Even if you do not know it by the term “gig economy,” there is a good chance you are familiar with how it works. Commonly known as freelancing or temping, the gig economy is an environment where a person completes tasks on a project or on-demand basis. There are numerous websites and mobile apps designed to connect people and companies who need services to individuals willing to provide them. Uber, Lyft, and AirBnB are the prime examples, and there are many more that are strictly work-for-hire with no actual product attached to the service.
If you currently work in the gig economy in Illinois, it is important to understand what protections you are and are not entitled to under the law. The key is appreciating the legal distinctions between independent contractors and employees, which an Illinois employment attorney can explain in more detail.
Employees Versus Independent Contractors
Generally, an employee is a worker who performs a job for a single employer on a regular basis. An independent contractor works on an as-needed basis for a person or company that requests tasks. More often than not, a gig economy worker will be considered an independent contractor for legal purposes.
Common Law Definitions
Illinois has adopted common law principles to establish whether a worker is an employee or contractor, which center on:
- How much control the employer has over the person’s work, tasks, performance, pay, and other components of the job;
- Whether the work is performed pursuant to an agreement, as opposed to a job description;
- The method of compensation, such as a regular paycheck compared to a lump sum for services performed;
- Whether the worker supplies his or her own equipment and supplies;
- The extent to which the worker can set his or her own hours;
- Whether the work is temporary or permanent; and,
- Many other factors that pertain on a case-by-case basis.
Fair Labor Standards Act (FLSA) Definitions
The federal FLSA uses certain economic realities factors to separate employees from gig economy workers. Therefore:
- When the work performed by an individual is integral to business success, it is more likely that he or she would be considered an employee.
- If the worker’s managerial skills and initiative impact business opportunities, he or she is typically an employee.
- Where the employer is more invested in the business as compared to the worker, that individual is more likely to be an employee.
Why the Distinction Matters
As an employee, you enjoy greater protections over independent contractors. For instance, by hiring a gig economy worker, a company does not have to:
- Pay into Social Security or Medicare;
- Pay for unemployment compensation insurance;
- Pay for workers’ compensation insurance;
- Provide benefits, such as medical insurance or 401K matching;
Plus, a company does not have to adhere to certain standards under the FLSA, including minimum wage and overtime requirements.
Discuss Your Status with a Skilled Chicago Employment Lawyer
If you have questions about your status in the gig economy, please contact the Chicago Law Office of Mitchell A. Kline to set up a consultation. We can tell you more about your rights and help you understand the distinction between employee and independent contractor.