Hart Brown, Firestorm COO on the Gig Economy and Insurance
According to Risk and Insurance Magazine, the number of gig economy workers (without employer-provided benefits and protections such as workers’ compensation) in the U.S. is growing. Supported by the 2018 Firestorm Analytical Solutions Business Continuity Compensation Report, the findings indicate 19.4 percent more independent consultants in the business continuity field worked the full 12 months in 2017.
Not only are business continuity contractors working longer, they’re also receiving greater compensation. The 2018 report revealed the average compensation rates have increased over the years. In comparing to 2016, the average high rate increased 24.6 percent (from $141 USD).
The classification of gig, or contracted workers, has recently been under question. As per Risk and Insurance Magazine,
Legal challenges have occurred, starting with lawsuits against transportation network companies (TNCs) like Uber and Lyft. Several court cases in recent years have come down on the side of allowing such companies to continue classifying drivers as independent contractors. Those decisions are significant for TNCs, because the gig model relies on the lower labor cost of independent contractors. Classification as an employee adds at least 30 percent to labor costs.
However, a March 2018 California Supreme Court ruling in a case involving delivery drivers for Dynamex went the other way. The Dynamex decision places heavy emphasis on whether the worker is performing a core function of the business.
Under the Dynamex court’s standard, an electrician called to fix a wiring problem at an Uber office would be considered a general contractor. But a driver providing rides to customers would be part of the company’s central mission and therefore an employee.
Despite the California ruling, a Philadelphia court a month later declined to follow suit, ruling that Uber’s limousine drivers are independent contractors, not employees. So a definitive answer remains elusive.
Benefits vs. Lack of Benefits
A significant difference between employees and contractors are benefit packages. More than 90 percent of full-time business continuity professionals receive medical insurance, dental insurance, eye care, a 401(k), and paid time off. Gig workers, however, do not receive such benefits. The lack of benefits increases risks for independent contractors. To mitigate risks, Firestorm COO, Hart Brown, suggests every person needs to have insurance.
Independent contractors need to buy their own insurance, including workers’ compensation. But many don’t, said Hart Brown, executive vice president, COO, Firestorm. They may not realize that in the case of an accident, their personal car and health insurance won’t engage. The gig system, where a worker does several different jobs for several different companies, breaks down without portable benefits, said Brown. Portable benefits would follow workers from one workplace engagement to another.
The risk of not having insurance is greater than missing out on company-wide paid vacation days (86.9%), company-distributed cell phones (64.4%), and an auto allowance (4.2%). *2018 Firestorm Business Continuity Compensation Report
“The insurance industry reinvented itself from a risk transfer mechanism to a risk management mechanism, Brown said, and now it’s reinventing itself again as risk educator to a new hybrid market.”
As a contract employee, ensure you are taking care of your business and yourself. For questions relating to risk insurance, please contact us.
Hart S. Brown, CORP, CBCP, CEH, CLCS, LPQ, serves as the COO and President of Insurance and Government Services for Firestorm, bringing to the executive team nearly 20 years’ experience in security, crisis management, emergency management and business continuity. As COO, Hart leads the development, acquisition and growth of key practices and people. Additionally, he manages the acquisition and integration strategy and directs the planning and budgeting process for all our Firestorm companies and acquisitions.
Known for his ability to grow organizations from inception to international recognition, Hart possesses expertise in building customer and shareholder value through assembling world-class teams. As a forward-thinking and highly knowledgeable leader in crisis management, cyber risk and insurance he has provided specialty services throughout 50 countries in both the public and private sectors. He is adept in business development, sales and creating new client relationships to support complex risks in an entrepreneurial manner.
Hart is an industry thought leader who also serves as a media contributor, conference presenter and author on issues related to crisis management, reputational risks, cyber risk, insurance and security. As a former program director for the U.S. Department of State, Brown received an Award of Appreciation from President George W. Bush. He is a widely published security expert, certified Organizational Resilience Professional (CORP) Certified Business Continuity Professional (CBCP) and Certified Ethical Hacker (CEH), among others. Read more about Hart Brown.