Know the Law: Using Temp Workers Can Create Uncertainty

Jennifer L. Parent
Director, Litigation Department & Chair Business Litigation Practice Group
Published: Union Leader
April 8, 2018

Q: My company has some small, short-term projects we need help on later this year. I have heard about the “gig” economy and the availability of hiring workers on a project basis. Is this something my company should consider? 

A. By now, most of us have heard something about the “gig” economy. The term refers to a workforce of temporary or freelance workers taking short-term projects, assignments or gigs. Sometimes people refer to these as the on-demand economy.

In our ever-changing technology world, there has been an increase of these workers using digital platforms to access these work opportunities. People are using online or mobile apps to access work opportunities.

Examples include TaskRabbit, Uber or Freelancer. The benefit to workers is that they can accept as many or as few projects at any one time and, because it is digital, they can do so from just about anywhere. This type of job also allows for flexibility.

The benefits to companies include the ability to hire on a project-by-project basis and as needed and to reach a broader pool of external talent, which may include workers with particular experience or skills that may be unavailable in the company’s location.

Businesses entering into this world, however, should be mindful of the current legal issues. At the top of the list is the continued attention to the classification of these workers. In other words, are they independent contractors or employees?

The answer makes a significant difference in terms of a company’s legal obligations. Classification of a worker impacts obligations such as workers compensation, unemployment, overtime and other benefits.

The Equal Employment Opportunity Commission (EEOC) announced in 2016 that over the next four years it would focus on businesses participating in this gig economy. The EEOC explained it would take steps to clarify the employment relationship and the application of workplace civil rights protections under these 21st century workplace relationships and structures. Some companies have already faced high-profile litigation on employer classification, and this arena of litigation continues to be watched.

As a company, you may explore opportunities in this new marketplace. If you do, your company must consider whether workers for these projects are independent contractors or employees. Given the uncertainty in this area, companies should consider obtaining legal assistance in this analysis.

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be addressed to: McLane Middleton, 900 Elm St., Manchester, NH 03101 or emailed to Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.