In early October, Biden had passed one of his newest proposals which, if enacted, can drastically change the gig worker economy and small business operation. The basic efforts of this proposal is to simply alter the status of gig workers from independent contractors to employees. The classification of employees requires their overlaying company to provide benefits such as minimum wage, social security, overtime, medical payroll taxes, worker’s comp insurance, and unemployment insurance. This will drastically increase the price it takes to hire and maintain these types of workers, causing major companies to alter their financial trajectories and small businesses to consider dropping their gig workers altogether. Here are some pros and cons for the upcoming Biden proposal.

First – some benefits. For gig workers, this proposal would be great for gathering revenue as minimum wage with tips would provide more than what they already make. The financial and physical risk for gig workers is reduced as health benefits and workers comp becomes mandatory requirements.

Additionally, here are the cons for allowing this proposal to go through this coming year. Research has shown that many gig workers like the flexibility working their own hours wherever they’d like. Being an employee requires gig workers to work under more refined restrictions. The opportunity to work for other companies is also limited when required to stay contracted with a singular entity. Some businesses are built largely on flexible quantity such as taxying and delivery-type like Lyft, Uber, and Uber Eats – if all independent contractors were classified as employees, their expenses would increase by 30-40%. Companies as large as Lyft and Uber would suffer major expenses, but would still have the finances to make a successful pivot – however smaller companies that can’t afford any number of employees will severely suffer as the tasks they once contracted to gig workers would no longer be permissible without breaking employment laws. The only temporary fix for this change will require companies to limit their gig working individuals, benefiting the few that remain while forcing a vast majority into unemployment.

The proposal is still new and will be put into place no earlier than next year, so it’s unsure to know if this will be officially put into place or revised before doing so. Until then subscribe to these articles to learn any new information that comes out.


Article by
Christian Peterson
Marketing Manager

Christian Peterson