A New Path for Gig Workers?

This op-ed was originally published in DC Journal on May 1, 2023.

As a recent New York Times article illustrated, things aren’t easy for workers in the gig economy. Without access to basic employer benefits, independent workers like rideshare drivers are often left unsupported. One rideshare driver put it best by saying, “This is not sustainable.” But that hasn’t deterred people from joining the independent job sector, and as a result, 10 percent of the U.S. workforce access basic benefits on their own — or they go without.

That’s unacceptable, especially in a modern society that rewards hard work. Most regulators have responded by attempting to change workers’ status to employees rather than independent contractors, ensuring their care and benefits through their affiliated companies. But this approach strips contracting jobs of the very thing that makes them attractive: flexibility.

Most jobs in the gig economy function on a part-time basis. The app-based platforms built around rideshare, food delivery and freelancing were meant to be side hustles — not career paths. And while many have praised the gig economy for its ability to monetize one-off consumer needs, few have mentioned ways to support the long-term needs of full-time gig workers without upending their flexible opportunities.

Fortunately, a new law in Utah could be the first bill to expand opportunities for these workers without robbing them of their independent status. Instead of forcing contractors into a mold they don’t fit, states should follow Utah’s example and create solutions that close the gap to access and allow gig workers to continue working as they please.

In 2019, California’s assembly attempted to close the gap in benefits access by reclassifying gig workers as employees. But this approach threatened worker flexibility and some jobs to boot. A referendum to overturn the bill received a majority vote in the next election, but the legislature went to court to overrule constituents — tying up the referendum until weeks ago when it was finally upheld by the courts.

In the time since, a handful of market solutions have emerged to fill the gap for gig workers. Most critical for gig workers, like any other entrepreneur, is the need for insurance. Companies like Stride Health and Ride Belay, and not-for-profit entities like New York’s Black Car Fund offer private versions of typical worker coverage. These offerings can include accident and disability insurance that supplement traditional workers’ compensation and unemployment insurance. But they can also include other basic benefits like private health insurance, life insurance, dental insurance and even auto insurance.

These support services work well for the gig economy because they’re customizable and portable (meaning a worker controls them, not an employer). But a significant drawback is that gig workers pay 100 percent of the premiums.

For a typical employee, coverage is often supplemented by their employer. But gig platforms have been unable to do the same because it could fundamentally alter a gig worker’s status as an independent contractor. State and federal regulations open the possibility that voluntary benefit contributions could be used as evidence of an employment relationship.

But that’s where Utah’s new law comes into play.

With a few lines of statutory text, Utah’s Portable Benefit Plan opens the door at the state level for app-based platforms to step in and help solve the problem.

The Utah bill exempts voluntary contributions to benefit plans from the employment factors ordinarily considered by courts. The benefit plans must be portable, meaning they’re tied to each individual worker, not an app-based platform. The plans must be administered by some third party as an insurance product. This structure ensures no gig worker will be locked in to one app or another to maintain access to coverage.

Unlike most labor law reforms, Utah’s Portable Benefit Plan received near-unanimous approval from the legislature, with only two nay votes in the legislative process. Only time will tell whether the Utah model will proliferate across the states and federal government. But one thing is clear: Utah’s legal innovation has opened a door for more robust conversations and opportunities in the gig economy — a door kept shut for far too long.