Guidelines for Hiring in the Gig Economy

Woman working on laptop in office

So, you’re posting a role on The Mom Project marketplace and you’re about to engage with some incredible, talented individuals who are looking for employers, like you, who get it. But what exactly is a “Gig Economy” and what does it mean for your company?

The Gig Economy gets its name from the rise of project-based work (“gigs”) in the marketplace that are temporary and allow for flexibility. Hiring for gigs is a great way to tap into independent talent versus a full-time employee. It’s estimated that around one-third of the working population is already working in a gig capacity!

However, taking advantage of the rising gig economy means there are a few legalities to consider, one being that contingent talent is taxed differently by the government than full-time employees. We are here to help, both with the following resource guide and as a partner. Let’s get to business!

Why do you need to care about worker classification?

As an Employer:

You may have to pay potential back taxes, penalty fees, or legal fees if you misclassify a worker. It’s important to understand the proper hiring practices at both the federal and state level to ensure you make the correct classifications.

Situations to pay attention to include:

  • A talent believes they have been misclassified. They can request a review from the IRS.
  • A 1099 incorrectly files for unemployment, which is a W2 work program benefit and not available to 1099s. This may trigger a classification question from the government.
  • An important note! Employer tax is a revenue center for state and federal government. They are supportive of 1099 contractors and if a worker raises a question, they are likely to side with the worker, rather than a company.

As an employer, how does this impact my project set-up with The Mom Project?

If you are classifying a worker as a 1099:

  • The Mom Project provides payment processing and project management services for your contractor, which includes providing them with end of year tax documents
  • Think of your talent as a vendor or consultant that is providing services directly to your company, rather than as your company’s employee of an employee of The Mom Project
  • Your company sets The Mom Project up as a vendor and pays on agreed schedule

If you are classifying a worker as a W2:

  • The worker is an assigned employee of The Mom Project; The Mom Project provides payrolling and project management services
  • Think of your talent as a temporary employee of The Mom Project
  • The Mom Project’s payrolling arm will make weekly or bi-weekly payroll payments, including all employer and employee federal, state, and county withholdings
  • Your talent will have access to a suite of benefits including health, dental, retirement, and insurance
  • There is an associated 20% pass-through fee for assigned employee (W2) services

What you’ve read so far is a good start to understanding gig workers versus full-time employees, but there are other factors to consider. Interested in learning more? Download the full guide below to access all the information!

Read the full guide here

1099 W2 infographic-v04 (1)

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- March 8, 2021

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