December 7th, 2016 | Debbie Lamb, Sterling Talent Solutions
Background Checks In A Gig Economy
The US economy has changed dramatically over the last 50 years from stable employment in large organizations to an increased reliance on temporary or contracted labor (with an emphasis on service and tech industry jobs). While the manufacturing world has shrunk, the on-demand workforce (or gig economy) has grown. Freelancers are relying on websites and apps like Handy, LinkedIn, Uber, Lyft and TaskRabbit to connect them with paying jobs. Large corporations are continually hiring more flexible, contingent workers to fill their staff.
What is a Gig Economy?
According to the Cambridge Dictionary, “a gig economy is a way of working that is based on people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for an employer.” This growing economic force accounted for 30% of new jobs and created income sources for 2.1 million people in the U.S. between 2010 and 2014. In 2015, Intuit forecasted that the gig economy will reach 7.6 million people by 2020. The study also found that 79% of existing on-demand providers said this part-time labor market will grow by 18.5% in the next five years. CNBC took a hard look at this change in the economy. They found that over the past 20 years, the number of independent workers, who often operate through apps, has increased 27% more than payroll employees. This change is even more prevalent in certain industries such as ground transportation with the rise of ride sharing applications. 81% of the growth of gig economy jobs took place in the last four years in cities along the coasts and in the nation’s 25 largest metro areas. This sector of the economy is growing at a rapid rate and will have an effect on the employment sector for many decades to come.
What is the Shared Economy?
A major component of the gig economy is based on the sharing of tangible assets such as vehicles, rooms or sporting equipment and intangible assets, such as time, space or specialized skills. This socio-economic system helps the average person earn a profit from assets that would otherwise go unused.
The premise of the sharing economy is built on collaborative consumption, a term coined by Rachel Botsman in her book What’s Mine Is Yours: The Rise of Collaborative Consumption. Botsman’s concept revolves around access to assets rather than ownership of them and encourages communities to maximize the use of products or services by renting them out or trading them for something else.
Another critical component of the sharing economy is online matching to bring individuals together so they can negotiate a transaction. An online matching platform needs to be both efficient and scalable in order to facilitate the success of the sharing economy.
Background Checks in a Gig or Shared Economy
Freelance workers and ride and home sharing services such as Lyft and Airbnb have become the impetus behind the sharing economy. As these types of businesses become more and more popular, the shared economy will continue to grow. Ride sharing services are becoming more regulated and require their drivers to take background screening tests. Each state (and sometimes each city) has enacted their own regulations for the drivers as there is not a federal mandate for workers in the gig economy.
While some assets in the new sharing economy are easily apportioned among the community, the sharing of other assets such as background checks could be more difficult to envision. A background check is a highly under-utilized asset, particularly when it is free of any marks because the employee rarely receives a copy of the results. When an individual does request a copy of their background check, it quickly becomes outdated and therefore unusable. A shareable background check report would need to be automatically updated with any information pertaining to the individual while not permitting the individual to alter or change the contents of the report.
And let’s not forget about volunteers! Verified Volunteers partners with non-profit and service organizations to fulfill their missions by reducing the time and costs associated with volunteer screening. Volunteers can set up their own account, allowing them to access their background checks at any time. The volunteers can share their background checks with other organizations, meaning it is not a “one-time use” result, saving organizations and the volunteers both time and money.
Sterling continually stays up-to-date on how new federal, state and local regulations could impact employment background screening in the shared economy. There are many components to employment background screening checks from criminal record checks to drug and health screening. Find out more about the basics of employee background checks by downloading our eBook, Background Screening 101.
This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.