It may be fun for an architect to moonlight as a freelance photographer, but few people want a job title that’s full of slashes, whether as a social media manager/babysitter/barista or a substitute teacher/tutor/Uber driver.
Many workers don’t have a choice, however. “In Canada, one of the things we see is employers moving away from permanent employment to contract employment, and one of the reasons is to avoid the payroll costs [such as] CPP and EI and also benefits,” says Andrew Cash, a former Toronto NDP MP and the co-founder of the Urban Worker Project, an organization that advocates for part-time, temporary, contract and other precarious workers.
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The project surveyed 1,000 precarious workers across Canada in November 2016 and found their top workplace concern was access to extended health benefits. “People need a level of protection and security that simply isn’t there right now in their lives,” says Cash.
“What I often say is that many urban workers are a bicycle accident away from the poverty line.”
Get in with a group
Some organizations can only offer renewable contracts to qualified workers because of head count and budget restrictions, says Patrick Hill, a consultant at Accompass Inc. in Toronto.
Insurers, however, may be willing to add contractors to group benefits plans, as long as they’re only working for one organization, Hill notes. But insurers would likely steer contractors with a roster of clients to individual products, which gives them more portability and means they don’t have to keep switching in and out of group benefits plans.
Employers that aren’t sure whether they should set a precedent for benefits for contractors could implement longer waiting periods, he adds. “So some of our clients may not want to offer benefits until after a six- or 12-month period. At that point, it is more of a long-term situation, and contracts are typically extended or renewed for longer periods once [the employers] feel comfortable with those people.”
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Hill notes insurers will set up a different class of benefits for long-term contractors. While health and dental coverage may be the same as benefits for employees, provisions for contractors will have flat life insurance rates, instead of tying them to salary, and they often don’t include long-term disability.
Some insurers don’t want to add non-traditional employees to benefits plans because it can get pricey, says Yafa Sakkejha, general manager at Beneplan Inc. If workers think the employer won’t renew their contract, they may make a claim for long-term disability due to stress. Many insurers, then, won’t offer long-term disability coverage at all. And even with health and dental coverage, workers may maximize their benefits just before the contract ends, which could increase the costs. As a result, some employers create basic plans for contract workers.
“That’s why companies either don’t offer it or they’ll offer a really truncated plan or a core plan where it’s just the basics,” says Sakkejha. Such basic plans can be roughly $50 to $100 for each employee per month, according to Sakkejha.
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Still, she doesn’t expect employers will feel pressure to offer benefits, even with the move towards nontraditional work. If employers have their contractors pay for a group plan, those with significant conditions will be more likely to opt in, thus creating an anti-selection bias and high premiums, Sakkejha notes. And if the employer pays for the plan, it may face tax issues with the Canada Revenue Agency, she adds.
“Only in the case where it’s someone really important and that person has asked for it and they’ve made it clear that they’re going to walk if they don’t get it, that’s the only time we see companies consider it.”
Who’s an employee?
One risk employers should consider, according to Hill, is whether they’ve classified their workers properly. Organizations whose workers do the job of employees but receive the compensation of independent contractors could face significant consequences, says Inna Koldorf, a founding partner at Koldorf Stam LLP in Toronto.
Employers would have to remit back payments for taxes, Canada Pension Plan contributions and employment insurance contributions, she says. “There would be interest on that. [The Canada Revenue Agency] usually puts a 10 per cent penalty on that, and if the employer did it knowingly, the penalty can be as much as 20 per cent. . . . And if it’s a corporation, the directors of the corporation could also be held liable individually.”
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Courts, the Canada Revenue Agency and ministries of labour conduct a four-part test to determine if a worker is an independent contractor or an employee, says Koldorf. The first issue is the degree of control the employer has over the worker. “If this person truly is an independent, they set their own hours, they work where they want, they’re not supervised, they don’t have to get approval for absences.”
Another key difference is the worker’s chance for profit and risk of loss, says Koldorf. Employees earn an hourly wage or an annual salary, even if there’s little work to do, while independent contractors’ income can vary according to project assignments.
Authorities will also investigate who owns the tools necessary for the job and workers’ level of integration within the organization, including whether they wear uniforms, are on payroll and can hire their own employees.
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Including independent contractors in a group benefits plan “might tip the scale” as to whether they’re really an employee, says Koldorf. But a bigger risk, she notes, is offering benefits to a contractor without consulting the insurer. If the insurer denies a claim because the plan isn’t supposed to include contractors, the worker can sue the employer.
Pay-per-gig benefits
Independent contractors can sometimes access benefits through professional associations. Canadian artists of all stripes, for example, can apply for benefits through the Actra Fraternal Benefit Society, a non-profit insurance company.
“Our main area of business is [running] benefits for ACTRA [the Alliance of Canadian Cinema, Television and Radio Artists] and the Writers Guild of Canada,” says Jason Saulay, who’s responsible for affinity programs and business development at the insurer. “So we have a members’ insurance program by way of collective bargaining through those organizations.”
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Full members of either union must participate in the group plan. Their coverage depends on how much they earn, since employers contribute to each member’s benefits plan whenever the artist books a gig. But for those artists who don’t work much during a particular year, they could lose their coverage. In that case, they’ll have access to individual plans, which the insurer also sells to artists who aren’t union members through other arts organizations. Non-affiliated artists can also participate if they can prove they’re working in the industry.
“It’s volunteer-enrolled . . . so you don’t get that group enrolment, you don’t get that massive buying power,” says Saulay, noting the arrangement is comparable in offering and price to other personal health insurance products. It does, however, target artists to some degree, with comprehensive travel and dental coverage.
When benefits boost business
Some gig-economy companies are happy to provide benefits to their workers. Take TappCar Inc., an Alberta ride-sharing company that launched in March 2016. Its 320 drivers are independent contractors but they’re also members of the Teamsters union who will soon receive health benefits and participate in a pension plan. The company is still working out the details of the benefits and pension plan with the union, according to spokesperson Pascal Ryffel. He notes that while plans won’t offer “gold-plated” coverage, the benefits will be enough to provide drivers and their families with “a sense of comfort and stability.”
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Ryffel suggests that with more players predicted to enter the ride-sharing industry in the future, companies like TappCar will have to work hard to remain competitive. “For us, that means if we can attract the best drivers, if we can keep the drivers happy, that means our customers are going to be happy.”
The tech sector responds
In the United States, where the focus on private health care has made benefits even more important, several gig-economy companies encourage their workers to buy health insurance through a comparison site called Stride Health. The companies, which include Uber Technologies Inc., online craft marketplace Etsy Inc. and caregiving platform Care. com, don’t contribute to premiums but they work with Stride Health to make it easier for workers to find appropriate policies.
“We collect [workers’] health data, their doctors, their drugs, their illnesses,” says Noah Lang, chief executive officer at Stride Health in San Francisco. Uber, for example, sends drivers’ financial data and basic demographic information, which reduces their administrative tasks. Stride Health uses all of the information “to help them pick the best health plan and [decide not only] how much risk they should take on but also how to take advantage of things like tax credit opportunities,” says Lang.
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Care.com also offers what it calls Benefit Bucks. The program is similar to a health spending account, but the amount offered depends on how frequently the caregiver works and how the families want to pay. If families pay through the Care.com website, as opposed to by cash or cheque, two per cent of the transaction fee goes to the caregiver’s benefits account until it reaches a maximum of US$500 each year.
“We’ve heard from caregivers that when they look at getting . . . benefits, they’re anxious about it,” says Bryan O’Malley, vice-president and general manager of payments at Care.com in New York. “It’s a stress for them to actually sort through the options and actually pay for it.” O’Malley also points to survey data from the National Domestic Workers Alliance that found 65 per cent of domestic workers didn’t have health insurance and only four per cent had employer-sponsored coverage.
Once caregivers have accumulated $15 in their account, they can spend that money on expenses such as health and dental services, higher education and transit costs.
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“If you think about workplace benefit programs, they, in many cases, offer employees help with commuting expenses and professional development,” says O’Malley. “And we thought that Care.com benefits program and being able to use your Benefit Bucks towards expenses like transportation and professional development really helped with our goal of professionalizing caregiving.”
Sara Tatelman is an associate editor at Benefits Canada.
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