Guidelines For Hiring in the Gig Economy
So, you’re posting a role on The Mom Project marketplace and you’re about to engage with some incredible, talented individuals who are looking for employers, like you, who get it. But what exactly is a “Gig Economy” and what does it mean for your company?
The Gig Economy gets its name from the rise of project-based work (“gigs”) in the marketplace that are temporary and allow for flexibility. Hiring for gigs is a great way to tap into independent talent versus a full-time employee. It’s estimated that around one-third of the working population is already working in a gig capacity!
However, taking advantage of the rising gig economy means there are a few legalities to consider, one being that contingent talent is taxed differently by the government than full-time employees. We are here to help, both with the following resource guide and as a partner. Let’s get to business!
Why do you need to care about worker classification?
As An Employer:
You may have to pay potential back taxes, penalty fees, or legal fees if you misclassify a worker. It’s important to understand the proper hiring practices at both the federal and state level to ensure you make the correct classifications.
Situations to pay attention to include:
- A talent believes they have been misclassified. They can request a review from the IRS.
- A 1099 incorrectly files for unemployment, which is a W2 work program benefit and not available to 1099s. This may trigger a classification question from the government.
- An important note! Employer tax is a revenue center for state and federal government. They are supportive of 1099 contractors and if a worker raises a question, they are likely to side with the worker, rather than a company.
As an employer, how does this impact my project set-up with The Mom Project?
If you are classifying a worker as a 1099:
- The Mom Project provides payment processing and project management services for your contractor, which includes providing them with end of year tax documents
- Think of your talent as a vendor or consultant that is providing services directly to your company, rather than as your company’s employee of an employee of The Mom Project
- Your company sets The Mom Project up as a vendor and pays on agreed schedule
If you are classifying a worker as a W2:
- The worker is an assigned employee of The Mom Project; The Mom Project provides payrolling and project management services
- Think of your talent as a temporary employee of The Mom Project
- The Mom Project’s payrolling arm will make weekly or bi-weekly payroll payments, including all employer and employee federal, state, and county withholdings
- Your talent will have access to a suite of benefits including health, dental, retirement, and insurance
- There is an associated 20% pass-through fee for assigned employee (W2) services
What you’ve read so far is a good start to understanding gig workers versus full-time employees, but there are other factors to consider. Interested in learning more? Download the full guide below to access all the information!
Read the full guide here