Workforce is changing. When most of us think of traditional employment, we imagine full-time, 9-5, permanent positions.

However, the rise of technology has resulted in millions of Americans earning income via “gig” work. The gig economy is made up of workers who get paid by the “gig” or project, and is a temporary work assignment versus a permanent one.

Companies such as Uber and Lyft are well recognized “gig” jobs, but the gig economy spans across multiple industries and can include almost any type of work imaginable. The gig economy is growing rapidly, and more than one third of U.S. workers (roughly 57 million Americans) work in the gig economy today.

There are many reasons individuals choose to join the gig economy. Autonomy and job flexibility are a major draw to gig work. Individuals in the gig economy can work when they feel like it, free to accomplish their tasks however they choose. The gig economy also contributes to reducing the national income gap – over 76% of gig workers over the age of 55 are using earnings generated from gig work to help them save for retirement.

Employers may choose to use gig workers for many reasons, including cost saving measures, or to bring in expert level knowledge for special projects. Utilizing gig workers also allows employers to tap into talent pools outside of the local area. Susie Glasgow, President/CEO of Kegman Inc. and chairman of CareerSource Brevard has utilized contract workers for many years. “We have 13, 1099 employees from across the nation that we use on an as-needed basis, as subject matter experts. All have other jobs, but contracting with us allows them to stay current and relevant in their industries.” Consumers love the gig economy too, as it allows fast and easy access to goods and services.

While the gig economy has many benefits, there are some regulatory and policy challenges that should be addressed as this sector continues to grow. The majority of gig workers are classified as independent contractors (i.e. 1099 employees). These employees have far less protections than traditional employees. They typically do not receive benefits such as unemployment compensation, medical, retirement, etc. Without benefits and protections, many gig workers are left financially vulnerable. Down the line, having an entire generation without retirement savings and health plans could increase future reliance on government programs to compensate for a lack of benefits provided by employers.

Though hiring 1099 employees can be good for employers financially (allowing them to save approximately 20-40% on labor costs versus a traditional employee), employers must proceed with caution. The key factor in determining whether or not an employee can be classified as an independent contractor ultimately boils down to the elements of control imposed over the worker. It is becoming increasingly difficult to determine if gig workers are true “employees” or not. The laws which define standard work arrangements were created long before the gig economy existed, and there is not a universal framework in place to determine how to classify gig workers. The lack of clear guidance on how to classify gig workers opens employers up to increased risk of misclassification lawsuits.

Since gig workers are largely classified as 1099 employees, this changes tax reporting requirements compared to traditional W-2 employees. Evidence shows that many gig workers are confused about their tax reporting requirements. This confusion could result in gig workers misreporting income, or being out of compliance with the IRS. The risk of underreporting income is especially concerning, as this could lead to a reduction in tax revenue, and ultimately, a reduction in government programs and services. Gig workers are unique, and the current tax regulations for independent contractors may not be suitable for the new era of gig workers.

What the gig economy means for our future remains to be seen. It is difficult to estimate the impact of the growth of the gig economy on society, because we don’t know what technology will exist, nor what skills will be most useful in the future. One thing is certain, however – the gig economy will continue to grow. In the future, the majority of workers may be gig workers as opposed to traditional employees. This could be an amazing opportunity to shape an entirely new societal ecosystem, with many positive benefits to the economy, or it could have negative effects on the entire global market. We have the opportunity to shape the rise of the gig economy into something extremely positive, but this can only be done if business owners, leaders, and government embrace it, and get ahead of any potential issues it could create. The evolution of the gig economy is the industrial revolution of our time, and we must be prepared.