What’s a Gig?

 

Abstract

The future of work has changed the way society views how work gets done and has even repopularized the word, gig. Grubhub, Uber, and Instacart are heavy users of gigs and its workers. But what is a gig? Gig can mean a number of things, including something that whirls or is whirled, slang used for describing a live musical or entertaining performance, and more recently, a job that’s usually for a specified amount of time.Gig has even been used to coin a sector of the workforce (the gig economy). For the purposes of this paper, a gig is will be the focus of this paper. With over 250M hits on Google, gig is extremely popular among the global workforce. The McKinsey Global Institute (MGI) estimates that roughly 20 to 30% of the current US workforce is taking on some form of a gig. In fact, estimates project that by 2027, half of the US workforce will be engaging in a gig of some form. One of the primary drivers for this dramatic shift in workforce is the preference for flexible work arrangements.

As more hiring professionals embrace these changes and begin to focus on work arrangements, a clear distinction must be made among gig, full-time, part-time, and internship positions. In particular, a gig is a work arrangement that can be both mutually beneficial and educational. For students, gigs offer experiential learning opportunities similar to that of internships. Students who take on gigs can focus on building hands-on experiences in their intended career choice or discovering new careers. Alternatively, employers offering these opportunities not only benefit from getting their work done by students, but also learn valuable information about the student’s background for any talent pipeline decisions. Because students are becoming more receptive to working on gigs, the focus of this paper is to help define gig so that it can be easily understood and interpreted by students and employers from a US audience.

 

Overview of Existing Work Arrangements

Today’s work arrangements can vary in flexibility: from permanent full-time positions to temporary gigs.  In between these two spectrums are part-time positions and internships. To sort through the differences, a heuristic was developed to easily identify and break down the four most common work arrangements.

This heuristic considers three factors: the nature of the work arrangement, the average number of hours required, and the level of control from each party involved. The latter answers the question of who (the worker or the employer) has control over the behavior, finance, and relationship of the work arrangement. The developed heuristic is organized in Table 1 and Table 2.

To further explain, the nature of the work arrangement is defined as either being definite (having a specified start and end date) or indefinite (having no specified end date). The average number of hours derives from the 30-hour work week or 130 hours per month benchmark by the Internal Revenue Service (IRS). With respects to control, the IRS breaks it down into three categories:

  1. Behavioral Control: A worker is an employee when the business has the right to direct and control the work performed by the worker, even if that right is not exercised. Behavioral control categories are:
  • Type of instructions given, such as when and where to work, what tools to use or where to purchase supplies and services. Receiving the types of instructions in these examples may indicate a worker is an employee.
  • Degree of instruction, more detailed instructions may indicate that the worker is an employee. Less detailed instructions reflect less control, indicating that the worker is more likely an independent contractor.
  • Evaluation systems to measure the details of how the work is done points to an employee, but systems measuring just the end result point to either an independent contractor or an employee.
  • Training a worker on how to do the job – or periodic or on-going training about procedures and methods – is strong evidence that the worker is an employee. Independent contractors ordinarily use their own methods.
  1. Financial Control: Does the business have the right to direct or control the financial and business aspects of the worker’s job? Consider:
  • Significant investment in the equipment the worker uses in working for someone else.
  • Unreimbursed expenses, independent contractors are more likely to incur unreimbursed expenses than employees.
  • Opportunity for profit or loss is often an indicator of an independent contractor.
  • Services available to the market. Independent contractors are generally free to seek out business opportunities.
  • Method of payment. An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time even when supplemented by a commission. However, independent contractors are most often paid for the job by a flat fee.
  1. Relationship Control: The type of relationship depends upon how the worker and business perceive their interaction with one another. This includes:
  • Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status.
  • Businesses providing employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay have employees. Independent contractors generally are not granted these benefits by businesses.
  • The permanency of the relationship is important. An expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally seen as evidence that the intent is to create an employer-employee relationship.
  • Services provided which are a key activity of the business. The extent to which services performed by the worker are seen as a key aspect of the regular business of the company.

Using these three rules, the different work arrangements can be better separated and defined. To begin, the work arrangement that people are most familiar with are full-time positions. Used interchangeably with permanent positions, full-time positions are indefinite in nature and must average at least 30 hours of service per week or 130 hours of service per month. In addition to the hours, the employer controls the behavior, finance, and relationship of the worker, as outlined by the IRS. Full-time positions are classified as an employer-employee work arrangement. In general, a position that is indefinite in nature, is employer controlled, requires hours greater than or equal to the IRS benchmark, and is an employer-employee relationship is full-time.

In comparison to a full-time position, a part-time position shares the same nature of work arrangement as well as control for involved parties. The only difference is in the required number of hours; any work arrangement requiring less than 30 average hours per week or 130 hours of service per month is considered part-time. Therefore, positions that are indefinite, are employer controlled, require less hours than the IRS benchmark, and are an employer-employee work arrangement are classified as part-time.

Unlike full-time and part-time positions, internships are definite in nature; there is an official end date that terminates the work arrangement. Similar to full-time and part-time positions, the employer controls the behavior, finances, and relationship of the work arrangement and is classified as an employer-employee work arrangement. Internships must also be an educational experience, which National Association of Colleges and Employers (NACE) has clearly defined. Ultimately, positions that are definite in nature, employer controlled, classified as employer-employee work arrangement, and educational are classified as internships.

The final and most flexible work arrangement is the gig. Similar to an internship, gigs are definite in nature with a specified end date. Contrary to full-time, part-time, and internship positions, gigs place the behavioral, financial, and relationship control on the worker. An internship is classified as an employer-independent contractor work arrangement. Instead of receiving a W-2, a gig worker must file a 1099 for tax purposes. By considering these factors, positions that are definite in nature, worker controlled, classified as an employer-independent contractor work arrangement, and taxed differently are classified as gigs.

At times, full-time, part-time, internship, and gig positions may still not be clearly defined. In this case, please refer to the 2007 IRS 20 Factor Checklist, NACE, and IRS Form SS-8 for better clarification. The IRS 20 Point Checklist below helps identify whether the worker is considered an employee or independent contractor/gig worker. 

  1. Instructions: If the person for whom the services are performed has the right to require compliance with instructions, this indicates employee status.
  2. Training: Worker training (e.g., by requiring attendance at training sessions) indicates that the person for whom services are performed wants the services performed in a particular manner (which indicates employee status).
  3. Integration: Integration of the worker’s services into the business operations of the person for whom services are performed is an indication of employee status.
  4. Services rendered personally: If the services are required to be performed personally, this is an indication that the person for whom services are performed is interested in the methods used to accomplish the work (which indicates employee status).
  5. Hiring, supervision, and paying assistants: If the person for whom services are performed hires, supervises or pays assistants, this generally indicates employee status. However, if the worker hires and supervises others under a contract pursuant to which the worker agrees to provide material and labor and is only responsible for the result, this indicates independent contractor status.
  6. Continuing relationship: A continuing relationship between the worker and the person for whom the services are performed indicates employee status.
  7. Set hours of work: The establishment of set hours for the worker indicates employee status.
  8. Full time required: If the worker must devote substantially full time to the business of the person for whom services are performed, this indicates employee status. An independent contractor is free to work when and for whom he or she chooses.
  9. Doing work on employer’s premises: If the work is performed on the premises of the person for whom the services are performed, this indicates employee status, especially if the work could be done elsewhere.
  10. Order or sequence test: If a worker must perform services in the order or sequence set by the person for whom services are performed, that shows the worker is not free to follow his or her own pattern of work and indicates employee status.
  11. Oral or written reports: A requirement that the worker submit regular reports indicates employee status.
  12. Payment by the hour, week, or month: Payment by the hour, week, or month generally points to employment status; payment by the job or a commission indicates independent contractor status.
  13. Payment of business and/or traveling expenses. If the person for whom the services are performed pays expenses, this indicates employee status. An employer, to control expenses, generally retains the right to direct the worker.
  14. Furnishing tools and materials: The provision of significant tools and materials to the worker indicates employee status.
  15. Significant investment: Investment in facilities used by the worker indicates independent contractor status.
  16. Realization of profit or loss: A worker who can realize a profit or suffer a loss as a result of the services (in addition to profit or loss ordinarily realized by employees) is generally an independent contractor.
  17. Working for more than one firm at a time: If a worker performs more than de minimis services for multiple firms at the same time, that generally indicates independent contractor status.
  18. Making service available to the general public: If a worker makes his or her services available to the public on a regular and consistent basis, that indicates independent contractor status.
  19. Right to discharge: The right to discharge a worker is a factor indicating that the worker is an employee.
  20. Right to terminate: If a worker has the right to terminate the relationship with the person for whom services are performed at any time, he or she wishes without incurring liability, that indicates employee status.

This checklist is not a rigid classification but instead, offers a quick reference for determining the nature of employment (whether the work arrangement is classified as employer-employee or employer-independent contractor). For internships, NACE establishes a true working definition for employer and university use. Even with these two references, the work arrangement may still be unclear. When in doubt, the IRS Form SS-8 can be submitted to the IRS for an exact classification of the position in question with respects to US laws.

 

Redefining Gigs as Learning Tools

From an educational perspective, gigs offer students not only with another form of work experience, but also an educational tool: students can take on a gig to help them narrow down their career path(s), build their competencies within their chosen career field(s), and develop industry specific skills. As a tool, gigs are valuable for students in developing their career path(s). Consequently, a working definition for employers and students must be established. This paper recommends the following definition:

A gig can be a form of experiential learning that integrates knowledge and theory learned in the classroom with practical application and skills development in a professional setting. Gigs can provide students the opportunity to gain valuable applied experience, develop relevant industry skills, make connections in professional fields that they are considering for career paths, and gigs give employers the opportunity to evaluate talent.

To further this definition, the following criteria must be met for a gig to be realized as an educational experience:

  1. The experience must be an extension of the classroom: a learning experience that provides for applying the knowledge gained in the classroom. It can be to advance operations of the employer or be the work that a regular employee could routinely perform.
  2. The skills or knowledge learned must be transferable to other employment settings.
  3. There is routine feedback by an experienced supervisor.
  4. The experience has a defined beginning and end, along with a job description stating desired qualifications.
  5. Learning objectives/goals related to the professional goals of the student’s academic coursework can be fulfilled.
  6. The behavioral, financial, and relationship control are given to the student and not to the employer.
  7. The work arrangement is considered an employer-independent contractor arrangement, implying the use of a 1099 instead of a W2 for tax purposes.

By fulfilling these seven criteria, a gig can be classified for educational purposes.

 

Unpaid Gigs at Career Centers

Career professionals must be active in monitoring gigs that are posted in career centers to ensure that they follow the seven criteria of this paper. Additionally, career centers should be wary of unpaid gigs. Paid gigs typically provide career centers a screening layer that helps identify credible employers as well as valid gig experiences. Without payment, unpaid gigs require increased efforts.

 

Conclusion

This paper provides an outline for students, employers, and career professionals to identify gig opportunities that are educational experiences, by understanding the following three components:

  1. Gigs can be distinguished from other forms of work arrangements in accordance to US law.
  2. An educational gig must have a learning component where students can apply their classroom learnings and gain skills and/or knowledge that are directly transferable to other employment settings.
  3. Unpaid gigs exist, but precaution must be taken to ensure that they are beneficial from a student’s perspective.

These are the opinions of Uplancer, Inc. in offering a working document so that career service professionals, employment professionals, and students can collaborate to ensure student gigs are legitimate.