Growth of the Global Gig Economy Requires Payroll Knowledge

Payroll professionals across the globe can play a vital role in the expanding gig economy by helping senior managers decide whether to hire gig workers to complement the workforce, corporate executives said June 2.
Regulatory complexities, from worker classification to payroll taxation, are increasing as governments implement worker protections, said Linda Obertin, senior vice president for human resources at Well Fargo. The protections include minimum wage laws, paid leave, and access to health insurance.
As regulation of gig workers grows, employers must be aware of where they are doing business, Obertin said. For example, a business that is not legally registered in a country or state where a gig worker lives may cause permanent establishment to be triggered, requiring payment of corporate and value-added taxes as well as local payroll taxes, Obertin said at the annual American Payroll Association Congress, which was held online because of the coronavirus crisis.
Organizations should ensure that appropriate policies and controls are in place to minimize regulatory risk, said Dimitris Papageorgiou, a senior management consulting executive at Accenture.
Without a universal gig-worker definition, companies face risks because of variations in regulation, Papageorgiou said. A company’s decision to hire an independent contractor over an employee should be multilayered because of security and legal issues, which include payroll compliance and wage payments for an independent contractor vs. an employee, he said.
Third-party providers and managed service providers may help to mitigate the risk in managing the relationship with the gig worker, Obertin said.
Hiring gig workers offers tax benefits and flexibility for employers, compared with full-time employees, Papageorgiou said. From a payroll and benefits perspective, gig workers are hired for a definitive time and at an agreed-upon rate.
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