Following on the potentially major lawsuits against Uber and Lyft about their classification of drivers as independent contractors, delivery people working for services like Postmates, Instacart, and Caviar have also filed suit to become full-time employees with benefits. As the Chronicle reports, several of these cases are being spearheaded by Boston lawyer Shannon Liss-Riordan, who argues that all these workers are the benefits and protections of employee status even though such rulings could mean major business-model problems for these burgeoning companies of the "on-demand" or "sharing" economy. Other cases have also been filed against home cleaning and repair companies Homejoy and Handy.
In early February a federal judge allowed the two cases against Uber and Lyft to move forward, noting in part that the claim by Uber that they're only a technology company is spurious given that the vast majority of their revenue comes from drivers driving people places. It therefore strains credulity to suggest the drivers aren't essential employees, under California law.
Likewise, all these other services that hire contractors to do the bulk of the actual services they provide have structured their businesses similarly, claiming that they're only providing the technology platform or app as their core business. Another argument has to do with how the companies direct and control these workers, either by setting their rates of pay, hours, or otherwise managing them.
Jonathan Davis of SF’s Arns Law Firm, who is part of the Instacart case, says the companies have created a "false narrative" about how technology exempts them from labor laws. "Just because a worker is being controlled and directed by an algorithm and a smartphone," he tells the Chron, "is not different than being controlled and directed by a foreman."
There's nothing saying that a company like Uber can't afford to make their drivers employees, but certainly it will cut into their ever-growing profits. And such a business model clearly won't work for every one of these startups, which have likely depended on cheap labor to exist.
Be prepared for this to get very interesting as the cases wend their way through federal court.