A BENEFITS SCHEME FOR NEW MEDIA'S FREELANCE WARRIORS

Of all the people across America who fancy themselves on the cutting edge, it's hard to find a group more vocal about it than the programmers, marketers, and entrepreneurs -- many of them freelancers and independent contractors -- who develop and run Web sites. This group, with its tradition of working long hours at a frenzied pace without overtime pay, would seem to be one of the least likely to feel any connection with labor unions.

So it's ironic that a new effort to bring health-care coverage to these folks may rely on an approach that was cutting edge 50 years ago -- when it was pioneered by organized labor. What makes sense, though, is that it's a former labor lawyer named Sara Horowitz who wants to establish this link between the past and the future. Horowitz hopes to fashion a novel kind of health plan based in part on a union vehicle called a multi-employer plan and offer it to freelancers in New York's Silicon Alley -- and beyond.

Horowitz is executive director of Working Today, a nonprofit advocate group for people who "work independently." These workers, along with part-timers and others who don't hold full-time jobs, make up about 31% of the U.S. workforce, according to the U.S. Bureau of Labor Statistics. These "free agents," as they're sometimes called, account for nearly half of the 106,000 workers in New York City's Web design shops and related enterprises, according to a 1997 Coopers & Lybrand study.

Although many of these people enjoy their make-your-own-hours status, Horowitz believes that they feel great unease about their lack of employer-sponsored benefits, in particular health insurance. "We haven't come up with new ways to deliver benefits, one different from the system that used to come from employers," she says.

The solution, argues Horowitz, whose paternal grandfather was a vice-president of the International Ladies Garment Workers Union, may be to create a benefits fund that covers an industry rather than just one employer. Like Web designers, unionized construction workers and actors move from project to project. But if they put in a minimum number of hours, they typically get benefits, often from central plans to which companies contribute.

With the backing from a grant by the United Hospital Fund, a philanthropy that supports research aimed at improving health care for New Yorkers, Horowitz is preparing a study to determine if the idea can be adapted to so-called new media. She hopes the answer will be yes and that Working Today will be able to help set up a nonprofit organization offering health coverage at less than $165 a month for individuals. It's a price that, in today's market, would buy a simple health maintenance organization plan, according Bethany J. Tani, vice-president of Customer Service Solutions Inc., a Detroit administrator of benefit plans for companies and organizations, including the National Writers Union.

Horowitz' goal is a fund that members would join either through affiliation with professional associations or, in the feature that makes the idea novel, through the companies they work for. She believes, based on a focus group of Silicon Alley employers and on conversations with executives, that owners of the small ventures that dot Silicon Alley would participate in the plan if they were freed from administrative headaches and got something in return. Among the incentives she envisions are low-cost coverage for an enterprise's regular employees and a tax break if the plan is properly structured to meet Internal Revenue Service regulations.

Will companies and freelancers nibble? Eric Goldberg, president of Crossover Technologies, a small New York City computer-game developer that uses freelancers, believes a number of questions must be addressed first. Among them: Would labor or tax regulators view freelancers in the plan as employees, thereby saddling small employers with regulations they want to avoid? Goldberg adds that if his questions can be answered to his satisfaction, he would be interested in such a plan.

Others doubt that he's typical, however. Jonathan Tasini, president of the National Writers Union, believes that employers, especially small ones, are so focused on the bottom line that only laws or unions could move them to offer benefits to freelancers. Horowitz is the first to concede that her idea is full of knots, but she believes they can be untangled. "I am more interested in solving problems than not doing something because it is hard."

Echoing many employers, Goldberg questions whether independent contractors really want health coverage, especially if employers offset the costs by reducing freelance pay. "New media is full of 20-somethings who say 'I'm immortal,'" he says. "That's a real problem Working Today has to get around."

Or maybe not. Robert G. Ponce, president of the World Wide Web Artists' Consortium, which represents several hundred Web developers and others, mostly in the New York City area, believes the lack of benefits troubles many freelancers. And, he says, despite the stereotype of the 23-year-old software developer dominating the Web "there are a lot of 30- and 40-somethings out there as well, and many second-career people, too."

Horowitz hopes to have finished her study and begun drumming up interest among employers and associations by next March. She also hopes to get favorable answers from the Internal Revenue Service about what the proposal would mean for participating companies. An IRS spokesman says the agency needs more details before determining the idea's tax-law status but adds that as a general rule, freelancers are unlikely to be declared employees simply because a company makes health contributions on their behalf.

By the end of next year, Horowitz hopes to start a plan she thinks could be a model for other freelance-heavy industries."There's nothing wrong with a mobile workforce," she says. "It's just that if it is going to be mobile, we have to think of what people need to move around."

By Pamela Mendels in New York