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What to Expect in the Gig Economy

Human Resources

There is a definitive change in the American workforce as the gig economy has established itself as part of the labor market.

More than 57 million Americans consider themselves freelancers, a 30 percent increase from the previous year, a 2017 Freelancing in America report from Freelancers Union and Upwork found. These numbers represent a changing workforce, and with it, a new set of values, challenges, and needs that HR teams should prepare themselves for.

Why professionals want to be part of the gig economy

Independent workers value creativity, freedom, and autonomy over the path that many traditional full- or part-time employees take. As many as 63 percent of freelancers find that having a diversified portfolio of clients is more secure than the conventional format of having a single employer, according to the Freelancing in America report.

The desire for autonomy is the typical motivation for freelances; yet self-employment is not for the faint of heart. Gig workers often struggle with isolation and time management, although the growing popularity of work-sharing spaces and networking groups have helped combat these issues. Also, there is the potential for not as much financial security and none of the associated benefits that often go along with being a traditional employee.

Creating a cohesive workforce

There are obvious payoffs for companies tapping into the independent workforce. A business has easier access to a greater range of creative talent and additional help can be brought on board to ease the burden of temporary, heavy workloads. It could reduce onboarding and ongoing overhead costs, and a business can bring an expert to the team for a specialized, short-term task.

Finding and attracting reputable and talented contract workers, like regular employees, demands effort. Additionally, just because an individual considers themselves a freelancer doesn’t mean that they can be an independent contractor for your company. HR must continue to navigate complex laws and regulations and determine whether a person is considered an employee or an independent contractor.

Once a freelancer is brought on for a project that person often participates on teams, and contributes to the diversity of a blended workforce. Cohesion, teamwork, and collaboration across full-time, part-time and independent contractors remain critical to ensure the success of a team's efforts. For instance, an independent contractor may need seamless access to the company’s intranet to assist in the completion of a collaborative project.

Embracing the evolution

Agile and tech-savvy HR departments can stand to gain tremendously from the gig economy. Incorporating smart technology can increase a business’s ability to engage with this burgeoning remote workforce.

Freelance management systems are emerging as tools to curate and track lists of freelancers and their activity within an organization, while collaborative project management platforms — like Slack, Trello, and Asana — provide agility, efficiency, and communication across siloes for a blended team. Offering reliable payment to gig workers through software that automates payments or automatic deposits is yet another way to engage contract workers.

While one of the attractions for a company to use gig workers is to cut costs in onboarding, salaries, taxes, and employee benefits, some companies are exploring the idea of providing benefits to contractors, particularly to help differentiate themselves in the competitive freelance market. However, it's important to avoid offering benefits through the company's programs in a way that could risk an independent contractor from being subsequently classified as an employee. Employers looking to add benefits for independent contractors may wish to review the plan with legal counsel.

It takes a progressive HR department to become a valued player that reaps the benefits of a gig economy. Knowledge, understanding, and a willingness to adapt are key drivers to success.

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This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.