The Future of Independent Contractors in the Hospitality Industry

By Mark Heymann Chairman & CEO, Unifocus | June 11, 2017

While the workplace continues its rapid move towards a "gig economy," recent National Labor Relations Board rulings have made it tougher for employers to classify workers as independent contractors vs. employees. That could change, however, under the new administration, which has signaled it could scale back federal protections of workers in favor of more employer-friendly policies. Add to that the uncertain future of healthcare requirements and the big questions are: Will independent contractors find a steady place in the hospitality industry? And what will be the advantages and disadvantages of working as a contractor versus a full-time employee?

The traditional workplace is fast giving way to a “gig economy.” A 2016 study co-sponsored by research and advisory firm Ardent Partners and software company SAP Fieldglass found that close to 38 percent of that year’s total workforce consisted of non-employee workers, up from 29 percent in 2011. What’s more, another software company study, this one by Intuit, projected that by 2020 a full 40 percent of workers will be contract, temporary or self-employed. The Intuit 2020 Report also revealed that more than 80 percent of large corporations have plans to “substantially increase their use of a flexible workforce.”

This brave new world is being fueled by both sides of the employee/employer relationship – on the one hand the lifestyle desires of Millennials, who now represent the majority generation in the workforce, and on the other the need for organizations to operate lean in an environment where service, rather than machine-controlled manufacturing operations, dominates the economy. This need for flexibility has major implications for the hotel industry.

The Millennial influence

Compared to previous generations, Millennials have different objectives and are less risk averse in their careers. They embrace a more transient lifestyle, waiting longer to settle down and start a family than their boomer counterparts. Fewer care about owning a home or car – acquisitions that were once considered badges of adulthood and that drove ambition in the workplace. According to Ernst & Young Global Generations Research, Millennials value work-life balance highly and in order to attain it, 65 percent are willing to forgo promotions, 44 percent would accept pay cuts, and as many as 77 percent would change jobs.

In its 2016 Millennial Career Survey, The National Society of High School Scholars polled Millennials ages 15-32 to determine the factors they consider in choosing an employer. In the category of salary and perks, flexible work hours/schedule topped the list at 70 percent, well above benefits (60 percent), base salary (46 percent) and performance bonuses (19 percent). Work-life balance (69 percent) was the number one priority under work atmosphere/environment. Millennial-friendly businesses like Google and Walt Disney have answered the call with more flexible hours and places of work. And Netflix is among the companies that have done away with restricting time off, implementing unlimited vacation policies (with certain caveats).

Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.