A group of labor leaders is calling for change in the way the workers’ compensation system applies to contract workers.
In a letter sent to US lawmakers this week, a group of executives and public policy experts from companies including Lyft, Handy and Etsy asked for new protections for contract workers, including workers’ compensation benefits when those workers are injured.
Although as many as 53 million Americans are now self-employed, the letter’s authors argue that the benefits system – including workers’ comp – has “not kept pace with the rapid changes in the economy.”
“Traditionally, benefits and protections such as workers compensation, unemployment insurance, paid time off, retirement savings and training/development have been, largely or partly, components of a workers’ employment relationship with an employer,” the letter reads. “The Affordable Care Act has disrupted that model, providing more independent workers a different avenue of access to health insurance. Another new model is needed to support new ways of work.”
Under this model, benefits like workers’ comp would be “portable,” so that workers could take them from job to job. The coalition is pushing for discussion among lawmakers on how this would best be accomplished, and thus bypassing litigation that has already arisen from workers with companies like Lyft and Instacart that rely on contractors.
The letter does not say who should pay for this safety net, however.
The debate over employee status, and consequent eligibility for workers’ compensation benefits, has been a tricky one for insurance professionals – it means additional pressure to help employers correctly classify employees.
That’s something many companies and agents overlook while submitting workers’ compensation applications, says La’Troya McKinney, commercial lines account manager with Abram Interstate Insurance Services in California.
“If an employer is scheduling their time, telling them who to see or where to go, they are an employee under the labor code and they can be fined up to $150 per day per employee for not having comp in place,” McKinney said.
She added that though these stipulations apply primarily in California – where 1099 status is under strictest review – it doesn’t hurt for agents across the country to adopt a similar no-risks attitude.
“I tell people that if they base their decisions off regulations in what is one of the most rigid states, they can’t go wrong,” she said.
If this group of tech, app and labor leaders has their way, however, this difficulty will be removed by the creation of “portable” workers’ comp benefits.
The group plans to hold a public event in Washington, D.C. later this year to further discuss the issue.
