GIG ECONOMY TEMPORARY STAFFING APPS
Labor & Employment Law Section
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Employers engaging
temporary workers
should closely assess
and proactively manage
both new and traditional
methods of engagement.
N
ew technologies with
names like “tilr” and
“Shiftgig” are using
algorithms to match
people to temporary jobs in the
modern gig economy, much like
ride-sharing apps connect
passengers with drivers. Although
the technology may be new, these
applications are the modern
equivalent of outside staffing
companies or professional employer
organizations (PEOs) that provide
temporary employees under
detailed staffing agreements.
PEOs often are heavily regulated
by a state statutory or administrative
scheme. Further adding to these
compliance considerations, PEOs
usually are a co-employer or joint
employer with their customer,
and thus must comply with all
employment laws. Although the
use of gig employees may seem
more casual or less formal, the
same compliance considerations
will apply if a temporary worker
arrives via an app-based matching
process or a traditional PEO.
As gig economy temporary
staffing options emerge, here are
six areas of concern employers
should consider and, where
appropriate, resolve in advance
of hiring or using gig employees.
1. Employee versus
independent contractor?
This question often looms. If the
proper classification is employee,
the employer has many obligations.
Even if both parties agree to the
characterization, it may not be
legally valid under federal and state
law, so the employer must evaluate
each employee’s role on a case-by-
case basis.
2. Withholding
If a worker is an employee, the
employer must withhold federal,
state, and local taxes; Federal
Insurance Contributions Act (FICA)
taxes; Federal Unemployment Tax
Act (FUTA)/state unemployment
tax acts (SUTA) taxes; and more.
To avoid non-payment of taxes,
which may result in both companies
receiving notice from the IRS,
the issue of which company must
withhold taxes when an algorithmic
application assigns a worker to a
project must be evaluated in advance.
3. Workers’ compensation
Most states have strict rules
requiring workers’ compensation
coverage. Some app-based
temporary staffing models suggest
that workers’ compensation coverage
is provided. Employers should verify
coverage, regardless of the staffing
source used. If the hiring employer
provides workers’ compensation
benefits, this is an admission of
employee status, and the worker
should be classified as such.
4. Administrative Agencies
Some states and localities have
special requirements and notice
obligations with respect to
temporary employees. The Fair
Labor Standards Act and some
state laws require employers to
record time worked for temporary
employees. Employers must also
record covered injuries for temporary
employees on an OSHA log.
Continued on page 43
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