HR Tip of the Week

HR Tip of the Week

HR Tip of the week: Not All Gig Work is Created Equal

The ADP Research Institute analyzed the 2019 payroll data of 18 million workers from 75,000 companies and found that ‘gig’ work is more or less lucrative depending on classification and industry.

1099-MISC independent contractors tend to be older, highly educated, highly skilled and often hired on a project basis. Short-term W-2 employees often work for one to six months a year, tend to be younger, less educated, have a lower income, and be employed typically on a seasonal or on-call basis.

By industry, recreation, construction and business services are the top three using gig workers where 1099-MISC workers are likely to earn more than traditional W‑2 employees doing similar work. Gig workers do not fare as well in the education and information sectors, which includes media businesses that attract many low-paid freelancers. The outlier is information services, where W-2 employees earn five times more than what 1099‑MISC contractors earn.

Is gig pay right for your company? It depends on the circumstances. Using skilled gig workers can minimize payroll expenses by limiting employee overtime costs, especially when project completion is undetermined. Gig work can also reduce employee related expenses such as PTO, benefits and retirement plan contributions.

Read More about Gig Worker Pay from the Society for Human Resource Management (SHRM).

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