, especially as it pertains to technology and its applications. With advanced telecommunications and increasing reliance on the web and cloud-based applications, companies are taking a more casual approach to employment. In other words, businesses and individuals hire specialists only when they need them. Therefore, we are experiencing a rise of platforms that directly connect those in need of a service with those who offer the service—Uber drivers, Instacart shoppers, and Airbnb renters all fall into this category. A quick glance at some numbers paints a clearer picture.
- 3.9 million Americans are employed on-demand
- 700,000 more Americans are being employed this way compared to last year
- The average worker earns 24% of their income on-demand
- 37% of workers own a business
These statistics make it clear that on-demand employment is a rising trend, so entrepreneurship is also on the rise. Increased work-life balance, ability to work from anywhere, and freedom to take extra work are clear advantages over traditional employment. Another interesting statistic is that workers are earning only about 24% of their total income from this route on average, showing it is still in the supplemental income phase.
Are you an independent contractor or employee?
With new technology always comes a new legal issue. Now that apps, websites, and other platforms directly connect those in need of skills with skill providers, an interesting legal grey area has developed. Federal and state jurisdictions treat independent contractors and employees in vastly different manners. If they classify a contractor as a full-time employee, the employer would be responsible for the following:
- Workers’ compensation payments
- Social Security payments
- Benefits, including retirement payments
- Any employment taxes due
Employers misclassify an estimated 3.4 million workers nationwide as independent contractors each year, according to the U.S. Government Accountability Office. This issue results in major loss of taxes for government programs, such as Social Security. High-profile cases in this area include government cases against on-demand driver services, such as Uber and Lyft.
Contact a Texas Business Law Attorney
The benefits of the rise of the on-demand economy for both employers and employees is clear, but seeing how governments and competing industries react legally and economically to the trend will be of special interest to businesses going forward. If you are starting a business or have an established institution, a business law attorney can help you with questions about on-demand workers and contractors. Contact Slater Pugh, Ltd. LLP at (512) 472-2431 for the business law help you need.