- A growing trend. British Columbia is the latest government entity that will be offering a minimum wage to gig workers beginning in 2024.
- Other variables with the legislation. Apart from a minimum wage, there also are provisions in BC’s plans for expense coverage, tip protections, destination transparency, suspension and termination decisions, and workers’ compensation coverage.
- Increased pay transparency. The overall impact of the proposed BC legislation offers a strong element of compensation transparency in general, also a growing, critical trend for employers.
- A chance to review compensation structures. The law is an opportunity for organizations to review compensation structures to ensure that ranges are compliant. In the process, organizations should also ensure their total rewards programs support their workforce strategy and, by extension, their business strategy.
The Canadian Province of British Columbia (BC) is the latest government entity to take aim at the independent contractor model established by ride-hailing and food-delivery app companies such as DoorDash, Uber and Lyft.
BC is introducing new protections for ride-hailing and food delivery app workers, including a minimum wage, compensation for expenses and other standards. According to the province’s announcement, the legislation will take effect in 2024.
Regarding the minimum wage, for now the proposed benefits (they could change) include establishing a standard of $20.10 an hour (120% of BC’s general current minimum wage of $16.75) and applying it to “engaged time,” which begins when a worker accepts an assignment through its completion.
Other potential aspects of the law include: expense coverage, tip protections, destination transparency, suspension and termination decisions and workers’ compensation coverage. According to government estimates, the number of ride-hailing drivers alone in BC is about 11,000, along with 27,000 food-delivery workers.
Some employers, including DoorDash, are taking steps on their own to meet emerging gig worker demands and needs when it comes to compensation. But there also is a larger trend across the U.S. in particular, when it comes to states and local municipalities adding gig worker protections and compensation/benefits.
The Pay Transparency Element
Gordon Frost, a partner and global rewards solution leader with Mercer, said that a law to give platform/gig workers information about how much they will earn for taking on a specific ride/gig is a form of pay transparency — a growing trend globally.
Webinar: Pay Transparency: Risks, Rewards and Regulations
“It will give gig workers more information that they can use to decide what type of work they want to do, based on a full and transparent understanding of the pay and conditions provided,” Frost said.
He added that this trend will require employers to be more thoughtful about their overall compensation strategy and pay ranges for the full set of different jobs and working relationships they have across the entire organization.
As employees — whether they are gig workers, part-time or full-time — gain access to more information about a company’s pay ranges and levels plus where their individual pay fits relative to those, employers will need to ensure that they have a coherent message to all of these employee segments, Frost said.
“This ultimately drives an organization’s employee value proposition as an employer of choice,” Frost said. Also, he said, as more information becomes available regarding pay practices across employers, top talent will gravitate to those whose compensation programs are seen as fair and equitable.
Frost said that proposed laws such as those in BC offer insights into how employers can adjust their compensation models to align with laws while ensuring fairness and compliance.
He said the “starting point” for employers is to think strategically about an organization’s overall workforce strategy, and what their future talent mix will be with respect to gig workers, part-time, full-time or a variety of other working relationships.
“From there, they need to ensure that their overall compensation strategy and programs are aligned, and how different types of employment relationships fit into that overall compensation philosophy,” Frost said.
For too long, he said, employers have developed their total rewards programs with only their direct/formal employees in mind. Other types of work arrangements, like gig workers, have been treated as “external providers” rather than as a critical part of the organization’s talent pool.
“Leading employers need to be thoughtful, strategic and transparent about the overall total rewards offering for all of their various employee groups — potentially including elements beyond the hourly rate, to include things like benefit eligibility and other types of coverage,” he said
Reviewing compensation structures to ensure that ranges are compliant is the bare minimum, Frost said, and employers need to think strategically and holistically to ensure that their total rewards programs support their workforce strategy and, by extension, their business strategy.
“Ultimately the impact of this trend will go beyond the BC example,” he said, “in that the strategic decisions an employer makes within the context of their overall workforce strategy would then be applicable across the organization.”
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