By disrupting the traditional employee-employer relationship, platforms like Uber, Lyft, Etsy, and TaskRabbit are changing the mechanics of our economy and moving us toward the future of work. An NPR/Marist poll from January 2018 shows 1 in 5 jobs in the U.S. are independent contractors, and by 2029, contractors and freelancers could comprise more than 50 percent of the country’s workforce. Policymakers are starting to recognize these shifts and are trying to solve problems that have arisen as a result. In Colorado, a new bill, SB18-171, attempts to codify these emerging trends and the implications could be significant for working Coloradans. 

SB18-171 proposes anyone working for a “marketplace platform” like Uber or Lyft should be classified as an independent contractor, absolving the business from paying payroll taxes that go toward unemployment, therefore disqualifying these workers from unemployment benefits. In many ways, this is a clarification of how these workers are currently treated, but the bill clearly favors platforms like Handy — a handyman contracting service — that are going further to blur the distinction between an independent contractor and someone more answerable to their employer. What’s more, because businesses have been known to misclassify employees as independent contractors, there are valid concerns this bill could be used by some companies to stop paying into unemployment insurance. 

Studies show between 10 percent and 20 percent of workers who should be employees are classified as independent contractors. This means businesses don’t pay payroll taxes — including unemployment, Social Security, and Medicare — and deprive state and local governments of important revenue. It hurts workers who pay more in taxes for being an independent contractor than they would if they were employees. It also means workers aren’t entitled to the same anti-discrimination policies available to employees. A bill like SB18-171 could lead to legal misclassification in a way that ends up wreaking havoc on Coloradans’ employee protections and our state’s economy.  

As one of the Colorado legislature’s first forays into the implications of the contingency economy and future of work, SB-171 should not be treated lightly. As legislators examine the proposal, they should reflect on the bigger picture. 

As alternative work arrangements become more prevalent, there will be profound effects to account for. As more people either choose or are forced into freelancing or independent contracting, they are less likely to have access to essential benefits and that will have huge implications for our society and public systems. 

Some have already taken the initiative to explore policies to accommodate this shift toward the future of work. For example, in Washington state, Uber and the local Service Employees International Union (SEIU) wrote a letter to policymakers urging a holistic approach to protecting independent contractors by devising a portable benefits system. This would contain benefits that follow a person from job to job and allow workers to pay a small amount into a pot for health care, retirement, sick and family leave, disability, and other benefits that wouldn’t be lost with a job change or a move to independent contracting. These types of innovative ideas are key if we are to move our 20th century employment system into the 21st century. 

These issues must be confronted before, not after, states fully endorse the emerging workforce arrangements that are being sought by these new platforms. By moving one piece of a puzzle without accounting for others, we might make mistakes that will be hard to correct. Proposals like SB-171 are well-timed. The time to have the conversation is now, not later, but it needs to include a broader range of components and a much wider group of stakeholders at the table.