The growing sophistication of technology is fueling what is becoming known as the on-demand economy. Through connections provided by digital platforms, consumers can connect directly with drivers at the ready to deliver goods and provide services ordered via a mobile device app.
Ride-sharing firms such as Uber Technologies Inc. and Lyft Inc. that provide transportation and delivery are gaining prominence through their use of the on-demand or "gig" economy. TaskRabbit Inc. is also increasing its profile via an app that allows their customers to contract professionals for housecleaning and general handiwork.
Job flexibility is an attractive selling point for prospective workers. However, they are not being hired as employees. They are considered independent contractors, an employment status normally not covered by workers’ compensation.
As with any job, the safety of workers is at risk. Injuries are an ever-present danger, particularly in the hazardous for-hire transportation industry. Even before the rise of Uber and Lyft, the rate of taxi drivers and chauffeurs killed on the job was five times higher than workers in other industries.
Postmates, Inc.’s reliance on the "gig" economy has come at a cost. The Washington state Department of Labor & Industries in October ordered the San Francisco-based delivery service retroactively pay workers compensation premiums for over 3,000 of its couriers who provide bicycle delivery services.
The on-demand industry is in its infancy. Workers comp insurers have yet to respond to the new category of employees, in spite of industry experts confident that the current workers’ comp system can accommodate this burgeoning economy. For now, states are stepping in with alternative coverage arrangements.
The Postmates ruling may only be the beginning of changes in on-demand employment.
Companies may be forced to change their business model to provide comp coverage for full-time workers instead of independent contractors.
The transition won’t be easy for some businesses that could be forced to close down shop. Those that survive will do so with the necessary protections in place should their workers suffer serious injuries.