Dive Brief:
- The newest radical innovation to come out of Silicon Valley? Calling the people who work for you employees, according to an article at Inc.com.
- Joining what’s fast becoming a movement in the on-demand services sector, the food delivery startup Sprig is reclassifying its freelance couriers as W-2 workers and making them eligible for an employee stock option plan, Inc. reports.
- Gagan Biyani, Sprig’s CEO, says the change will allow Sprig to better live up to its vision of making healthy food widely accessible.
Dive Insight:
By swapping out 1099s for W-2s, Sprig takes on responsibility for things like Social Security taxes, disability insurance and the vehicles couriers drive, so it will cost, Inc. reports. But Biyani believes it's worth it.
“We’re an intensely mission-driven company,” Biyani told Inc. “If you’re a server and you’re delivering these beautiful organic meals, we want you to embody our mission and to deeply care about the relationship Sprig has with our customers.”
Biyani said in the article he hopes Sprig will recoup some of the expense through increased productivity and improved employee retention. “We modeled the financial impact but it’s not really the main criteria,” he said. “I expect it to increase our costs -- and, on the flip side, to improve our relationship with customers.”
The HR lesson here is that on-demand employers need to take a hard look at their company's business strategy and independent contractor agreements in the decision of whether to go the contractor vs. full-time employee route. Of course, Sprig is not alone here. Companies including Instacart, Shyp and Luxe have done it too, according to a report at Business Insider. And it wasn't litigation that forced the issue.
