First, employers tend to view benefits as substantially less important for recruiting and retaining independent contractors compared with full-time, permanent employees. Fewer than 1 in 4 employers who offer benefits think they are important for recruiting contract workers. Also, only 14 percent of employers feel it is becoming more difficult to recruit contractors, reducing the need to offer them additional incentives.

Businesses are also apprehensive about the cost of providing benefits to gig workers. A majority of employers rate controlling the cost of employee benefits as one of the most important challenges facing their companies, and expanding benefits to nontraditional workers is likely to increase these costs.

In addition, employers are concerned about high turnover among contract workers and tend to assume these individuals can obtain insurance coverages elsewhere. Some also worry that offering benefits to independent contractors might create pressure for them to reclassify those workers as employees, triggering a host of additional obligations.

Top reasons for not offering benefits to contract workers

Signs of growth

Despite these concerns, some businesses are already taking the leap of offering benefits to gig workers. Among employers that offer benefits to their full-time employees, 16 percent  currently extend those benefits to contract workers. This practice varies considerably by company size, with 30 percent  of midsize and 43 percent  of large businesses offering at least some benefits to independent contractors. Medical and dental insurance are the coverages most likely to be offered to these workers.

There are some signs that contractors' access to benefits may expand in future years. Looking forward, 15 percent of employers that do not already extend benefits to independent contractors are interested in doing so in the future, while a similar number are “somewhat” interested. Also, more than one quarter think their business is at least somewhat likely to start offering benefits to these workers within the next five years. (Again, larger businesses are the most interested in introducing benefits for nontraditional workers.)

Moreover, those employers that already offer benefits to contract workers show considerable interest in adding more. Almost half of these employers want to add additional benefits for contractors in the near future, which suggests that they are seeing a positive return on their investment.

Future outlook

There are reasons to think gig workers' access to benefits may gradually expand. Although employers are not currently having trouble recruiting these workers, this may change in the future as the labor market continues to tighten.

Also, employers' outlook on gig workers suggests that they will remain an important part of the economy going forward. One third of employers with contract workers say these workers are “very important” to their business operations, while almost all consider them at least “somewhat” important. In addition, one quarter of businesses expect to hire more independent contractors in the next five years. Unsurprisingly, businesses that hold these views are the most likely to show interest in offering benefits to contractors.

If gig workers continue to play a critical role in business functions, and these workers become more vocal about their desire for benefits, more organizations may eventually see the need to make insurance and retirement offerings available to them in order to attract the right talent.

Kimberly Landry is assistant research director of Workplace Benefits Research at LIMRA.

Read more: 

• Gig work, data privacy and other workplace trends to watch
• The external workforce: It's more than a gig
• Gig workers help small businesses, but bosses are nervous about it