A Utah law, designed to help gig workers earn benefits, gets its first test

After little debate and nearly unanimous votes during the 2023 session, Utah legislators redefined what it means for companies to use contract labor — better known as gig workers — and give them more access to affordable benefits, such as health care.

Utah is now seeing the first efforts to put that law into effect, as a provider of portable benefits has announced its first Utah business partner.

The law, SB233, allows companies that rely on gig workers — such as Uber — to pay into flexible benefits packages for their workers, without calling them employees.

Advocates of the law say the idea is to give gig workers more access to affordable benefits without having to sacrifice their independence. They’re not company employees, according to the law, but they can still benefit from company contributions.

Detractors, however, question whether companies will make those contributions if they don’t have to — and wonder if companies may cut back on how many full-time workers they employ.

The law, signed by Gov. Spencer Cox in March 2023 and enacted last May, has borne its first fruit. Earlier this month, the benefits provider Stride announced it had partnered with its first Utah company. That partner is Shipt, the grocery delivery company owned by Target, which will now contribute to portable benefits packages for its shoppers and delivery drivers.

Shipt “is really leading the way,” said Noah Lang, Stride’s co-founder and CEO. “But the big story is about Utah innovating. ... No other state has done this yet. It’s a big deal, and a simple piece of legislation.”

In the pilot program, according to a company news release, Shipt will contribute to shoppers’ portable benefits accounts based on how much they earn on the app. A company spokesperson did not say how many shoppers will benefit.

Sen. John Johnson, a North Ogden Republican and the bill’s chief sponsor, celebrated the move in a news release last week.

“Over the past decade, Utah has continued to thrive due to dynamic and innovative policies that enable us to adapt to an ever-evolving economy,” Johnson said. “Stride’s portable benefits program will empower Utah’s independent workforce with the necessary support to pursue their chosen career path with confidence.”

A similar pilot program was introduced in Pennsylvania for DoorDash drivers earlier this month, also with Stride. But Utah is innovative, Lang said, because of the new rule’s simplicity. It’s not reinventing the wheel; it’s not wading into the murkier conversation of what protections gig workers deserve from the companies that use them (contract workers aren’t eligible for things like worker’s comp or federal minimum wage, which some labor advocates say is exploitative). The federal government is years deep in a legal matter over how to classify gig workers. Utah’s rule does not attempt to alter the relationship between companies and gig workers.

“[The bill] fits on one page,” Lang said. “It makes it easier for companies to pay benefits for 1099 workers. ... It’s not a criteria for determining employment classification.”

Flexible workforce, flexible benefits

Many gig workers are drawn to the work for the flexibility it offers as they supplement other forms of income. According to a Shipt spokesperson, most Shipt shoppers work less than 10 hours a week.

Like freelance contract workers, gig workers can set their own hours and customize their services.

Unlike fully unattached freelancers, however, gig workers use such apps as Uber or Shipt to connect with clients and generate business. Those apps then take a cut of the profits. The apps are built around a service offering, like ride sharing or dog walking, with gig workers providing that service.

Gig workers, though, aren’t employees of the apps, no matter how many hours of service they provide. That means that even if gig work is their only form of income, and even if that all of work is done on behalf of one app, the workers get none of the benefits of full-time employment. They’re on their own for such things as health insurance, retirement plans and unemployment insurance. They also don’t qualify for worker’s compensation if they are injured on the job.

Enter flexible benefits plans. They offer access to health care, vision and dental plans at pooled rates — generally cheaper than individual pricing — plus, in Stride’s case, they also offer such things as savings accounts and tax guidance. And they are not tied to employment, so they can follow people from gig to gig.

Their benefit — and their distinction from individual, private healthcare plans — is in volume, said Caden Rosenbaum, senior policy advocate for the Libertas Institute, a Lehi-based think tank. Rosenbaum was the lead voice advocating SB233, and presented the bill alongside Johnson during the 2023 session.

“On the private market, you’re just one person,” Rosenbaum said. “The pool is a lot smaller, and the rates are higher.”

Such plans are not new — Stride has been around for a decade. But until recently, only workers paid into them.

Jeff Worthington, president of Utah’s AFL-CIO, said he’s skeptical companies will contribute. Why would they, he said, when their business model is founded on access to contract labor that does not require such contributions?

Worthington also said there’s a chance companies who do opt-in will use it as an excuse to cut back on full-time employees.

“It sounds like a way of putting someone on the payroll at 30 hours instead of 40,” he said — the legal threshold for providing employee benefits.

Lang and Rosenbaum don’t see it that way. It’s good business, they said, to create better working environments, even for contract workers. The ones that do will attract more, and better, talent.

“There’s always competition between platforms to get people on the apps,” Rosenbaum said.

Plus, Lang said, it’s the “right thing to do.”

Shipt said in a statement that it “takes pride in exploring solutions to enhance the financial well-being of platform-based workers while preserving the flexibility and independence they desire,” and it was excited to pilot the program in Utah.

The future of work

In Utah, some 36% of working adults have used such apps to earn an income, according to a report from the Flex Association, an advocacy group that represents app-based platforms. There were 64,000 app-based workers in the state in 2022.

Worthington is not convinced the gig economy is here to stay. It’s “trendy” he said, but as a union guy, Worthington said he thinks people will eventually wise up to the realities of employee benefits.

“What I’m seeing ... is an uptick in younger people wanting to become unionized or work for a union company because they see the benefits of having benefits,” Worthington said. “It doesn’t take but one trip to the hospital [for] the bell to go off.”

Lang and Rosenbaum disagree. It’s why Lang created Stride, he said, and why he and Rosenbaum both advocate for workforce legislation that matches the era. (Lang is part of a Flexible Workforce Working Group that, in partnership with Libertas, lobbied the Utah legislature to pass SB233.)

“This is about the future of work,” Lang said. “The future of work is now.”

Rosenbaum said he thinks the gig economy will grow, but it will also evolve. Luxurious Uber rides now offer such extras as massage seats, fancy lighting, music — providing not just a ride, but an experience.

“This is their business,” Rosenbaum said. “It’s not really gig work, it’s self-employment... having the flexibility of being your own boss, I think that’s empowering for a lot of people.”

Rosenbaum said he hopes employers and lawmakers can keep up with the changes.

“You can duke it out on more important questions,” he said — questions like how to classify gig workers and what legal protections they deserve. “But the workers are somewhere in between, just waiting.”

Shannon Sollitt is a Report for America corps member covering business accountability and sustainability for The Salt Lake Tribune. Your donation to match our RFA grant helps keep her writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.