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Sunday, February 5, 2023

Business Works – GIG Economy at Risk


A GIG economy is a labor market characterized by the prevalence of short-term, independent contractors or freelance workers—as opposed to workers who receive a salary or an hourly wage. In 2017, the Bureau of Labor Statistics reported that 55 million people in the U.S. are “gig workers,” which is more than 35 percent of the U.S. workforce. That number is projected to jump to 43 percent in 2020*. Naperville, and the region, are working models of these statistics.

A significant issue on the NACC’s advocacy radar is a desire to limit the definition of who qualifies for a 1099 contract employee status. Limitations adopted in California from what’s known as the AB5 legislation have been described as the most consequential labor-market shift in modern history. These limitations threaten traditional business models who operate with significant numbers of 1099 employees; i.e. real estate agents, financial advisors, as well as other industry segments that are major economic drivers in our area.

Last year’s passing of AB5 in the California Legislature prevented many companies from claiming workers are independent contractors. Under their “ABC” test, workers are employees, and must be given benefits – unless they satisfy all three of the following criteria:

1. The worker is free from control and direction in connection with the service performed.

2. The worker performs the service outside the usual course of the hiring entity’s business.

3. The worker is customarily engaged in an independently established trade, occupation, profession, or business of the same type involved in the service being performed.

More states are expected to follow suit in addressing the limitations imposed by California’s AB5 – including Illinois. The NACC Business Works Steering Committee, the advocacy arm of our Chamber, is carefully examining this issue and will be monitoring legislation introduced at the upcoming legislative session in order to continue the discussion of the potential ramifications this could have on our local business community, as well as our nonprofit agencies.

For more information and possible regulatory comprises see the U.S. Chamber of Commerce white paper at www.uschamber.com/sites/default/files/ready_fire_aim_report_on_the_gig_economy.pdf.

We welcome any questions or comments from readers. Contact me at (630) 544-3387 or rosborne@naperville.net.

* Source: Forbes 7/29/18

Reba Morgan Osborne
Reba Morgan Osbornehttp://naperville.net
Reba Morgan Osborne is the Director of Government Affairs for the Naperville Area Chamber of Commerce. Contact Reba at (630) 544-3387 or rosborne@naperville.net.