We thought it was time to define two terms that often get thrown around interchangeably but shouldn’t be: independent contractor and gig worker. Let’s clear up the confusion!
Merriam Webster defines the gig economy as “economic activity that involves the use of temporary or freelance workers to perform jobs typically in the service sector.”
The service sector piece is one of the main hints that someone is a gig worker. Ride-sharing drivers and grocery deliverers are good examples. Their “gigs” are on-demand. A customer requests a one-time service such as a ride or a grocery cart full of food delivered to their doorstep. The companies, such as Uber and Instacart, facilitate the transaction through an app.
The gig worker, then, is the person who does the driving or shopping/delivering. They might also be an independent contractor, but it’s not the same thing.
Independent contractors are business owners who are hired to do a specific job. They receive payment only for the work they perform. Unlike a regular employee, they pick their jobs and regularly move from client to client.
Here are some of the key indicators that someone is an independent contractor
- They have a specific skill set and an established business
- They report payments as business income and pay self-employment taxes
- Their work that is not central to their client’s main line of business
- Their work is project-oriented and is typically completed in a short amount of time.
Resources for employers and workers (coming up)
Next week, we’ll talk about how to set yourself up as an independent contractor. For the employers trying to walk the line, we’ll talk about best practices for staying compliant while working with independent contractors.
Still have questions?
Let us help you. It’s our business to keep clients remain compliant.