earlier this year, I hired a house cleaner. I usually don’t do that, but my room is too messy, but I’m busy at work, at the same time I saw one on Facebook looks good enough enough real information, a San Francisco start-up Homejoy to bay area provide clean house need to pay $19. (not $19 per room, not $19 per hour, only pay $19.) So I book the appointment from Homejoy website, the next day, a young man appeared at my door.
when the cleaner put away his tools, we made a brief conversation, I asked where he lives? “I now live in Auckland to a shelter.” He said. I hesitated, not sure if I catch him. A shelter? Our cleaners – I get Google from a vc investment of $4 million does the company employ to come over, he’s just in my room in a large amount of physical labor, use those who have the potential threat of cleaning chemicals – a homeless man?
the facts prove that he is indeed a homeless man. I told the thing to my friends in the bay area, I heard the most amazing thing, a few friends from Homejoy hired cleaners, is also a homeless person.
in order to explain why a profitable technology startups will have displaced workers, can know is Homejoy not Homejoy staff employed by people. That’s because the Homejoy don’t hire any cleaner – like it peer enterprises, it makes a lot of contract workers to meet the needs of customers. Listen to Homejoy is how to explain it, it’s just a dealer network, it makes seeking house cleaning service to find people who are willing to do the job. The finishing bookshelf man appears to be working for the Homejoy person, actually he is the only John Smith. As the Washington journal wrote “Homejoy just put those already organized to provide clean house alone.”
Uber market valuation is $18 billion, growing company market value estimate is $10 billion, and every day have imitators are racing to popular businessman clearly obsessed with this mode of middlemen in silicon valley. Venture capital firms recently SherpaVentures done a research, the company has invested a lot of startups like Washio (Uber) in the field of laundry, BloomThat Uber) in the field of transport (flowers and Shyp Uber) in the field of (by parcel post. Studies estimate venture capitalists invested $2013 in 1.6 billion in the so-called “on demand” startup. SherpaVentures expects those using the so-called “free market” or “management services” labor model company is preparing to change careers such as law, medical and investment Banks, the result is fewer and fewer people with traditional full-time or part-time work. This is a good thing for SherpaVentures.
“full-time and part-time for people on both sides of the employment is usually a very inefficient.” According to the report.
but gradually, critics argue that kind of freedom model is being abused, as workers did not get and staff should be similar to treatment. Some of silicon valley’s excessive dependence on the industry began to worry that the startup contract workers will come back to haunt them if the company violated some long-term labor rules. And if that happens, the ambitious enterprise may be faced with the serious destruction.
a previous Homejoy sweeps on condition of anonymity because he was afraid of being his current employer retaliation. He told me that when he was signing Homejoy, he was sent a set of cleaning tools and a set of uniforms, the Homejoy staff training in the house for a short period of time. Company, he said, let him make his own work schedule, but encourage him to work for a few days more than others. Although the company did not give them any professional experience in cleaning, he gave Homejoy do a lot of work. He proposed the problem now is the company policy no protection to the contract, such as their injured on the job.
“frankly, I think it is not fair,” the former sweeper said, “I used to work in any organization, I think I can get an average employee treatment.”
welcome to the 1099 economic
this year at the TechCrunch Disrupt conference for the first time I heard the word, “1099 economy” is not contempt, but as a kind of praise for silicon valley startups innovation mode of labor. When you from one of these companies, set the service, the person who get paid to work no files in the form of tax, because they are not a formal staff. Alternative is that they have an independent from 1099 the contractor contract documents. The 1099 companies in one of the most famous example is the automobile supplies such as Uber and Lyft, but there are a lot of other: Homejoy, Handy, Postmates, Spoonrocket, TaskRabbit, DoorDash, Washio.
all these companies with similar terms to describe their labor model, if you hear these words, platform, service providers, network, or in the field of XXX Uber, you’re saying one of them.
Homejoy 1099 economic model is to use one of the most successful startups, it insisted that they hire mode is better for workers. “Our partners are free to choose when they work and the scope of work.” Chief executive Adora Cheung said in an E-mail interview. “Flexibility is the most important of the platform” (about the homeless cleaner, Homejoy said their contractors in the bay area per hour can earn 17 to 20 dollars, far higher than the minimum wage. “While we sympathize with those who are in financial difficulties, but we have nothing to do with Homejoy website or this approach makes sense.” Cheung said.
for a startup company tried to competition in the technology industry, select the mode of 1099 contractors than tax returns than working-class benefits are obvious. Do so significantly reduce your costs, because you only need to pay the workers to provide the service in the part time money, without the need to pay them at lunch time, chat of time, money and vacation. Contract workers apparently have no health benefits, unemployment insurance, industrial injury compensation or retirement plan. And the contractor if you screwed up, also need not fired, because they will not be hired for a start. Alternative is they just removed from the network to go out, life still need to continue.
in other words, the economic model of 1099 almost completely accords with the demand of the rapid growth of startups, lower cost, less responsibility, can quickly expanding and reducing labor ability – but it’s really good for to do the job?
it depends on who you ask. Startup of workers is usually divided into three categories. Josh Felser explained that a Freestyle Capital venture investors. “A contractor is to control your time. This group of people looking for this model is quite satisfactory. The other is a full-time employees. Still a person in the middle group, they do a full-time staff work, only the temporary work reward. This part of people being exploited.
what makes workers
“contractors” and the end of the beginning of the “full-time employees” is a controversial subject. The irs has a 20 factors test is used to determine the contract workers or a full-time employees. Most of the factors related to the degree of company control workers. Workers to see if there is a company set timetable? Does the company require workers to wear uniforms, training and use issued by the company of tools? If so, that 1099 of the company’s workers may be classified as tax returns employees – at the same time the company also should assume these workers thousands of dollars in payroll taxes. (not local freelancer to replace full-time employees how common practice? It is hard to say, but the national employment law a paper claim that country and each year the federal government because workers fault classification lost billions of revenue.)
these companies use marketing materials may make things more complicated. Homejoy website home page, for example, a “credible, responsible, convenient home cleaning and housekeeping service”, but made no mention of these services are not provided by the Homejoy employees. (for this, you must see the company website “about us” at the bottom of the page, there is a small disclaimer.) The company’s advertisement on Craigslist looking for new cleaners also don’t say that to the contracting model alone. The AD just write “cleaning professionals to join our team! No reference to, those who respond to advertising, not to join any team, they will be on the platform of Homejoy to work as an independent contractor.
in some industries, it is meaningful to this mode of independent contractors – do the driver of a UberX attractions, for example, you can arrange your own time. But when the company started to control the time of contract like formal employees, trouble will follow. Recently, a group of New York Uber driver threatened Uber will not use the Uber service, if Uber always punish them reduce UberX fare is very low, and the black car fare allows them to earn more. In the end, Uber made concessions, changed his policy, let the driver can choose in the form of the fare.
“it is a question that many factors balance.” A skadden labor and employment lawyer David Schwartz, mentioned something about the individual contracting/full-time employees. “But regulators is the most value thing: your service embodied in where? Supervision and how much did you get? How much time and project cost?” Schwartz, and added: “if a person is very dependent on a company’s work, it looks like a hired.”
at least an on-demand produce startups – Handy.com has an emergency plan to deal with the legal policy changes that may occur. Company services on the terms of the pointed out that “if found Handy.com take any tax and withholding taxes associated with the use of user service, then you have to immediately pay or pay the same amount of profits or fine.” In other words, if Handy.com was forced to sort contractors for full-time employees, his customers rather than the company itself will bear the extra expenses.
contract work of the two-way street
is a to the bay area Spoonrocket provides 10 to 15 minutes room service company, its profit growth mainly depends on the location of the rules. Its driver is contracting contract workers, each time they send out a dish for a fixed fee. (estimate the taxi company final income is about $10 to $25 per hour) between. Although Spoonrocket paid by the hour for the drivers and lend them with company logo for meals, eventually transformed into contract workers use their own car.
“we tested in a certain amount of time that need tax table of full-time driver, but at that time we also provide the delivery car.” Spoonrocket’s chief executive, Steven Hasio said in an interview, “we found that make work full-time driver to provide the car driver is not the most economic decisions.”
like many start-ups, Spoonrocket can give its contractors provide payroll form of payment, if it wants to. (in May, the company announced it in Capital investment under the leadership of round has raised 11 million.) But optimizing economic growth means lower costs, and reduce costs means constantly looking for new ways to reduce inefficient. Hsaio says Spoonrocket may begin testing a new model, in this mode the driver according to their room by driving distance to get salary.
“I finally feel this is a very good model,” Hsaio said, “we don’t have to tell the driver what to do or how to do their jobs. They are entrepreneurs.”
Billy Hasan, a former Spoonrocket contractors, until June this year he has room for the company. He remembered the company make payment according to the time according to the quota time. Under the old system, Hasan said he often work six hours or so he’ll earn $50 to 60. Under the new system, it takes about eight or nine hours to get the same money.
“before they do the conversion, it feels like a team to work together,” he said, “then the system feels like ‘we don’t really care about you, we focus on the money come in. ‘”
court will destroy 1099 model?
in June of this year, a group of drivers Uber users group filed a lawsuit against the company in California and Massachusetts. Driver representatives of the Boston lawyer Shannon liss-riordan Uber classified as an independent individual contracting contract them, and ask them to bear the ordinary full-time employees don’t need to bear the repair and maintenance costs. (Uber, in The Times of the Boston globe in a statement, said it will “actively protect users to enjoy the power of the competition and choice, and let the driver to establish their own small businesses.” )
startup is not only the workers misclassification of the company. But when the law is changed, they are also the most vulnerable. Asked 1099 startups to their employees reclassified as tax full-time employees, this means that you are going to completely change its ability to weaken the cost, but also weaken the competitiveness of it – in most cases, its ability to reduce costs is also a key reason why investors are interested in it.
“if let their drivers to be classified as full-time employees, doing that will make their business models collapse suddenly.” A research assistant MIT center for citizen media Denise Cheng told the global times.