4 ways gig workers can protect themselves from scams and lawsuits

May 25, 2023 1:48 PM

Gig work is a fitting choice for those seeking to be their own boss, but with this flexibility comes a lack of security that, if things go wrong, can leave these workers floundering. Planning out ways to protect themselves and their clients saves both parties from a good job going bad.

For the more than 70 million gig workers in the U.S., passion, a flexible schedule and prioritization of personal choices are the top reasons this population chooses to work independently, according to Finance Online. The number of Americans seeking this lifestyle has steadily increased over the past six years, and is expected to reach 90 million by 2028, with the majority gravitating toward jobs in recreation, construction and business services according to financial platform Finmasters.

However, this population is also at risk of being taken advantage of by predatory employers — in fact, The Federal Trade Commission announced a crackdown last September, after observing unfair practices including deception about pay and hours, unfair contract terms, and anti-competitive wage fixing were issues among the gig population.

Independent contractors can help keep themselves (and their clients) safe by knowing the ins and outs of insurance, cyber protection and having a well-written contract, advises Tyler Peterson, head of professional risks at small business insurance provider Hiscox.

"It's the ability to move quickly and be nimble," she says "If they've got insurance, if they've got a specific contract that they're able to provide, they can just say, 'I meet your minimum vendor requirements — I'm good to go.'"

Peterson shares the considerations gig workers need to make to protect their business and personal safety.

Choose the right insurance

Peterson recommends becoming well-versed in insurance options, including professional liability and personal accident insurance, which can financially protect a gig worker from a variety of work-related incidents.

"Professional liability [insurance] is going to cover financial loss allegations that might come from their customers or their clients, arising from their professional service," says Peterson. "General liability will cover bodily injury and property damage to third parties that may arise out of their general business operations — anything from tripping over a briefcase in a client's office to someone running into their equipment. They should also be looking at personal accident insurance just in case they get hurt while on the job, as a way to protect themselves against medical costs."

Consult an insurance expert

Peterson recommends doing a search to find checklists for industry-specific gig work, but also seeking out professional advice. If more expertise is necessary, it is a good idea to speak with someone in the insurance field.

"Find an insurance agent who can guide through what is best to protect against the potential risks they may face as a gig worker," she says.

Invest in strong cybersecurity

A newer, very serious threat to those in the gig economy comes through their computers. Not only can their financial information and that of their clients be at risk, but theft of confidential materials including patented and copyrighted products as well, all of which an independent contractor may be held liable for, says Peterson.

"Generally speaking, make sure phone and email passwords are protected," she says. "And anywhere they are going to be storing client data or information, it's important that it's going to be encrypted, and they have multi-factor authentication in order to prevent prying eyes from getting to that resource."

These steps are important for tracking down any potential breaches, and can also give a client reassurance that you're handling it, she says.

"You also have to be cognizant of the fact that your client is going to be unhappy if their information gets stolen or leaked, and they could bring a lawsuit or bring a claim," she says. "Cyber policies also have that liability coverage, so you get that two-pronged approach."

Make a contract, check it twice

"One of the biggest pitfalls we've seen from gig workers is doing work under a verbal agreement or text message, and that doesn't do anyone any favors," Peterson says. "From a contract perspective, there are fabulous resources online that will provide templates that gig workers can utilize. Make sure that any written contract with a client contains a clear, defined scope of services."

She also points out that contracts should contain limits of liability that are reasonable for the work being done, and this can be negotiated with the client. Including insurance that a gig worker has within their contract is a great way to avoid haggling over these details and ensure that the worker is protected, while also giving peace of mind to the client.

"Insurance carriers will provide a free contract review service with a policy, which is severely underutilized," says Peterson. "Before they're about to enter into a major contract, [gig workers] can absolutely get in touch with their professional liability carrier and leverage a legal firm paid for by the carrier to review their contracts."