By Lauren Weber And Rachel Emma Silverman
Companies like Uber Technologies Inc., cleaning service
Handybook Inc., and odd-job facilitator TaskRabbit have captured
the imagination of consumers and investors because their apps turn
a smartphone into a remote control capable of summoning a driver,
housekeeper or errand-doer.
The leaders of those companies, which rely on freelance labor,
describe their workers as micro-entrepreneurs at the vanguard of a
new, flexible future of work in which people only do the jobs they
like, when they like.
Yet a host of lawsuits, protests and forums organized by and for
workers suggest that many flexible laborers feel less enthusiastic
about the new model of work. Current and former workers for Uber,
Amazon Inc.'s Mechanical Turk and Handybook, better known as Handy,
say on-demand work platforms give them little control over the
terms of their labor, and complain that the contracts they're
required to accept force them to shoulder personal and financial
risk without the returns or advantages they'd hoped for.
The rumblings of discontent--including a letter-writing campaign
by Mechanical Turk workers to Amazon chief executive Jeff
Bezos--don't yet pose an existential threat to companies using
on-demand labor, but they highlight the ambivalence that many
workers feel toward the platforms that supply or supplement their
income.
"Many people are really liberated by the income they are able to
earn and the flexibility over their schedules," says Shelby Clark,
the chief executive of Peers, a membership organization of roughly
250,000 independent contractors for on-demand firms. "At the same
time, working in the sharing economy can feel isolating and
confusing."
At issue for many is whether the contractors should be
considered employees--a debate that has surfaced in recent court
decisions as more large employers rely on contract work.
Last year, an appeals court ruled that FedEx Corp. incorrectly
classified as contractors some delivery-truck drivers who were
required to wear FedEx uniforms, drive company vehicles and groom
themselves according to the company's appearance standards.
Similar lawsuits are facing firms like Uber, Lyft and Handy,
which provides housecleaning and handyman services for as little as
$25 an hour.
With a few swipes of Handy's mobile app, customers book
services, and the company's algorithm alerts its army of 5,000
freelance cleaners, painters and IKEA furniture assemblers.
According to one lawsuit, the New York-based firm allegedly
requires workers to abide by strict guidelines on the job, from
when to knock and ring customers' doorbells, to how to use the
bathroom. Handy had previously "encouraged" employees to wear
company T-shirts but no longer does so, according to a
spokesman.
Vilma Zenelaj cleaned houses for Handy in Los Angeles for a
brief period last year before being fired for subcontracting
cleaning work to her sister Greta. They are the lead plaintiffs in
a class-action suit that alleges Handy's workers should be covered
by minimum-wage rules and other employee protections because they
lack the control over their work that characterizes a true
freelancer. "We are not robots; we are not a remote control; we are
individuals," says Vilma.
A Handy spokesman says the suit, along with a similar one
brought in August and dismissed in December, is without merit. The
company has filed motions to move the case into arbitration, a
condition contained in its contracts with workers.
Workers use the Handy platform "because it provides much needed
flexibility," he says, adding that its cleaners and handymen earn
more than $18 an hour on average.
App-enabled workers don't fit neatly into a regulatory landscape
that recognizes only two types of worker: employees in traditional
work relationships and independent contractors. Employees are
generally covered by protections such as minimum-wage and
antidiscrimination statutes, workers' compensation, and
union-organizing rights, while the latter have no such protections.
Employers in many situations favor the contractor model since it
frees them from certain tax obligations and legal liabilities.
New laws changing the system appear unlikely any time soon, so
courts and companies may sort out the complexities first,
employment experts say.
One suit in federal court in San Francisco could bring changes
to the way companies pay on-demand workers. CrowdFlower Inc., a
startup that breaks down digital jobs, such as data entry, into
tiny tasks performed by millions of workers, has been winding down
a class-action suit alleging that the company violated minimum-wage
laws.
The nearly 20,000 workers in the suit say they should have been
classified as CrowdFlower employees, and not contractors, citing
the company's work assignments, minute instructions as to how they
should do their work and work-monitoring algorithms. CrowdFlower's
co-founder, according to the suit, said in a video interview that
the firm sometimes paid workers $2 to $3 an hour, rather than the
federal minimum wage of $7.25, or paid workers in points for
various online reward programs and videogame credits.
CrowdFlower has offered more than $585,000 to settle with
plaintiffs, but a California district judge rejected its offer in
December, indicating that the company didn't go far enough in
compensating workers. CrowdFlower declined to comment on the
lawsuit, but a spokeswoman says the firm supports "the upholding of
fair wage practices."
Venky Ganesan, a partner at Menlo Ventures, a venture-capital
firm with investments in numerous on-demand firms including Uber,
Handy, Munchery Inc., and Rover.com, says that the
independent-contractor model benefits workers and businesses
both--and it isn't a worry for investors as long as labor is still
abundant.
Gauging the size of the app-enabled workforce is difficult, in
part because so many workers join and abandon freelance platforms;
for example, Uber counted about 162,000 "active drivers" in
December, but the company doesn't disclose the total number of
drivers registered on the platform. About 34% of the labor force,
or 53 million Americans, work in some form of contingent
arrangement, according to a 2014 report written by the Freelancers
Union and Elance-oDesk Inc., an online marketplace for freelance
work.
"We are going toward becoming a freelance nation," says Mr.
Ganesan. "The $40-an-hour manufacturing job is not going to come
back," he adds, "but the $25 local services job" represents a
viable alternative.
Kristy Milland of Toronto says odd jobs on the Mechanical Turk
platform, like checking the accuracy of a software program's search
results, help her support her family, but calls her experience with
the site "a conundrum."
She is a leader of the online forum TurkerNation.com, which
gives Mechanical Turk laborers a place to air complaints and
connect; a similar forum, Uberpeople.net, does the same for Uber's
drivers.
"At the same time that I'm using it to make a living, I'm
fighting against it," she says. "It's not paying fairly and it's
taking advantage of people in a situation where labor laws don't
apply."
An Amazon spokeswoman says Mechanical Turk workers enjoy their
flexibility, adding that the platform "gives them a wide variety of
HITs (Human Intelligence Tasks) to choose from."
According to a new study commissioned by Uber, drivers earn an
average of $19 per hour before expenses. The majority are "very
satisfied with the platform, they have complete control over when
they work, and they're very satisfied with the income opportunity,"
says David Plouffe, a former White House official who heads Uber's
policy and strategy team. "We obviously are comfortable with our
business model."
"In some ways it's saving me while I search for other
employment," says an Uber driver in New Jersey who started with the
service last year on a part-time basis while working in technology
sales. Since losing his job recently, the man, who declined to be
named since he doesn't want Uber to cut him off, now drives for the
company full-time and estimates he earns roughly $500 a week after
expenses and depreciation, working 40 or more hours.
"If you want to 'Uber' as a moonlighting thing, it's great," he
says. But driving full-time, "basically you're in a service
industry job making $8 to $10 per hour and getting clobbered on the
depreciation of your vehicle."
Zirtual, which provides remote personal assistants, initially
used independent contractors, but switched to an employee model
after growing tired of arm's-length relationships with contractors,
says CEO Maren Kate Donovan. Now considered full employees, Zirtual
assistants now stay longer with the company, and start at $11 an
hour, she says.
"At first people like the flexibility of being a contractor, but
at the end of the day most people don't have the luxury to bring in
half a paycheck," she says.
Write to Lauren Weber at lauren.weber@wsj.com and Rachel Emma
Silverman at rachel.silverman@wsj.com
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