Whether it’s a guy ferrying strangers around in his Ford Taurus after work or the college student fitting in some IKEA furniture assembly in between classes, the new “gig” economy is alive and well.
So much so that the number of on-demand, freelance workers in the United States is expected to double in the next four years, to more than nine million.
Story after story about this relatively new phenomenon touts the transformational effect it’s having on how work is getting done and how 21st-century consumers are filling a variety of needs, from lodging (Airbnb) to massage (Zeel).
But this shift away from a traditional service employer/employee relationship has significant risk management implications for the end client as well.
Nanny tax and nanny liability
The “nanny tax” has ensnared a long list of public officials who hired domestic help and failed to pay payroll and other taxes. But taxes are not the only consideration when hiring someone to help around your home.
In most states, domestic help that works for you alone is legally your employee. That requires you to carry worker’s compensation coverage on those household employees to protect them. However, you should also be carrying what’s known as Employment Practices Liability Insurance, which is coverage that protects you in the event the worker you’ve hired sues you for sexual harassment, wrongful termination, or for another work-related issue.
What are the liability considerations in the gig economy? After political pressure, Uber begrudgingly began offering its non-employee drivers some liability protection. The FAQ for Amazon Home Services, meanwhile, which offers to connect you with people who can handle a variety of household and home improvement tasks, says very little about insurance liability. It notes that it requires its service professionals — who are not Amazon employees — to be insured “if applicable.”
We read that as caveat emptor.
Work agreements and fidelity bonds
Other service providers in the gig economy include TaskRabbit and Fiverr, both of which connect you with individuals (not employees of those companies!) who will negotiate with you to perform a variety of tasks, many of them in-your-home, such as furniture assembly.
Electricians and plumbers who are licensed by the state are required to carry insurance and will show you proof when asked…do you think the same can be said of an Allen wrench wielding college student?
What happens if something breaks while the work is being done? If you are going to participate in the gig economy, consider having some kind of work agreement in place with your employee…err, Tasker… that spells out responsibility and what will happen if an issue arises.
Another consideration is that a traditional business that sends its employees into your home will likely have what’s known as a “crime” or “fidelity” bond, which is insurance that covers the employer if theft occurs, allowing them to easily reimburse you if any employee steals from you. That’s not likely to be the case with the gig economy service providers because their business model is built on not having “employees.” They consider themselves marketplaces, connecting clients with freelancers.
The gig economy can be an affordable, efficient solution for consumers, but it comes with liability concerns that cannot be ignored.
Having an umbrella policy in place, which provides significant coverage for a variety of perils at a low price, is a smart move regardless of whether you have Taskers and Fiverrs scurrying around your property. But depending on your particular circumstances, it may not be enough. Talk to your agent today about how your risk management portfolio can accommodate forays into the gig economy.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.