Collaborative Startups Shift from Contractor to Employee Relationships

On-demand startups, which are a subset of the Collaborative Economy, have been under scrutiny on worker treatment. They’re under the magnifying glass more than ever.

This new industry, which was birthed  the 2008 recession, provided rise to the “gig” worker, or independent contractors. These part-time workers were offering their idle time, working multiple jobs, and offering their spare bedrooms to make ends meet. Many of the workers see the benefits of “being their own boss” as they can choose the time, service, and how they work rather than reporting to a salaried job.

In past months, there’s been increasing pressure to shift the relationship from contractors to employees. There have been lawsuits against Uber, where a single driver was able to win business expenses, but also we’re seeing American presidential candidates like Hillary Clinton suggest she’ll be influencing startups to provide fair wages and benefits to workers, while Jeb Bush takes Uber rides in San Francisco, promoting the service and free market capitalism.

Providing worker resources for freelancers isn’t new. For more than a decade, the Freelancers Union, featured here in The NYT, offers centralized healthcare, retirement programs, and other job-related services. Peers, a three-year-old sharing economy advocacy group, is also making signals that they plan to offer resources to these gig workers.

This blog is used to track the trends in this new economy and explain what it means to established businesses. As such, we will track how these contractor relationships are now starting to shift toward full-time and part-time employee relationships.

Startups are shifting from contractor to employees relationships:
Here’s a running list, mostly in chronological order.

This means: Short-term suffering for startups, but long term resilience for the Collaborative Economy.Tech startups, under scrutiny from workers rights advocates and the political election, are shifting workers into employee relationships rather than independent contractor status. This does not mean the space will collapse, as nearly every other established industry from retail, to hospitality, to food, has successfully operated with workers that are employees.

It does mean that these companies will need to provide ample training, resources, and also hold employees accountable based on customer feedback and ratings just as other established companies do. It also means that these startups will need to provide new forms of worker benefits, discounts, and perks under these new relationships.

We already see that these startups, and their workers, are lobbying for a third class of workers dubbed “Dependent Contractors” which could work several services at once while benefiting from 401k, retirement, healthcare benefits, and fair treatment of workers.

Want to learn more? You can check out my full body of work on the Collaborative Economy, which includes reports, graphs, databases, lists, frameworks, info graphics, essays, and points of view.

(Creative Commons, photo from Washington State Dept of Transportation)