First, get a gig doing SEO for Cat Fancy so you can write off all your Fancy Feast
First, get a gig doing SEO for Cat Fancy so you can write off all your Fancy Feast sanjeri / Getty Images

California’s passage of Prop 22 means that Lyft and Uber can classify their drivers in a weird employee/contractor grey zone, where the company can exploit them for labor with fewer benefits. The companies have already said they plan to take that model nationwide, and they’re surely not alone. Just imagine CEOs everywhere giddily reading the news and envisioning a benefit-free workforce while the pupils of their eyes are replaced with dollar signs making cash register sounds.

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So let’s blast our minds into the future and imagine that employers are jumping on the gig-worker train as fast as they can, converting their workforce from full-time employment to an army of freelancers. When your boss delivers the news that you’ll be part of that shift, what can you expect? Well, as someone who’s spent time on both sides of the gig-work divide, I can offer a little sneak peek at how your job—your life, really—might change.

TAXES

Hooooboy, this is the big one. Self-employment taxes are a killer. Employers usually pay Social Security and Medicare taxes, but now it’s up to you to cough up an additional 15-ish percent on top of your income taxes. My advice to newly-minted freelancers is to set aside a third of everything you make for taxes to be safe. You’ll also need to pay them in installments over the course of the year rather than all at once at tax time.

What happens if you can’t set aside a third of every check for taxes? Well, then you’ll have to pay even more. Failing to make quarterly payments, or making quarterly payments that are too small, will result in a penalty. Establishing a payment plan with the IRS so you can catch up will also cost you extra. You might think it makes no sense to expect people who already don’t have enough money to pay more money. You’re right.

And while Washington doesn’t have an income tax, it does tax business income. Get ready to become an expert in Washington’s Business and Occupation taxes because you’ll start paying some lovely new fees to the state.

Gig-worker taxes are super weird, and one-size-fits-all tax prep software often does a lousy job of accounting for all the little weirdsies. (For example, I had one client whose headquarters were in Hong Kong, which resulted in a labyrinth of foreign transaction fees and deductibles.) I recommend getting a dedicated tax pro who can help you rather than trying to do it all yourself—when I was full-time freelance, I found a very nice accountant (who is, in his free time, in a metal band) to whom I pay a few hundred bucks a year, and he’s saved me thousands.


HEALTH INSURANCE

Depending on how Uber and Lyft and companies like them can negotiate with state officials, you may lose all of your benefits when you go from employee to contractor. That means you’ll have to buy your own health insurance, which at its cheapest is a couple hundred bucks a month.

That insurance will not be very good—I used Ambetter for a long time, and the whole process was so confusing that sometimes I gave up trying to file claims and just paid out of pocket. You will encounter baffling fees that don’t make sense, and it will be impossible to know how much a procedure will cost until you get the bill. (Of course, this isn’t very different from employer-based health care.)

You could forgo health insurance altogether if you feel like rolling the dice with the one and only meatbag you’re given, but there are tax penalties for risking your life in that way.

Be aware that you probably won’t get sick time off, or family leave, or worker’s comp, or death benefits. If you get a cold, your choice is to either stay home and lose money or power through it and possibly infect others. If you get something more serious, it’s time to explore America’s shadow healthcare system: GoFundMe.

If your income falls below a certain level, Apple Health is a great Washington option. And I can’t recommend Country Doctor Community Health Clinics highly enough; I’ve never been treated better in a health care setting.

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SIDE HUSTLES

In an ideal gig-work scenario, you’re in charge of when you work and how to work. (Companies will try to exploit this, though—be wary of clients who insist that you work specific hours, or who micromanage what you do in order to get the work done.) You’re free to work when you feel like it, as long as you hit agreed-on deadlines, and you’re free to have as many clients as you wish.

You should definitely have multiple clients because gigs will come and go without warning. When I was at my busiest, I would do work for five or six different clients during the week; if one of them decided to cut their budget, or went out of business, or just became a pain in the neck to work for, I could shift my workload to one of the others. This means that you'll need to update your resume and apply for new gigs constantly. Don’t put all your eggs in one basket because the bottom will eventually break.

In other words, all of your hustles are now side-hustles. Congratulations, and thanks to Uber and Lyft for all of this wonderful freedom.

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