Employers may behesitant to participate in any scheme to facilitate benefits forcontract workers, particularly if it puts them in to a grey area ofemployment law regulations. (Photo: Shutterstock)

It’s not necessarily easy to define the “gig economy,” and it’seven harder to estimate its size.

A 2017 study by Intuit and Emergent Research estimated thatthere were 3.8 million gig workers in 2016 and that the numberwould grow to 9.2 million by 2021.

Meanwhile, a study released this summer by Staffing IndustryAnalysts estimated that a whopping 53 million Americans worked insome capacity in the gig economy. That study took into accounttemporary workers assigned to jobs by staffing firms as well as thefully independent contractors, such as Uber drivers.

What is clear, however, is that the gig economy is generallycharacterized by a lack of benefits. Workers are almost always ontheir own when it comes to retirement savings and health care.

To some, that’s a major problem. Many labor advocates see theuse of independent contractors as a way for companies to evadetypical employee protections and leave workers insecurefinancially.

However, not all freelancers are unhappy with their worksituation. A recent survey of “external employees” by the Societyfor Human Resource Management found that about three-quarters offreelancers say they could get a full-time job if they wanted toand that nearly one-fifth of them said they preferred to workexternally. That suggests that while many freelancers would like tohave a full-time job, they’re not unhappy enough in their situationto settle for one they won’t like.

Asked what their reasons were for working as freelancers, themost popular reason, cited by 49 percent of external workers, assetting their own schedule. Similarly, 40 percent said they likeddetermining the number of hours they’ll work. A third ofrespondents cited the appeal of working from any location.

Meeting gig workers where they are

An affinity for the freelance or gig lifestyle does notnecessarily make up for the problems traditionally associated withindependent contract labor, notably the lack of benefits.

Perhaps the problem is not the gig economy, but the traditionalsystem of employer-based health care and retirement savings. Makingbenefits portable would allow workers to avoid being tieddown to a job. Employment mobility can encourage entrepreneurship,empowering workers to take greater risks, including startingcompanies, without the fear of losing health coverage forthemselves or their families.

Obamacare has helped on this front. First, the Affordable CareAct prohibited insurers from refusing customers based onpreexisting conditions. Previously, somebody who quit a job tofreelance or start a business faced the serious risk of beingdenied coverage due to a medical condition, forcing them to livewith the fear of a financially crippling hospital bill.

Just as important, the ACA established a centralized marketplacethat any consumer could access online and find a plan that coveredall of the core services that one would expect from a healthplan.

Finally, the ACA subsidies have made health care cheaper for themany independent employees with low or modest incomes.

However, the ACA isn’t nearly enough to address the benefitchallenges that accompany freelance employment. First, it onlyaddresses health care. Second, its health plans aren’t necessarilycheap, particularly for those who make too much money to qualifyfor subsidies.

A number of companies are therefore designing portable insuranceproducts geared towards America’s millions of gig workers,part-time employees and others who traditionally don’t receiveemployer-based insurance.

One example is Trupo, an “insurtech” company that focuses onoffering “curated” insurance to freelancers. Similar to Turbo Tax,Trupo leads users through a series of simple questions about theirincome, work status and physical activity required of their job.Based on the answers, it recommends a health plan.

Trupo, which is currently only offering insurance in the stateof New York, is partially owned by Freelancers Union, a nonprofitorganization (contrary to its name, it is not a traditional laborunion) that offers services to independent employees and advocatesfor freelancer-friendly policies. A Silicon Valley-based venturecapital fund, Sequoia Capital, is also a part-owner of thecompany.

Also offering curated benefits targeting freelancers is Catch.Its dashboard allows workers to search for and compare healthinsurance plans. It also provides a robo-advisor that helps workersput money away for retirement in an IRA or Roth IRA. Finally, itoffers to automatically calculate federal and state withholding andput them in a separate account for workers to use to pay taxeslater.

Employers seeing the benefits

In other cases, benefits providers are partnering with employersto offer voluntary products to independent contractors.

A notable example is MyChoice Market, a platform that wasoriginally designed by Businesssolver as a way to offboarddeparting employees, including transitioning their benefits, in thehopes of staying in touch with high-quality former workers whomight return in the future. Businesssolver is now marketing theprogram as a benefits platform that employers can use to attractand retain part-time employees by offering them a convenient way toaccess and oversee their own benefits, even if the employer is notcontributing to them.

“Because Businessolver manages pools of employees and premiumpayment in the system, these employees can get lower rates thanthey may have access to on the retail market,” said the company ina recent news release. “Benefits access at better rates supportsemployees’ physical, mental, and financial well-being, and thisdrives improved outcomes for individuals and organizationsalike.”

A number of prominent employers boast a range of benefits forcontract employees. SurveyMonkey, the online polling company,announced last year that it would be working with i2i benefits andInsurance Services to provide benefits to the contract employeeswho work at its San Mateo site in janitorial services, catering andworkforce management. The benefits included a medical plan withpremiums that are 85% paid for by the employer, a $260/monthvoucher for public transit and 80 hours of paid vacation ayear.

There are reasons that employers may be hesitant to participatein any scheme to facilitate benefits for contract workers. Thatcould be used as grounds by regulatory agencies, such as the IRS orthe Department of Labor, to classify those workers as employeesentitled to full employee protections.

That’s why Mike Boro, a partner at PwC’s who specializes inindependent contractors, tells SHRM he recommends that clients workwith temp agencies to provide benefits to workers. And yet, hesaid, that doesn’t eliminate the risk. If the temp agency ispassing the cost of benefits onto the company, then it is thecompany that is effectively providing the benefits.

Employers, including gig economy platforms, may not be willingor able to pay for benefits, but they can help connect theirworkers with resources to find benefits themselves. Many gigplatforms, including Uber, have partnered with Stride Health, asearch app that people can use to find ACA health plans.

Fiverr, an on-demand task service, has partnered with eHealthand WealthSimple to help its workers find health plans and set upretirement savings accounts. It also has a tax advice service ––including a personal tax adviser –– that is heavily discounted forboth those who provide and buy services through the site.

For those who are forced into or choose the freelance lifestyle,there may never be options as easy and generous as those providedby a full-time employer. However, economic, political andtechnological changes have clearly created an opportunity, both forbenefits providers and workers, to provide a greater level offinancial security to freelancers than they have historicallyenjoyed.

Read more: 

• Gig work, data privacy and other workplace trendsto watch
• The external workforce: It’s more than agig
• Gig workers help small businesses, but bosses arenervous about it