By Chris Morehead
For the Oregon Beer Growler
Most people I come across are unfamiliar with the term “gig economy,” even though they’ve already had some experience with it. Simply put, the gig economy is the digital marketplace that connects contingent workers with consumers. It is the increasingly app-based system where skilled individuals can offer their services and perform specific tasks or “gigs” in exchange for some agreed-upon pay. The most common examples are Uber and Lyft drivers. However, the possibilities are endless, as you can now use apps to find someone who will walk your dog, fix your plumbing or even draft a legally binding contract (note: this is not necessarily an endorsement for finding your lawyer by “swiping right”).
Indeed, just like the craft beer industry, the gig economy is booming and here to stay. Just four years ago, there were approximately 75,000 workers in the gig economy. That number has exploded and will continue to do so, since an estimated 19 percent of the current workforce engages in project-based work. And in just 10 years, that number is expected to balloon to 66 percent. Meanwhile, the number of workers in traditional 9 a.m. to 5 p.m. jobs is expected to decline from 86 percent to 60 percent during the same time span. Many people will work in both economies, while others will leave the established model behind entirely.
So, what are the driving forces behind this revolution? For one, consumer demand for ultra-convenient services has pumped hundreds of billions of dollars into this burgeoning economy. Millennials — who, like the craft beer industry, make up a massive portion of the gig workforce — love it because of the flexibility and the freedom it provides when compared to a traditional career. And gig companies, which have been treating gig workers as independent contractors, are saving tons of cash by avoiding payroll taxes, health insurance, office space and training.
But with drastic changes come the inevitable uncertainty and risk. By far the biggest challenge facing the gig economy is how to appropriately classify gig workers: are they truly independent contractors, or are they actually employees? This is not always an easy answer, as even traditional employers often mistakenly classify workers as independent contractors when they should be employees due to the amount of control exercised over the worker. That error can turn into a legal nightmare. For example, Uber recently tried to settle a misclassification lawsuit for $100 million before that amount was rejected by a federal judge.
So what’s the solution for gig companies that don’t want to pay taxes for “employees” that they may never see or tell when to show up for work? That remains to be seen, as courts and legislatures grapple with this very issue, but it is possible that a third category of workers will emerge: the “dependent contractor,” which could create some middle ground between the competing interests of the gig worker, the gig company and the government’s interest in regulations and taxes.
The bottom line is that the gig economy will have a profound effect on all workplaces, including the craft beer industry, where talent acquisition and retention continues to be a challenge for employers. While we’re already seeing some craft beverage gig companies pop up across the country, I wouldn’t be surprised if in five years, for example, tap rooms and hop farms “hire” workers via apps on a flat-fee-per-shift, as-needed basis. Virtually every facet of the industry will have new options to get tasks completed. And when that happens, it will be essential for all employers and gig companies engaged in the craft beer industry to pay close attention to the not-so-glamorous pitfalls of the evolving employment law landscape.
Chris Morehead is an attorney in the Portland office of Fisher Phillips, a national labor and employment law firm. He focuses on hospitality employers, with an emphasis on the craft beer industry. When not in the office, he’s collecting badges on Untappd. He can be reached at CMorehead@fisherphillips.com or 503-205-8099.
Stories from the print edition of the Oregon Beer Growler.