Giving Gig or Temp Workers Disability Protection

The modern economy is becoming more dependent on contract and gig workers, employing millions in flexible and sometimes temporary positions. These workers can be a way to deal with seasonal highs and lows, or to expand into more markets without the overhead costs of a full-time staff. Gig workers are on demand, ready whenever they are needed. However, one of the drawbacks to these positions is that many employers are not able nor required to offer benefits such as short-term and long-term disability insurance.

This can put workers in a state of unease, without the protections that traditional employment typically provides. And they’re not happy about it. A new survey from the American Institute of CPAs has found that 80% of workers would choose a lesser-paying job with good benefits over a higher-paying job with no benefits. In today’s tightening labor market, employees are expecting (and receiving) higher salaries and better benefits. With this shift in mind, it’s critical for businesses to explore other options to remain competitive and maintain a productive and satisfied selection of employees for contract, freelance, and part-time positions.

An important benefit that is often missing when workers are not working full-time is disability protection. If a worker experiences an injury or illness that puts them out of work, they may have few supports available and could quickly slip into poverty. According to the Federal Reserve Board’s 2017 survey regarding household economics, about 50% of adults don’t have a rainy day fund that could cover them for even three months of living expenses. Also, 40% don’t have enough cash to cover a $400 emergency expense.

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Even if a company is part of the rising gig platform — like Uber or Lyft —or hiring for a temporary position, offering access to disability benefits will show a company is truly looking out for the health of its workforce. Should the need arise, forward-thinking employers who can provide an alternative option to protect their employees’ financial well-being even without offering long-term disability insurance will be at the top of the totem pole. The Social Security Administration (SSA) estimates one in four 20-year-olds will be disabled before reaching age 67, so the pool who may need this assistance is vast.

Luckily, there is a federal benefit that provides a much-needed safety net for employers in this position: the Social Security Disability Insurance (SSDI) program. SSDI is an income replacement insurance for former workers with disabilities, provided through the Social Security Administration. It’s versatile and available to everyone who meets the requirements, no matter how many employers they may have. SSDI Extended Benefits is free for employers to provide access to disability protection to their workers, allow businesses to highlight a valuable resource for workers to fall back on when things take a turn for the worse. These programs help workers access SSDI when and if they need it for a severe disability. This program also is accessible to workers who choose not to purchase their employers’ long-term disability insurance plan.

Work history, education, age and mental or physical conditions are all factors in a worker’s application for disability income through the SSDI program. Typically, workers must have paid FICA payroll or self-employment taxes for five out of the last 10 years to be covered.

Whether employees are ineligible or simply declined group disability insurance, they may be eligible for SSDI. It’s an important federal insurance program with numerous benefits that many workers aren’t aware of and which carries tremendous complexity and challenges when they try to access it. Even with limited financial resources or the capability to offer traditional benefits, providing an avenue for accessing SSDI more conveniently is an innovative way to stay in the race, putting companies at a competitive notch above the rest.

John McGrath

John McGrath
As director of business services at Allsup LLC, John McGrath assists employers and self-insured businesses with the process of evaluating their benefits programs in coordination with federal programs that their employees can access when and if needed.

John McGrath

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