The coronavirus pandemic aid package passed in the House Saturday may leave many contractors and gig-economy workers uncovered, particularly if they want to undertake the sort of social distancing that many public health experts have recommended to reduce the spread of the virus.
The rights and benefits extended to workers generally hinge on the legal definition of an “employee"—as compared to an independent contractor—and how an employer or its contractors classifies people on their payrolls. That means that both the self-employment tax credit and emergency paid leave in the Families First Coronavirus Response Act are more complicated for gig workers, if they apply at all.
The emergency paid leave expansion probably doesn’t apply to most gig workers, said Jeff Nowak, an employer-side attorney for Littler Mendelson in Chicago.
“It’s likely to run up against the same issues that we see in other parts of the economy where if someone is misclassified, that could potentially be a problem,” said Jessica Mason, senior policy analyst at the National Partnership for Women & Families.
The measure requires many employers to give paid leave to workers who take time off for various reasons related to the virus, including a positive diagnosis, symptoms or exposure, or to care for a family member in those situations. Employers would get refunds through payroll tax credits.
Government entities and private sector employers with fewer than 500 workers would have to provide up to 12 weeks of job-protected, partially-paid leave under the Family Medical Leave Act, which would ensure they don’t lose their jobs. The Labor Department would also be authorized to issue regulations that exempt businesses with fewer than 50 workers from the paid sick requirements.
The bill directs those employers to provide workers with two weeks of paid sick time off for similar reasons, including exposure, although it doesn’t go further in terms of engaging in the sort of “social distancing” that’s been recommended nationwide by the Centers for Disease Control.
Companies are unlikely to include gig workers in a headcount when considering the exemptions for employers with more than 500 employees because they’re deemed to be independent contractors, Nowak said. Some gig companies are offering assistance voluntarily:
Protections for Gig Workers?
The bill has a similar provision for people who are self-employed. Those workers can fund their own leave and be refunded up to $511 a day for time off due to their own health, or $200 if caring for a relative—though the credit would be capped at $200 per day for self-employed individuals under the bill’s FMLA expansion. People who do gig work to supplement their income from a job may have different requirements under that section.
Some gig workers are probably eligible for that tax credit. The bill currently defines self-employed is as someone who is regularly carrying on their own trade or business.
“It’s a reasonable reading of the House bill that gig workers would be able to obtain [the] tax credit at 100% pay for their own self quarantine, obtaining a diagnosis, and the like,” Nowak said.
But the provision also comes with additional complications that full-time workers who are considered legal “employees” don’t typically have to face.
The current version “places a huge burden on self-employed people, essentially asking them to self-fund leave and wait until their quarterly tax filings to see some reimbursement,” Mason said.
That solution for reimbursement would be “an added layer of bureaucracy for the gig worker, but I can’t think of a better alternative than allowing this as a tax credit through their individual filings so that they can realize those payments,” Nowak told Bloomberg Law.
The Senate will consider the bill this week. President Donald Trump has tweeted in support of the House-passed current version.