Gig economy. On-demand economy. Sharing economy. There are a lot of terms for the space occupied by startups like Uber and Instacart, and just as many (if not more) lawsuits attacking how this disruptive new economic sub-sector classifies workers.
The legal battles largely center on whether the people ferrying meals to the doorsteps of customers or standing in line for tickets on behalf of others should be considered independent contractors or employees. Amidst the flurry of lawsuits, some companies (like Sprig) have decided to switch from the ubiquitous 1099 form for independent contractors to employee W-2s, arguing that it makes for better quality service to customers.
But there is an emerging base of political support for startups that rely on independent contractors. Even Democratic presidential candidate Hillary Clinton seems like she might be coming to accept the way the sharing economy has historically worked.
Uber, Lyft, HandyBook, Instacart, Postmates and Try Caviar have all faced lawsuits arguing that their workers have been misclassified as independent contractors, according to an editorial in the Wall Street Journal. It’s a toss up which way the tide will flow on worker classification. Here’s a quick rundown of where some lawsuits stand as the battle rolls on.
Uber is still fighting.
The California Labor Commission's Office ruled in June that a driver who had sued the ridesharing service startup must be treated as an employee as opposed to as an independent contractor. Uber has appealed the decision. Now, a judge is weighing whether to allow another lawsuit to proceed to class-action status, reports Wired. The lawsuit seeks reimbursement for driver expenses such as mileage and tips, on behalf of 160,000 people who have driven Ubers. Whew, good luck with that one, Uber.
Homejoy lost the battle.
The on-demand cleaning services company was facing four lawsuits over worker classification last month when it shut down, according to Re/code. Homejoy cofounder and CEO Adora Cheung said the lawsuits made it harder to raise funding for the startup. The ruling in June that an Uber driver be classified as an employee wasn’t much of a help for Homejoy either, Cheung said.
Instacart changed its ways.
In January, Instacart was slapped with a lawsuit alleging personal shoppers for the grocery delivery service were misclassified as independent contractors so the company could avoid paying things like overtime and reimbursement for gas. In June, the company announced it would offer part-time shoppers in Boston and Chicago the option to become employees. Hours for these new employees are to be capped to keep the employees under the full-time threshold, according to Wired, and the option has been slated for rollout in other cities.