On-demand workers for companies like Uber and Lyft are constantly debated. As the founder of a startup that also relied on contracted workers (not in the transportation market), what can I (and others like me) do to avoid the contractor vs. employee legal debate? Our product isn’t live yet so we want to take and and all precautions so as to preempt any potential ambiguity about the status of our contracted workers.
Learning Center View all courses >
Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training or other means.
(Let's say you're a web designer and a company wants to hire you. If the company tells you to use Adobe Illustrator to layout a page instead of letting you decide what's best to create the design, then you're an employee. If they ask you to work in their offices from 9 to 5, you're an employee. It's always THIS relationship that matters, not whether you worked in the past as an independent contractor.)
Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker's job. This includes:
Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:
Reposting from another FD conversation about the demise of Homejoy.
Below is a post I wrote on my personal FB page immediately after reading about the demise of Homejoy (I service I admittedly never used). To put this in perspective - my post was visible to my FB friends, family, colleagues, advisors and yes - former staff members.
This hits very close to home as InterSchola's model was challenged by similar regulatory issues after we had created the first full service solution to help school districts and local agencies create a much needed revenue stream through the sale of their surplus assets and obsolete equipment through eBay style online auctions. Our model generated over $20 million in revenues for our clients (largely school districts and other local agencies), repurposed idle assets into the community and kept over 30 million pounds of surplus from going directly to landfill. Equally important, we created flexible work opportunities for many individuals in areas where similar jobs were not readily available. Our team enjoyed the work and found it rewarding.Although not challenged by a single staff member (unlike Uber or Homejoy- both facing litigation from staff members), in 2011 the state of CAchallenged us to convert our project based, flexible IC staff to employees. Wedid.That shift contributed significantly to our company's demise. We absolutely support workers rights and wished to provide a safety net, but the loss of InterSchola infrastructure following our business closure left our staff scrambling to try to continue to support clients with no net at all. I sincerely believe the country needs to consider an alternative to the employee/independent contractor distinction - a middle ground that supports flexibility for those that want it or need it while also providing company sponsored support for workers. This is a new economy. Think what you will of the Uber's of the world - but small companies are trying to innovate. Meanwhile large companies have been using highly paid ICs for decades with NO recourse because they have the legal resources to structure these relationships to sidestep their transgressions. A middle ground is needed. Interesting to watch both parties presidential candidates struggling to address this topic in their campaign efforts.
There is some good advice in the thread above. Certainly this topic is one that is and will increasingly be under scrutiny. To be sure, if thinking of using the sharing economy as a backdrop for your model (our business predated this term - and likely looked more like Homejoy than Uber), please be aware of themulti pronged tests(differ by state) to understand the classification distinctions. If the government wants to fight this - they can and they will as the tests are nothing close to black and white.
just added: Most important factor seems to be degree and manor of control. Be mindful that even if you have reasonable belief and guidance that justify the IC classification and even if you do everything correctly in treating workers as ICs (ie have IC agreements and file w9s), the agencies could still find that you don't meet the IC tests but rather must reclassify. If I could give advice it would be: if you are concerned, you might have good reason. Until there is more clarity this is going t be a hot topic. Perhaps avoid the challenge if you can - go for the employee classification...
Happy to share my experience...