Technology | 7 min read

Why The Gig Economy Is Changing Hourly Work Forever

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By The Nowsta Team,

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For many hourly workers, the idea of work has changed drastically in just a few short years. The model used to be pretty straight forward, employees receive a schedule, and they then report to their weekly shifts with little say over how and when they work. Now, people have found an avenue around the traditional model that we’ve followed for so long and are choosing to join a phenomenon commonly referred to as the Gig Economy. 

What is the Gig Economy? 

The Gig Economy describes the rise of temporary or freelance roles where employees don’t work full-time and find work on an on-going basis. This job model grew in popularity partly due to ride-sharing platforms like Uber and Lyft, which gives drivers the ability to work when and where they’d like. Instead of waking up each day with a set schedule of when and where employees are going to work, they now have the freedom to choose their hours as well as where they’d like to work. This change signals a huge shift in the freedoms hourly workers can expect to receive. 

Employers competing with Uber and Lyft for employees 

There’s a lot of people driving for Uber and Lyft, millions in fact. And that number is growing each day as hourly workers look towards other ways to make a living and work their own schedule. To the benefit of workers, ride-sharing platforms create an environment where people can drive from midnight to 5 am if they choose to. But unfortunately for employers of hourly workers, this means they have yet another competitor to deal with when hunting for rockstar employees. The popularity and growth of the Gig Economy leads to workers dissecting all their options for employment when searching for work, and being in complete control of their schedule is going to be a hard perk to compete with. That said, this doesn’t necessarily make attracting employees to traditional work a lost cause. Employers must work to provide similar benefits to their full-time employees. 

A good place to start is by allowing employees to have a say regarding the shifts they’ll work, as well as even letting them designate their preferred window of time to work. This way, your company’s employer branding is able to compete with platforms that offer their employees a great deal of autonomy. And aside from having to worry about competing for employees, brands must remember that the classification for these employees is also changing in major ways.

The effects of AB-5 and the shift in Employee classification 

As a result of the impact that Uber and Lyft has had on employees, California recently passed a bill titled AB-5 that works to change the classification of several workers from independent contractors to employees. The move was partly made in an effort to better the conditions for contractors by helping them receive benefits that are commonly reserved for employees. Some examples of benefits reserved solely for full-time employees include receiving a minimum wage, overtime pay, unemployment benefits, sick leave, and many more. And while many are celebrating the move, the reality is many employers will have to rethink how they manage and train their employee base. 

To help employers figure out whether their staff is considered employees or hourly contractors, take a look at some of the rules below: 

  1. Employees are paid by the hour, through commission, or have a predetermined salary.
  2. Employees get taxed based on their income while employers are expected to hold federal, state, and FICA taxes.
  3. Employers using Independent contractors aren’t expected to hold any taxes from their income. Instead, the contractor has to pay those taxes themselves along with any self-employment taxes.

In the same vein as employee classification, workforce management software will play an ever-growing role within the hourly workforce as employers search for better ways to handle time-consuming administrative tasks like employee scheduling, payroll, and workplace communication. 

Software playing a larger role in getting employees to work cohesively

With temporary workers and independent contractors becoming all the rage, this opens up a number of new administrative concerns for employers that bring them on. This is because having a constantly revolving base of employees can get complicated and can lead to a number of mistakes in many areas.

One example is within workplace communication, where businesses need to reach every employee they have on hand whenever an issue arises. When you bring on temporary workers, it can make the process more difficult because certain staff members may not have their contact information when they need to reach them. But with proper workforce management software, staff can message whomever they need to with ease. And the best part is there’s no need to write down numbers or to reach out to managers for contact info whenever someone new is brought on because everyone’s able to be contacted right from the software.

Employee scheduling is another area where workforce management software is able to make a large impact in terms of employers saving time on administrative tasks. Instead of spending multiple hours each week on creating employee schedules, employers are able to cut the amount of time they spend on schedules in half. Making it easier to schedule the growing number of temporary workers and independent contractors being added to their rosters.  And with the changes going on in classification and other areas that are adding to labor costs, employers will need every tool at their disposal.

Luckily, workforce management software also works to rid unneeded employee overtime and uncover valuable insights in regards to your labor budget. Working to save you money on labor so you can redirect funds in other ways to better your business and stay competitive.

Prepare for the future of work by optimizing your Hourly Workforce now! 

The landscape for work is changing and employers can’t afford to get left behind. For this reason, they should implement workforce management software immediately to save time on administrative tasks and to receive better insight into how they can save money on labor costs.