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The Gig Economy: Why Employers Need to Focus on Worker Classification in 2020 and Beyond

Woman smiling and writing at a desk

The future of work is here and the gig economy is thriving. In fact, a 2020 report found that 43% of an average organization’s total workforce is comprised of contingent workers, a figure that has more than doubled over the past decade.1

Fueling this business trend is the desire to remain agile and scale quickly. Yet, as the world of work moves toward a contingent workforce, the greater the risks companies will face classifying their workers accurately.

Why does accurate worker classification matter?

In the U.S. and abroad, government and local agencies are always looking for companies that are using independent workers, consultants, freelancers, or gig professionals to avoid tax payments and other legal responsibilities, either intentionally or unintentionally.

What are the consequences of misclassifying workers?

As we’ve seen in recent California headlines, there can be some serious consequences when workers in the gig economy are inaccurately classified.

If found, companies usually have to pay thousands of dollars in fees, penalties, and taxes owed, for each misclassified worker.

Conclusion

As organizations work towards meeting their business goals, engaging with independent workers may provide the flexibility and agility companies seek. In doing so, however, businesses will need to focus equally as much on classifying their workers in order to avoid costly missteps.

How iWorkGlobal can help

Whether your contingent workforce needs a pulse check to ensure it is operating compliantly, or you’re looking to engage new talent, the experts at iWorkGlobal ensure that your U.S. and international programs are in tip-top shape – leaving no room for costly errors. Check out these three simple steps to learn how.

 

 

1 Ardent Partners, The State of  Contingent Workforce Management 2020
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