Work Without a Net: Protecting Gig Workers Through Smart Policy

Over the last 80 years, many white-collar and unionized workers in the United States have benefited from paid sick days, required minimum wages, fair work weeks, and Social Security and Medicare in old age.

However, many gig or nonstandard workers are left out of this protective net because they need the flexibility of being their own boss, working for rideshare companies or local companies who need a flexible workforce.

Many workers we have spoken with love the flexibility to care for their children or elderly parents, go to college, or work as artists. However, workers also told us that there is the constant concern of something going wrong and being without pay when a child is sick or an employer cancels without warning. These workers deserve the same protections as 9-to-5 workers.

Some nonstandard workers are working jobs that would normally be considered full or part-time employment arrangements. Misclassified as independent contractors, these workers may lack the benefits of contract work, such as setting their own wages or hours, and also lack benefits full-time employees have like paid sick days, retirement accounts, and health insurance.

However for workers who prefer nonstandard, contract work, tackling misclassification alone will not provide adequate protections. Additional, modernized policy protections would ensure all nonstandard workers are able to maintain their flexible schedule, while also caring for themselves and their families and saving for the future.

A design sprint funded by The Workers Lab in partnership with the workforce development board in Long Beach, has shown that with innovation, nonstandard workers can have both the flexibility they want and the benefits they need to support themselves and their families consistently. This model, originally developed in the United Kingdom, leverages the networks of local workforce boards to connect workers with better-paying, flexible work with benefits. A local workforce board, large company, or nonprofit can act as the employer-of-record, connecting workers with employers large and small through a phone-based app. Workers are able to select one-time or repeat jobs based on their skills, preferences, pay needs, and locations. Employers are able to tap into a large pool of flexible, skilled workers. The employer-of-record ensures workers are well-treated and can provide portable benefits such as health insurance or paid days off across multiple gigs. Workers are also able to receive one W-2 form, which makes it easier for them to show eligibility for mortgages or receive much-deserved tax refunds due to the Earned Income Tax Credit or Child Tax Credit.

A handful of new companies have also found ways to provide better pay and more flexibility for nonstandard workers. However, current laws have not kept up with the demand for nonstandard work and workers.

State and local workforce leaders can all take steps to implement similar employer-of-record models using their state or local workforce boards or hiring hall models. However, to make sure gig workers outside of these programs also get to do the work they want to and enjoy the same treatment as other workers, changes must be made to modernize city, state, and federal laws and regulations. In addition, key supports in existing policy like Medicaid, SNAP, and child care assistance must be strengthened. Recent recommendations from the Senate HELP Committee are an important step towards modernization, but should go further.

Here are policy updates to meet the needs of workers, families, and businesses today.

The public workforce system often ignores workers in nonstandard jobs. What’s more, there are often disincentives for the workforce system to engage and support these workers in finding and securing jobs.

Ensuring that our workforce system serves the needs of all workers on their own terms and that workers have access to the benefits they need are essential to the health and prosperity of communities everywhere. We see valuable ways for the workforce system to innovate and support workers who want to work in nonstandard jobs, improving access to quality, nonstandard work opportunities through the public workforce system.

First, the public workforce system and workforce provider partners can act as an employer-of-record for nonstandard workers. This is not unlike the role that some workforce system partners play in implementing transitional jobs, subsidized employment, or on-the-job training through the availability of Workforce Innovation and Opportunity Act (WIOA) funds or Temporary Assistance to Needy Families (TANF) funding. The public workforce system can leverage employer contributions and public funds to establish larger risk pools that offer nonstandard workers access to a variety of employers and valuable benefits. These benefits could include employer-sponsored health insurance, family or medical leave, workers' compensation, and unemployment insurance.

Second, the public workforce system can support nonstandard workers in navigating their tax liability and benefits. For example, nonstandard workers must pool their 1099s to accurately report their taxes. The process is complex and time-consuming, particularly if workers complete work for companies based in different states. Additionally, many of these workers are eligible for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). The public workforce system could help workers navigate these systems, accurately report their income, and receive the tax credits they deserve. If the local workforce board acted as an employer-of-record, the process would be expeditiously streamlined by offering these workers a W2 form.

Here are a few ways we can advance policy solutions within the public workforce system to allow the public workforce system the flexibility to serve nonstandard workers:

• Congress should reform the current performance metrics of the workforce development system. Current performance metrics may dissuade workforce boards and providers from serving nonstandard workers. A reauthorization of WIOA should update performance measures to reflect the reality that engagement in nonstandard work is and can be a valued and viable employment path for many individuals who engage with the workforce system.
• Congress and the Department of Labor should allow for and encourage the representation of nonstandard workers on state and local workforce boards. Aligning public workforce policy, funding, and decision-making with the interests and needs of workers is paramount—especially when so many workers are feeling economic strain. Congress should reauthorize WIOA and DOL should follow with guidance to make clear that nonstandard workers alongside worker and labor organizations should be meaningfully included on workforce boards across the country to support the development and ongoing implementation of local policy and decision-making that accounts for their needs.
• Congress should include nonstandard workers among priority populations in public workforce system services. WIOA does not acknowledge nonstandard workers as a priority population for career navigation or training services. Reauthorization should include these workers among the priority populations for access to services.
• The Department of Labor should issue guidance to all state and local workforce boards supporting nonstandard workers. The guidance should elevate the need for state and local public workforce boards to promulgate policy, program access, and funding opportunities to support the employment needs of nonstandard workers.

Not all workers will want to or have the chance to participate in these types of workforce development programs. To ensure that all nonstandard workers have access to basic protections, a number of changes to city, county, state, and federal laws are also needed.

No Protection from Exploitation- Basic Worker Protection

Businesses and nonstandard workers need to be able to work together freely to get work done. But, a key role of the government is to protect American workers from the possibility of mistreatment.

• Congress should create clear guidelines to define nonstandard work arrangements versus employee work arrangements. Several definitions are used across federal and state governments and the court system. Workers often don’t know what their rights are. Congress can simultaneously ensure the line between employee and contractor is clear and ensure some basic standards for engaging nonstandard workers, including a baseline for setting compensation, recourse for mistreatment, control over their work, and options for contributing to portable benefits to improve economic stability.
• Congress should set basic requirements for workers’ compensation. When injured on the job, nonstandard workers must shoulder the costs with no guarantees that a company will step in or take any responsibility, even when injury occurs because of something the company did. Nonstandard workers deserve protections against injury and should be covered by a company’s basic workers’ compensation insurance when required to be in particular locations outside the home to complete projects. While state regulations for workers’ compensation vary widely, the federal government should set basic standards for states to follow.
• State legislatures should ensure workers have standard contract protections and protection from abuses. Nonstandard workers have told us they have limited protections against companies taking advantage of them. Employers can cancel even after they have arrived to work, but if workers need to cancel for a sick child or car accident they can be fined or kept from getting future gigs. Ensuring nonstandard workers are covered by basic contract and wage theft protections with a class action option is a must. It is also challenging to push for basic rights as one person when companies can just move on to the next person. The federal and state agencies enforcing workplace laws must work together to provide easy to access information on nonstandard workers’ rights and a simple process for reporting violations to catch companies taking advantage of workers.
• Localities should institute pay floors for app-based delivery drivers. Between the fees that apps like Uber and Handy skim from nonstandard workers’ pay and the burden of time and equipment required to acquire the jobs themselves, too often nonstandard workers’ earnings end up being dismally below minimum wage. Certain cities, such as Seattle, have instituted minimum pay floors for app-based delivery drivers, and the rest of the U.S. should follow suit.

No Protection from Illness, Instability, Emergencies, and Aging

Updated policies would help ensure nonstandard workers can continue doing the work they love, while also caring for themselves and their families when life happens.

• Congress should create clear guidance to allow hiring entities to provide nonstandard workers with pooled benefits. Having access to pooled benefits allows workers to receive the same cost savings other workers receive from being part of large health insurance or retirement funds. Creating ways for companies to offer access to these types of benefits when there is a clear and appropriate business need for nonstandard work, would allow workers maximum flexibility and stability.
• Congress and states should work together to expand access to, saving limits, and ways of contributing to retirement programs for workers without access to an existing employer program. Due to the inconsistent nature of gig work and the lack of uniform payment systems, workers may not realize how little they are paying into Social Security and Medicare. This could be a devastating blow once gig workers near retirement age. Expanding availability, allowing matching contributions from employers, and increasing the amount of pre-tax dollars that can be put into independent, state-based retirement accounts would help keep nonstandard workers out of the poorhouse in retirement.
• States should reform Unemployment Insurance statutes to ensure nonstandard workers are covered without designating them as employees. When nonstandard workers find themselves out of work for an extended time, due to no fault of their own, most do not have the same access to Unemployment Insurance as other workers. States could follow a model similar to Washington State to ensure services performed by gig workers are subject to the Unemployment Insurance laws of the state. Employers whose business model requires nonstandard work could be required to pay a partial pooled UI contribution for those independent contractors. This could be matched by workers when paying self-employment taxes and could be combined with clarifications delineating them from employees to maintain worker independence while also discouraging misclassification.
• Congress should work with states to close the Medicaid coverage gap. Without the safety net of employer-provided health insurance, nonstandard workers are far more likely to go without necessary medical care than traditional workers. Because of limited Affordable Care Act (ACA) Medicaid expansion, nonstandard workers are uninsured at three times the rate of traditional workers. One of the main reasons for this is that too many people have incomes too low to qualify for ACA assistance, but cannot access Medicaid. This gap in coverage has severe consequences, including medical debt and poor health outcomes. There is a vital need for reducing costs, requiring customer access to cost comparisons, and creating more affordable options outside of the traditional employer-led system.
• States should adopt comprehensive, universal paid family and medical leave programs and paid sick time or paid time off standards that include nonstandard workers. While many traditional workers can count on paid sick time and paid time off and some can count on longer-term paid family and medical leave, nonstandard workers frequently go without that support. Nonstandard workers in a hiring hall or employer-of-record model can earn paid time off based on the number of hours worked, but others aren’t so lucky. As of 2024, around 11 states were poised to offer voluntary paid family and medical leave for self-employed workers through state insurance programs. However, more states need to offer this option in their existing programs at rates that self-employed workers can afford. State paid sick time and paid time off laws could also be expanded to include a shared fund for self-employed workers. At the federal level, a national paid family and medical leave program structured as social insurance should provide either mandatory coverage for self-employed workers as Social Security does, or offer voluntary coverage in which self-employed workers can choose to participate.

Left Out of Supports to Help Provide for Their Families

Nonstandard workers are left out of a number of other supports that workers in more standard jobs rely on to help them care for their families.

• Federal and State Policymakers Should Ensure Families Can Access Child Care. Many states have child care assistance programs to help low-income workers cover the cost of childcare while they work. Unfortunately, these programs may require a pay stub or check, which could be difficult to show for nonstandard workers who don’t receive a formal check and work irregularly. Congress should work with states to protect this funding and provide alternative ways for parents in nonstandard work to prove their need for assistance.
• The IRS Should Create Clearer Income Summary Forms. Workers may be eligible for any number of tax credits and benefits based on their incomes. They may also be eligible for programs to help with buying a house. However, with multiple 1099 forms from different employers or even states, it can be difficult for nonstandard workers to prove their income to claim their full Child Tax Credit or even to qualify for a loan. While not all workers will want this, it should be an option for those who could benefit. Employers could differentiate nonstandard work from other types of 1099 forms. Workers who work primarily in nonstandard work, could opt in to receive a form at the end of the year that summarizes all of their income from multiple sources, similar to the income passport tested in Louisiana and Alabama.

Special thanks to Melissa Young from The Intersect for her matchless analysis and support.