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“One of the reasons that gig economy has been so successful is that it satisfies consumer preference for products that are on-demand, convenient, and easy to use,” said Toast CEO Chris Comparato in an article he wrote for Forbes about how the gig-economy could offer restaurants struggling with staffing an innovative solution to their struggle .
With difficulties in restaurant staffing at an all-time high, a new labor market is redefining the way we find quality candidates: The gig economy. A shrinking labor pool makes it extremely difficult to source talent, and, even if you do find quality staff, there is still an unusually high employee turnover rate plaguing the industry. Employee recruitment and retention are frequently listed by restaurateurs as their top operational challenge, as cited in Toast's 2019 Restaurant Success Report.
By now, you’ve likely heard the term “gig economy”, chosen as one of The Financial Times’ “defining words” of 2015. A departure from the traditional 9 to 5 schedule, the gig economy provides employers with an alternative way to source and retain talent as independent contractors, although experts are split on the issue.
“The gig economy provides an easy way to access a flexible (and available) worker pool who can help restaurants quickly grow or shrink their workforces at low risk based on current demand,” says Jenay Sellars, Director of Marketing at GigSmart.
What is the Gig Economy?
The gig economy, sometimes referred to as a “collaborative economy”, is most commonly associated with platforms such as Uber (and UberEats), Lyft, Postmates, Etsy, and Air BnB. The gig model It is an employment model where a company engages with a base of independent contractors who perform one specific output for the business, such as driving a car or delivering food or goods.
“The gig economy is the term given to the growth of gig work, which is basically a labor relationship based upon short-term, task-specific contracts as opposed to traditional employment relationships,” says Editor in Chief of PeopleScience.com Jeff Kreisler (Research and Insights Manager, Jacob Mohrmann, also participated in this article). “You get hired to work on a project, or to complete a task, or to work a shift. You don’t get paid any other time.”
Uber, Lyft, Postmates, and Task Rabbit tend to be the first companies to come to mind when discussing examples of the gig employment model in action, but gig work isn’t new – it’s just been rebranded. Traditionally, gig work has been referred to as “independent contracting”, “contract work,” or “freelancing.”
The Pros and Cons of the Gig Economy
A gig employment model provides restaurants with a cost effective way to supplement their staff with additional workers who can help during busy shifts or seasons, like the holidays or evenings on the weekend. Having an extra set of hands during a rush is a lifesaver for many restaurants where there always are more than enough responsibilities to go around; it also provides a way for restaurants to staff up or down during busy times of the year like during the holidays or the summer months.
“Restaurants can staff according to their needs at the time - both the number of employees and the quality of them – as well as keeping a flush roster of potential workers in times of uncertain availability,” says Kreisler.
Engaging with gig workers also gives restaurants a way to evaluate potential new staff members before bringing them on as full-time employees, and the contractors can likewise assess if the establishment would be a good full-time fit. Managers are also able to replace an absent staff member immediately to reduce the stress of a missing server on the rest of their staff.
Much of the restaurant industry has been using the gig economy forever already....Bartenders, servers, and others who are paid just for those shifts which they work, rather than a consistent salary (and benefits) are gig workers.
Incorporating gig workers to your restaurant staff roster prevents the need to over-schedule staff and give them a well deserved break mid week without worrying there won’t be enough hands on deck.
While contract work is not always a negative experience, there are some cons to using a gig employment model. “The gig economy is often pitched as an all-new provider of the ultimate millennial job: be your own boss, work when you want, have a flexible environment and win the game of life! However… actual experiences often fall short of this initial marketing pitch,” says Kreisler.
Many people love the autonomy that being a contractor brings, and the pay and treatment can sometimes outweigh the lack of traditional workplace benefits. Unfortunately, this is not always the case when an employee is brought on as a contractor.
“Gig work tends not to provide traditional stability, security, or benefits that might come with a more formal job, and it creates a different type of relationship between employer and “employee,” Kreisler continues. “Workers often struggle to make enough, and not knowing how much you will make in a given day, week, or month can make life difficult.”
Uber recently came under fire for resistance to a new California bill that would make gig workers into full employees at the ride-sharing app. For Uber, this means that drivers could be paid for their wait times in-between rides and employment taxes would have to be included in their wages, raising Uber’s costs by 20% reports Forbes.
They would also be entitled to the benefits that the other 27,000 company employees receive. By relinquishing their contractor status, the drivers would not be afforded the freedom to set their own schedules. Uber is often accused of using the “contract worker” status of their 4 million drivers to skirt any legal ramifications for crimes committed during rides according to Washington Post.
The gig economy model can also contribute to contractors feeling that they are not really employed by the company but contributing the same level of effort and outputs that a full-time, salaried employee does. As a result, the feeling of being taken advantage of is pervasive in companies that engage with a sizable pool of contractors. Coupled with the lack of hands on support, gig work can leave contractors feeling expendable and like their professional success doesn’t matter.
“This is not to say that gig work is always a negative experience,” says Kreisler. “Some people do relish the freedom and flexibility that comes with it, particularly when those jobs come with better pay, good treatment by employers or using their gig as a supplement source of income, rather than their primary financial security.”
As with any employment model, there are pluses and minuses to consider before rolling it out full-scale in your business; the gig-model is no exception.
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How Restaurants Can Build on the Success of the Gig Economy
Incorporating gig workers into your restaurant operations can be a wonderful choice for restaurants struggling with turnover or finding the right people for the right shifts. Here are some of the biggest things to keep in mind when considering whether the gig-employment model makes sense for your restaurant.
Understand the difference between an independent contractor and a salaried employee
Not understanding the difference between full-time, part-time, and independent contractors can get your restaurant in hot water. Full-time employees are subject to minimum wage laws, employee rights, and benefits along with a 40-hour work week. Part-time employees may work up to 30 hours per week but may not be eligible for benefits at their employer’s discretion. A contract worker is technically self employed and often has a predetermined length of time they will be working for their employer.
For more information about engaging with independent contractors and maintaining legal compliance, check out this page on IRS.gov.
Use the Resources Available to You
There are a number of companies in the restaurant gig-work space that help managers in need fill empty or understaffed shifts immediately. Here are a few options:
Embrace and Promote the Flexibility of the Workers You Hire
Many who choose to be independent contractors do so because they value their autonomy, as well as the ability to work independently and set their own schedule. When creating your restaurant’s employee schedule, leave a certain number of spots on shift open for gig workers to pick up; this allows contractors to create a schedule that works for them and drastically reduces the stress and anxiety involved with making a schedule that successfully meets many conflicting availabilities. 7shifts, a restaurant employee scheduling and management platform, has an alert function that tells workers when they can’t pick up or trade according to their availability.
Make the Terms of the Contract Employment Agreement Clear
Be transparent with the contractors you’re engaging about your business goals and how they fit into the big picture. If you’re looking for short term or part-time help, actively seek workers that are looking to pick up extra money and not full-time employment. If you are open and honest about why you’re working with contractors from the beginning of your engagement, your contract workers are less likely to lose the motivation that may affect their performance. On the other hand, a gig worker who is fully aware of their contractor status is less likely to be dissatisfied with the terms than one who thought it would lead to full-time employment.
Don’t Treat Contractors Differently From Full-Time or Part-Time Staff
If you are not offering employee benefits, do little things to make your contractor’s lives easier, such as implementing calendar apps to keep them up to date on your restaurant events or a restaurant payroll app that helps them keep track of their earnings and allows them the option to be paid by direct deposit. Treat your contractors with them with the same respect and courtesy that you would treat your full-time and part-time staff members, listen to them, and try to accommodate their needs. Your business relies on gig workers to thrive and keeping your contractors happy and motivated is important.
“The happy medium for ‘giggers’ and employers alike is to use the budding flexibility of this new gig economy model, while also giving these contractors access to their employee benefits, protections, and coverage,” says Adam Guild, CEO of Placepull.com. “This will both protect their employer’s base while serving the contractors and treating them like an integral part of the business that they are.”
While the gig employment model has existed in the restaurant industry forever, apps such as Shiftgig and Hyr are evolving the way to engage with independent contractors in both front- and back of house. With these advancements, your restaurant has a great opportunity to implement the contractor strategy to your advantage, while still treating the gig workers you hire with respect, whether they are contracted for one shift or an entire season.
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