Employers in the “Gig Economy”: 3 Precautions you Must Take

Level.jpgIf you operate a business in Minnesota, you are likely aware of the growing popularity of the “gig economy.” This phrase refers to a workforce made up increasingly of people who work for multiple employers and often work in a temporary capacity.

If you participate in this environment, then you need to be especially cautious when it comes to managing your workforce. Below, we examine three specific precautions you must take if you hire independent workers for short periods of time.

  1. Employee vs. Independent Contractor. Be clear on classifications. It can be very difficult to know whether a person is an employee or an independent contractor in the gig economy. If you take a guess and are wrong, you could face lawsuits from misclassified workers and significant fines from the IRS. Unfortunately, there may not be an easy answer, as courts across the country continue to hear (and disagree) on cases involving whether person is a contractor or employee, like this case involving Grubhub Inc.
  2. Consistency. Consider efforts to provide consistent messages. Take the time to make sure your workers understand your office culture and the provisions of your employee handbook. Update these documents as circumstances change. Be sure they are available and relevant to the various types of workers you may hire.
  3. Don’t discriminate. Finding talented workers is a top priority in this environment, but be careful to maintain fairness in your efforts. Whether you are hiring and managing workers under the same roof or remotely, it is crucial that you avoid any practices that could be deemed discriminatory.  Currently the protected classes in Minnesota for purposes of employment are: race, color, creed, religion, national origin, sex, sexual orientation, marital status, familial status, status with regard to public assistance, membership or activity in local commission, disability, and age.

Taking these and other precautions when you hire temporary, freelancing workers can be essential in avoiding expensive lawsuits in the future. If you have any questions or concerns about your obligations and rights as an employer, you would be wise to discuss them with an attorney sooner, rather than later, so that you can sidestep costly mistakes.