The Rise in the Gig Economy
There are several factors that have created the perfect environment for freelancers working under 1099 contracts. The first factor is the technological advances of the past decade, which have made it easier for trained professionals to build a career online. These developments include huge leaps in cloud computing, social networking, and consumer hardware, especially within mobile devices. It’s common to see freelancers working in coffee shops, parks, or co-working spaces—but most work from comfortable home offices where they can juggle the responsibilities of both personal and professional life. The second reason is a changing attitude among working professionals, who have begun to prioritize the value of work-life balance over climbing the corporate ladder. The EY 2021 Work Reimagined Employee Survey, which surveyed employees from around the world, found that:
More than half of respondents said they would consider quitting their job if they were not provided some form of flexibility in where and when they work64% of respondents want better technology in the office, while almost half say they want better technology to use when working from home
Between 2007 and 2011, during the global financial crisis and subsequent recession, millions of workers were displaced from their careers. The U.S. unemployment rate, which according to the U.S. Bureau of Labor Statistics was near 5% in 2007, doubled to over 10% by October of 2009. With so many people out of work for extended periods of time, many turned to freelancing to make ends meet.
Employee Benefits Available for 1099 Freelancers
1099 workers can get support in regard to their taxes, including write-offs for various business expenses. The Internal Revenue Service allows U.S. self-employed individuals to claim the costs of using a home office, office equipment, computers, office supplies, fees for advertising, fees for hiring subcontractors, utilities, use of a vehicle for work purposes, and more. Some companies that hire freelancers offer benefits, such as the use of a company technology; group health insurance, dental, and vision coverage; access to a retirement savings plan; paid leave; educational benefits; travel and corporate discounts; and other perks. Profit sharing can be factored into 1099 work arrangements, with a certain percentage of earnings delivered when work is completed.
How 1099 Contractors Obtain Employee Benefits
Freelancers should ask about 1099 employee benefits near the start of their interviewing process in order to weigh the pros and cons of each new client. Most companies don’t advertise benefits for contractors, but they may provide limited access to their group plans. One example is a group supplemental insurance plan that offers low-cost access to hospital indemnity care, cancer coverage, life insurance, auto and home insurance, and pet insurance. 1099 contractors may be able to purchase a dental and vision plan to augment a current self-employed healthcare plan. A 1099 contractor may be eligible for a fleet credit card to pay for gas for a work vehicle. Other costs that are negotiable can include dry cleaning services for required clothing or uniforms and reimbursement for required footwear or safety equipment. VISA and immigration administration and housing fees for taking a contractor role in another country can be paid for as an added benefit. Educational benefits are becoming a more popular incentive for contractors, such as being trained and reverified for certifications and developing new skills. Most companies reserve college tuition programs for their full-time employees.
Applying for 1099 Employee Benefits
When negotiating a new contract, it’s important to ask about potential benefits early and to be flexible. A contractor should look at the entire relationship and responsibilities before accepting a 1099 role. If a job requires large amounts of travel, then it makes sense to request travel benefits. If a job requires the use of expensive technology, then you deserve to have the equipment furnished for you by the client. Also, bear in mind that if you’re taking a contractor job through a staffing agency, you might be able to get benefits through them. It’s possible for 1099 contractors to get low-cost health insurance, supplemental insurance, life insurance, retirement savings plans, access to pay cards, training opportunities, and paid time off. Contractors will need to complete enrollment documents just like any other employee, but the employer will designate the status as being 1099, and any premiums due from the contractor will need to be paid in advance each month. It’s increasingly common for contractors to earn a living, benefits, and independence through their work—but it requires a schedule and a discipline all its own. As the gig economy matures into a more competitive and engrossing workspace, 1099 contractors who know the tax code, communicate their needs, and remain flexible will be the ones to use their skills most effectively.
