When our ancestors dreamed of the future, complete with flying cars and robot maids, did they also imagine a shift from traditional employment?

Either way, alternative forms of employment are booming, even as workers’ primary jobs. And it’s creating big challenges for HR teams.

The rise of gig work

Understanding the current scope of gig work is…tricky. The Bureau of Labor Statistics (BLS) estimates around 14.5% of the US workforce had contingent or alternative employment as their primary job in 2023, while 5.5% held multiple jobs. But economists and former Labor Department (DOL) officials have criticized BLS data for not accurately capturing the gig economy.

Non-government research suggests a higher prevalence of gig work. A 2023 Upwork study found that 38% of US professionals did freelance work that year. And a 2024 LinkedIn survey found that 31% of US employees were balancing a side hustle or project in addition to their primary job, with remote and self-employed or freelance workers being more likely to do so.

Nonetheless, the gig economy has grown in recent years, and is likely to expand in the coming decade. Workers have increasingly turned to alternative work because of the flexibility and income it provides. Some have even turned to it after losing a job, instead of applying for unemployment—a strategy that may become more common if the economy slips into a recession.

“If there is a recession, as more gig work and part-time work becomes available, we may have less people laid off or completely unemployed that don’t have at least an opportunity to earn some income,” Amy Glaser, SVP of business operations at staffing firm Adecco, said.

This trend should prompt HR leaders to think about how alternative forms of employment might fit into their future talent strategy.

“I truly believe that in the future, most people who work in a company won’t be employees full-time at the company, and that’s going to happen in the next two to four years,” Rishad Tobaccowala, the author of Rethinking Work, said at a recent HR Brew event. “Most of the people and most of the work will be done outside. How do you operate a company like that?”

No touching

But this trend is creating a challenge for HR leaders. The status quo has long been that, because gig workers are not permanent employees, they do not need to be overseen by HR teams.

That’s largely because HR oversight would be a compliance risk. The IRS has guidelines on whether workers should be classified as contractors or employees. Companies suspected of misclassifying workers could face investigations and fines from the IRS, DOL, and state agencies.

“You have to figure out what you’re doing for [workers] in terms of, ‘Is it employment or not,’” David Lewis, national managing director at Gallagher, told HR Brew. He said, “If the person who’s the independent contractor is just designated that way” by title only, but is treated like a full-time employee, that’s when the employer-gig worker relationship has tension.

“Unless there is room to be able to create more of a friendly environment for companies to engage gig workers” in a way that affords them the pay and freedom of that role, then “the complexities and the potential compliance issues associated with engaging a larger workforce of gig people” are always going to be top-of-mind for the employer.

Businesses could also be reluctant to employ gig workers, as some that have done so have faced legal challenges from contractors demanding they be classified as employees (which experts expect to continue).

However…

The US faces a labor shortage that’s only expected to worsen. As recruiting and retaining top talent becomes increasingly challenging, employers may consider filling the gaps with contingent workers.

But HR leaders need to be careful about how they do so, Lewis warned. As a first step, they can identify where in their company such labor might be needed, and explain to hiring managers that gig workers are not permanent employees, but rather workers intended to “parachute” in on specific projects.

“You’re gonna be [in a]much better position to be able to execute on that when it becomes necessary to do that, and I think it is going to become, for a lot of places, a good strategy going forward, only because…there’s no real reason to see (short of a significant recession, which we can never predict that) that we are going to suddenly see a much larger availability of talent,” he added.

When looking for gig workers, talent acquisition leaders can turn to gig platforms that offer “matchmaker” services. Adecco, for example, classifies contingent workers as employees, meaning they fill out W-2s, have taxes withheld, and receive benefits from the staffing firm—alleviating clients of compliance headaches.

“For the staffing industry, it’s an opportunity,” Glaser said. “There’s definitely upside with the gig workforce. This should lend some confidence to a job seeker as well, because it can be daunting to think: I’m a 1099, I’m going to have to track all my expenses and do my own taxes. And this affords them a way to continue in a normal W-2 environment.”

HR leaders should also make their interest in contingent workers known through their employer branding and job listings. They can also create their own databases of potential gig candidates.

“Talent sourcing is a multifaceted Swiss army knife of stuff. It’s not one thing anymore. It’s not post and pray, where you post a job on a website and pray for a good result,” Lewis said. “They need to be the storytellers and the designers and the articulators of the communicated message. Just as much as you are selling your product or your service, you need to sell your company, you need to sell your culture.”