> there's no reason why they couldn't.

Yes there is. Workers compensation insurance and other benefits have significant fixed costs per employee. If someone is treated as an employee, they'll be required to work a minimum number of hours to cover those costs.

That seems like a failure of the insurance market more than anything else. It seems like insurance companies are using employee count as a proxy for hours worked... is there really that much of an increase risk for 4 people working 2 hours each vs one person working 8? Maybe, but we should be able to price that risk and allow a company to insure people per hour.

Or, you can just pay them what their market salary is in cash including what would have gone into insurance, and let them figure it out themselves. Why are you trying to overcomplicate things?

>>Maybe, but we should be able to price that risk and allow a company to insure people per hour.

In many states regulations prevent customizing employee insurance packages to that extent. There are cookie cutter obligations that employers have to meet regardless of the hours an employee works.

Gig economy jobs get around the inefficiencies imposed by labor regulations.

Ideally, yes, but that's not how it works in general.

It's not unusual for some departments (like HR) to operate at a loss, with the costs covered by other parts of the business, or for one product to be a loss leader that guides customers to more profitable products and services.

In any case, the problem of covering those costs doesn't go away by making the employee a contractor, but it pushes the cost off to the worker.

Worker's compensation in Washington state is paid by the hour.

it is a unit cost, not a fixed cost.

And what is a unit of work? Is it the CPU time of the app? Good luck defining it.