• iWorker Team

Benefits: A Growing Issue for Independent Workers


Independent workers provide benefits to the economy and to society, helping to increase the diversity of services available while enabling employers to save around 20 to 30% on wages (1).


While it has been long recognized that there has to be a trade-off between the freedoms Independent Workers enjoy and the job security and benefits provided to W2 employees, there is a growing movement to bring benefits such as sick pay, insurance, pensions, and maternity support into closer alignment.


But the current discrepancy is causing understandable discontent among workers with non-standard employment.


Exhibit A: Amazon

Throughout 2019, several groups representing Amazon temporary workers have filed legal action against Amazon due to benefit inequality and related unfair practices at 'last mile' delivery stations (2). These complaints have come from Amazon's internal temporary and part-time field staff (so-called 'class q' and 'class m' employees) who are deemed ineligible for some of the benefits awarded to standard part-time and full-time employees (3).


From Chicago workers voicing their concerns about being cheated out of overtime pay to those from Minnesota fighting back against strict time-off rules, there has been a wave of dissatisfaction leading to multiple labor complaints being filed.


Although the internal Amazon staff weren't technically Independent Workers, these cases do highlight some of the benefits disadvantages that non-W2 workers routinely face. For example, staff directly employed by Amazon are entitled to up to 14 weeks of full earnings for maternity leave but internal Independent Workers and part-time field staff are ineligible. Internal temps also face being fired if they go one day over their 20-hour absence allowance whereas permanent employees are protected from this outcome.


Some Amazon workers claim they have never heard of the class distinctions that separate them from their benefit-entitled part-time colleagues. This illustrates the confusion in the classification of workers that often leads to legal wrangles (4).


'More work to do' on benefit equality

Frustration and discontentment over benefits inequality have been predicted for some time.

Back in 2016, a report by McKinsey & Co. praised the macroeconomic benefits provided by the gig economy while advising that there was, 'more work to do on issues such as benefits' (5).


As governing bodies become increasingly aware of a crisis in unequal working conditions across the globe, recommendations for fairer treatment of Independent Workers have been included in reports from both the United Nations and freelancers' unions (6) (7).


In their 2018 paper, the UN stated that social protection for non-standard workers needed to be strengthened. They recommended alignment of benefit rules, an adaptation of insurance plans, complementing social insurance with non-contributory programs and moving social protections from the job to the individual.


Meanwhile, a study from Upwork found that 20% of full-time Independent Workers are uninsured. With 52 million Independent Workers in the US economy, that's a lot of uncovered liability.


Solutions: Pools, policy change, and portability

Various solutions have been proposed, in the documents above and elsewhere.


One suggestion is to move away from having benefits attached to specific jobs. Instead, benefits would be portable, applied to individuals and moving with them wherever they decided to work.


Another idea is the formation of workers' pools as already happens within the construction industry and in Hollywood. In fact, the slew of legal actions taken against Amazon has been filed by recently organized workers' groups such as Amazonians United Sacramento. However, forming official trade unions would rely on policies being changed in some countries. For example, there are often restrictions on collective bargaining over terms and conditions.


Discontentment with worker inequality is not going to go away until lawmakers take real action to modernize the benefits system and clarify definitions. Independent workers, internal temps, field workers, and employed staff need to know where they stand and what rights they have.


References

1. https://www.business-humanrights.org/sites/default/files/documents/CLA%20Annual%20Briefing-FINAL.pdf

2. https://www.vox.com/recode/2019/12/10/21005098/amazon-warehouse-workers-sacramento

3. https://amazon.ehr.com/ESS/Client/Documents/PlanDescriptions/Aon%20Hewitt%20STD%202013%20Summary%20Plan%20Description.pdf

4. https://www.foxhire.com/blog/the-difference-between-temporary-employees-and-independent-contractors/

5. https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Employment%20and%20Growth/Independent%20work%20Choice%20necessity%20and%20the%20gig%20economy/Independent-Work-Choice-necessity-and-the-gig-economy-Executive-Summary.ashx

6. https://www.foxhire.com/blog/the-difference-between-temporary-employees-and-independent-contractors/

7. https://www.fastcompany.com/3064937/freelance-workers-are-still-far-more-likely-to-be-uninsured

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