The last nine years of employment doldrums has brought a seismic shift in the way Americans view work. That shift includes the emergence of what we now call the ‘gig’ economy – where short-term contractors are doing the work that full-time employees may have done in the past. Companies are using contractors more now than ever before.
One of the primary benefits of using contractors is the fact that they are cheaper to employ. Yet the supply of contractors in any given industry does not match current demand, making competition for the best of the best as fierce as the competition for full-time employees. How do employers compete? By offering certain kinds of benefits.
Before getting into some of those benefits, it is imperative to note that employers have to be very careful about both benefits they offer and how they offer them, so as not to cross the line between contracting and having a new, full-time employee. Contractors have to be equally careful. Being misclassified could land a contractor in hot water.
Access to Health Insurance Benefits
BenefitMall is a nationwide company that offers payroll processing and benefits administration services to companies of all sizes. As experts in benefits administration, they say one of the best benefits employers can offer their contractors is access to health insurance. How does this work? Through partnerships with health insurance marketplaces.
Health insurance marketplaces act as brokers on behalf of contractors purchasing insurance via the individual market. Through a partnership, an employer can give contractors access to less expensive health insurance without actually paying for it themselves. This may not seem like a big deal to full-time employees, but it is tremendously helpful to self-employed contractors who pay among the highest rates in the nation for health insurance.
Another very effective perk is bonus pay. Employers can structure contracts to include bonuses for reaching certain milestones, for example. As long as a bonus pay is structured correctly, it can be offered to contractors without crossing that line from contracting to full-time employment.
Discounted Products and Services
Employers have long been known for the practice of offering their employees discounted products and services. For example, an office coffee and water provider may sell coffee products to employees at-cost. This is considered a benefit inasmuch is employees save money on things they would normally buy elsewhere. The same benefits can be offered to gig workers without crossing the employment classification line.
It should be noted that discounts to gig workers would only be available during the term of the contract. Once the contract is complete and the worker moves on, the discounted products and services would cease. In that way, there is a clear delineation that makes the discounts a benefit of taking contracts with the company.
Contractors Want Benefits
Contractors in the modern gig economy are known to do what they do because they enjoy the benefits of being self-employed. Nonetheless, they are in business for the money and benefits. They work for the same reasons the rest of us work. So it only makes sense that competing for the best of the best is made a lot easier when employers offer their contractors a few extra perks.
It is possible to provide contractor benefits without crossing the employee classification line. Employers looking for more information about how to do so can consult their payroll providers, accountants, or any other professionals with experience in this area. It’s best not to rely on vague IRS documentation that does not clearly spell out the differences between full-time employee and contractor.