Future Friday: What about the “dependent contractor?”

by Michael Haberman on July 1, 2016 · 0 comments


The freelancer of the future may actually be a dependent contractor.

The freelancer of the future may actually be a dependent contractor.

There is a great deal of controversy about the independent contractor and the gig economy. I have written about it a lot, as have many others. People are floating numerous ideas about how to utilize workers beyond the employee versus independent contractor. One such idea has been labeled as the dependent contractor.

Dependent

The question is what would this dependent contractor be dependent on? The biggest issue is the safety net of benefits, in particular health benefits, that might make the life of an independent contractor easier. This social contract, as it has been labeled, of providing for the health and welfare of all workers needs to be redefined. Currently for the private sector to provide this the worker must be labeled as a W-2 worker. The government providing for it creates an outcry of welfare and is decried.

Some people have suggested that anyone using contractors pay into a system that provides a way to pay for health and welfare of contractors. According to one article one company is doing just that. It is far from a universal solution.

Trade off

For the time being workers and companies have to decide where they are in the system. Companies that use contractors get the freedom to adjust their workforce on demand, but lose the ability to exert control over that workforce to the level many would like to have. They also have no guarantee of worker commitment and often wonder about the quality of the work they get.

The worker that performs as a contractor also has a tradeoff. They can work when and where they want, assuming they can find work to begin with, but they do not have the support they need. Without paying for generally expensive healthcare or having a lot of money in the bank, they have a hard time weathering periods of illness or injury and those associated costs. In the meantime many “gig” workers are on a hunt for the acceptable fulltime job.

It will take effort

It will take a concerted effort on the part of employers, workers, and governments to work out the details of a new social contract. It will take openmindness on part of all parties to work out the details of this contract and determine what needs to occur. Hopefully as the new world of work evolves parties will work together to revise what is needed. I suspect that workers and employers will lead the way, let’s hope government won’t be too far behind.


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