For six years, WorkMarket co-founder Jeff Wald and his team tried to figure out one of the IT labor market's biggest hindrances: a lack of wage-replacement insurance coverage for injured or sick freelancer workers.
Now, thanks to a game-changing partnership with one of the world's major insurance providers, the software vendor can offer workers' compensation coverage to contract employees and the companies that rely on them through its on-demand workforce management platform. Wald believes this new option could make New York-based WorkMarket a massive business catalyst for freelance work in the IT industry.
"We've had the heads of insurance companies from almost every major insurer in America, in our office, trying to explain to them that this is a problem," Wald told CRN exclusively. "But it took us a year to have these conversations and to structure it. This is incredibly complicated in terms of the actuarial tables and how this is all done. It just took a long time. It's important, for our customers and the freelance economy, for us to crack this code."
The federal government mandates that full-time workers be granted workers' comp access, but those protections do not extend to part-timers and contractors. Because of this, businesses are potentially liable if a freelance employee gets injured while performing maintenance or traveling to a job site.
In some cases, those situations can lead to long, contentious lawsuits that result in regulatory action and up to millions in damages against the hiring company, WorkMarket VP of Marketing Mousa Ackall said, while contractors who are awarded compensation might not receive it for a long time.
Users of the WorkMarket platform, which allows companies to build pools of skilled technical labor that can be deployed as needed, will have the option to be protected by a "no-fault" workers' comp policy that protects businesses from any legal action, regardless of responsibility.
The coverage is available as an add-on to WorkMarket's existing services, according to Wald, and customers can decide which requirements set for a particular project, such as general liability insurance, errors and omissions insurance and legal agreements.
"We do extra work on our back end to make sure the work they're doing is covered," he said. "That's a really important point when you can't say, 'I want workers' comp for this project and not for that project.' It's an all-or-nothing proposition. Insurance companies do not like the adverse selection."
Roughly 300 OEMs, distributors, solution providers or third-party maintenance service providers use WorkMarket, the company said, including like Dimension Data, High Wire Networks and Presidio.
Whippany, N.J.- based Core Technology Solutions (CTS) is one such company. James Inzalaco, president and owner of CTS, thinks the workers' comp offering will be "invaluable" in putting executives' minds at ease when it comes to hiring freelancers.
"Workers' comp is always in the back of our minds, as we constantly look for new ways to protect our employees and contractors from the inherent risk of field work," Inzalaco said. "WorkMarket making workers' comp available to independent contractors is particularly significant because it provides an invaluable peace of mind while also affording 1099 technicians a safety net typically reserved only for full-time employees."
Wald emphasized that the vast majority of contract workers complete the job without any major issues, because data transparency incentivizes both sides of the agreement to stay aligned. However, he said that many large businesses that WorkMarket has contacted were reluctant to dip their toes into the freelance space because of the potential insurance risk.
This hesitance has been compounded by competing labor management platform developers, he added, have "irresponsibly" tried to address the issue by offering their own workers' comp certificates and believing those would provide adequate coverage.
With WorkMarket's no-fault coverage, Wald feels like clients could become much more comfortable with contract work.
"There are a large number of business that were on the fence that will be reimagining their workforce and beginning to evolve their workforce because we've cracked this workers' comp code," he said.