Health benefits

Expert panel: How employers can design health benefits and pension plans for gig workers

Lily: Uber Canada shares details of self-directed benefits fund for on-demand workers

So even if an employer offered dental benefits today, their on-demand workers would have to pay taxes on the money received for cleanings and fillings. Under current tax laws, a gig worker’s dollar cannot go as far as an employee’s dollar.

One solution is to classify gig workers as employees. Some labor rights groups are advocating for this change, while others are shelving the issue of classification and instead negotiating benefits contributions for platform companies.

It is feared that obtaining these benefits will require making a greater concession in terms of status. For example, in April, Washington State legislated a minimum per-minute, per-mile wage for construction worker drivers and required platform companies to provide paid sick leave, but effectively cemented the status of drivers as independent contractors.

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The classification debate is important, and if gig workers were recognized as employees, they would enjoy significant workplace protections related to minimum wage, working hours and overtime, parental leave, and the right to unionize. Although platform companies are still not required to provide benefits, some want to. Uber has proposed laws requiring all platform companies to establish individual benefit accounts — funded by earnings-based company contributions — that gig workers can withdraw to buy health insurance or time off. paid.

Governments are also interested in benefits for gig workers. Ontario has established a portable benefits advisory committee, and in its 2020 platform, the New Democratic Party of British Columbia has committed to creating a benefits fund for workers without government-sponsored coverage. the employer. Ahead of the 2021 election, the Liberal Party of Canada promised to change CPP and EI legislation so that platforms pay employer contributions on behalf of their workers.

With this interest from governments and platform companies, now is a good time to design an efficient and tax-efficient plan that maximizes the benefits for gig workers – a workforce that can work for one or more companies. full-time or part-time platform. base and with fluctuating hours and income.

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Although individual savings accounts are easier to administer, they offer limited benefits and continue to shift economic precariousness to workers. They also often come with higher investment management fees. It is therefore essential that a benefits plan for gig workers be based on a risk-sharing model.

An effective plan should cover workers hired by all platforms so that they can consolidate their benefits and not be forced to pay fees across multiple platform-specific plans. Also, the larger the group, the lower the administrative and overhead costs per member.

One option could be to establish a central fund into which all platform companies deposit contributions and which oversees three separate funds: a pension plan; a complementary health insurance scheme and; a fund for leave guaranteed by employment standards legislation. Pension and health funds would offer group plans that pool risks and reduce costs. Generally, tax laws prevent a single fund from providing retirement, health and other benefits.

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Each worker’s contributions could be distributed among the funds according to a predetermined distribution, or workers could distribute their contributions among the funds as they see fit.

The plan should be administered by a government or not-for-profit organization with a legally imposed fiduciary duty to plan participants. In 2017, Washington State considered a bill that would create portable benefits for gig workers. The bill required nonprofit benefit providers to administer the funds, capped administrative fees at 5% of funds paid out, and required that at least half of the administrator’s board be workers. site and that all directors have a fiduciary duty to the members.

Benefit funds could be funded by contributions from platform companies, gig workers, and customers. In the UK, Uber drivers contribute to a defined contribution pension scheme. Uber pays 3% of qualifying earnings, while drivers pay 5%. In New York State, rideshare drivers can participate in the Black Car Fund, which provides workers’ compensation, dental and vision care, and telemedicine. The services are financed by a 3% surcharge on all journeys made by its drivers. A gradual increase in employer contributions each year can help get platform companies on board.

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Regardless of the classification of gig workers, the federal government must ensure that tax laws allow them to participate in advantageous tax benefit schemes on an equivalent basis to that of employees.