Technological advancements—like social media and freelancing platforms—have helped make gig work more lucrative and accessible in recent years. The gig economy can encompass anything from ridesharing and delivery services to dog walkers and construction workers.
While gig workers are typically independent contractors, they still need to be protected on the job. If you own a business that hires primarily gig workers, workers’ compensation is crucial for ensuring your employees are covered if an accident happens at work. Medical expenses, rehabilitation costs, and lost wages can add up, but with a great insurance plan you won’t need to worry about potentially having to pay out of pocket.
Traditional workers’ compensation coverage might not make sense for gig economy workers, but there are alternatives. Let’s take a look at some of the unique payroll challenges for gig workers and innovative solutions for workers’ comp in the gig economy.
Payroll Challenges for Gig Workers
Payroll for gig workers comes with some unique challenges that traditional payroll solutions may not solve.
One of the major challenges that comes with managing gig workers is correctly classifying them for payroll purposes. Compliance with tax and labor laws is necessary for any worker, but the rules and regulations may vary depending on whether they’re considered an employee or an independent contractor.
Gig workers also often work on a job-by-job basis, which can be a challenge when it comes to traditional workers’ comp options. Working project-to-project means they won’t necessarily need ongoing workers’ compensation insurance. As an independent contractor, coverage is really only required for the duration of the project, and it can be costly to pay for more than what’s needed.
Additionally, while full-time employees have set schedules with consistent hours, gig workers’ schedules tend to be somewhat complicated. In many cases, gig workers expect to be paid as soon as the work is completed, rather than on a bi-weekly or monthly cycle. For business owners or HR managers, payroll for independent contractors or freelance workers can be challenging to accurately calculate—particularly when the complexities of workers’ comp are involved. Automation is essential for staying on top of payroll and ensuring accuracy for gig workers.
Innovative Workers’ Comp Payroll Solutions for the Gig Economy
Workers’ compensation for the gig economy often requires more unique payroll alternatives than what’s traditionally seen. Professional employer organizations (PEOs) offer innovative solutions for gig workers that can help simplify and streamline the payroll process.
Time tracking is an essential part of ensuring accurate payroll in the gig economy. PEOs utilize software that allow your employees to sign in to their own personal portal from anywhere in the world—helping solve issues around handling payment for international employees. This also means that no matter where your workers are or what timezone they’re in, they can track their own hours in real time, which helps improve accuracy.
As a business owner or HR manager, you likely have a lot on your plate already. Automating your payroll processes not only helps ensure accuracy in calculations, but it also alleviates the pressure to have payroll finished by a certain deadline. Accurate and timely payroll is essential for boosting employee satisfaction and morale, increasing retention rates, and cultivating a great company culture.
PEOs also offer tailored workers’ compensation insurance to meet the specific needs of your gig workers. Because gig workers are typically independent contractors who work on a project-by-project basis, pay-as-you-go programs can be incredibly beneficial for keeping your workers covered. Pay-as-you-go workers’ comp means you’ll never pay for more than you need. Not only will coverage be tailored to the unique needs of your industry, but it will also only be effective for the amount of time you need it.
The Future of Workers’ Comp for Freelancers and Gig Workers
Workers’ compensation solutions for freelancers and gig workers are continuing to evolve as time passes. If you own a business or manage a team of independent contractors, consider working with a PEO to help you streamline your workers’ comp processes.
If you’re ready to simplify payroll and workers’ comp for your business, reach out to the PEO experts at OCMI workers’ comp today!
