The number of on-demand workers (such as on-call workers, independent contractors, and those who obtain work through digital platforms) has increased sharply in recent years. The so-called gig economy offers these workers the opportunity to earn money while retaining their independence and ability to set their own working hours. However, this development is raising concerns over worker safety and how to best provide reimbursement for medical costs and wage losses when self-employed workers are injured. An article on the Business Insurance website discusses these questions.
First, let’s look at the safety issue. A significant number of on-demand workers work in high-risk occupations. For example, for-hire transportation is particularly dangerous field. Drivers for digital taxi services such as Uber and Lyft are killed at a rate that is five times higher than other workers. The same goes for delivery service drivers who operate trucks, cars, or motorbikes, or deliver parcels via bicycles.
Ways to provide coverage to on-demand workers
The big question is how gig-sector employees can obtain insurance coverage to pay for medical costs and lost wages after an accident. There are four major possibilities:
- A company such as a delivery service is free to provide workers’ compensation coverage to its independent contractors, simply by classifying them as employees for the purpose of workers’ comp. However, this is somewhat self-defeating in that it increases a company’s costs, thus lowering profitability and perhaps rendering its business model unviable. We can expect most companies that employ gig workers to reject this option.
- So far, workers’ compensation insurance companies have been slow to adapt to the gig economy. But given the liability issues that gig-sector employers face, there are calls within the insurance industry for insurers to start developing solutions. However, these solutions are likely to be slow in coming.
- The government or courts could force gig-sector employers to provide workers’ compensation coverage. For example, in October 2016, the Washington State Department of Labor & Industries ordered the delivery service Postmates Inc., to retroactively pay workers’ compensation premiums for more than 3,000 of its self-employed couriers in the state. The Department is the state’s monopoly workers’ compensation insurer. The company is currently contesting the order.
- An injured gig-sector worker could seek compensation from a negligent company or third-party. If you have suffered such an injury, you should seek counsel from an experienced attorney as soon as possible.
It’s clear that with the continued growth of the on-demand employment sector, the issue of insurance coverage will have to be addressed, one or way or another.