When it comes to the "gig economy," one of the more controversial issues is how Uber, Lyft, Amazon and other companies save money by classifying their workers as independent contractors rather than employees. Contract workers aren't eligible for many standard workplace benefits and protections, such as employer-paid payroll taxes, access to workers' compensation and unemployment insurance, and the right to be paid the overtime premium rate. They're not even guaranteed the minimum wage.
With the rise of the "gig economy," new companies have sometimes opted to classify their workers as independent contractors vs. employees. This immediately cuts their overhead, as contractors are not eligible for overtime or many job-based benefits like workers' compensation and unemployment insurance. They are responsible for paying 100 percent of their payroll taxes, while employees receive half paid by their employer. Hiring independent contractors can save a lot of money for the company by shifting the cost of even basic benefits to the worker.