Dive Brief:
- Homejoy, an app-based on-demand home cleaning startup that was targeted by lawsuits over employee vs independent contractor issues, will be out of business soon, reports Wired.
- In a blog post last week, Homejoy CEO Adora Cheung announced that the company would be shutting down for good at the end of July.
- While Cheung didn’t specify the reasons on the blog, Wired notes that challenges in Washington over protections for workers in the so-called gig economy might have played a role.
Dive Insight:
While the sharing economy does not have much of a direct impact on HR right now, the Homejoy case may be a precursor to future companies who try to succeed by using mainly an independent contractor workforce model. For example, the DOL said recently that it considers workers who depend solely on a single employer to make a living not to be independent contractors, but rather full-time employees (FTEs).
If Uber and related companies face constant legal challenges and legislative roadblocks, then they will either have to instead use full-time employees or fold up the tent. For those with a promising business case, that would mean creating HR departments to manage their newly acquired human capital, so to speak. The Washington Post offered a recent article saying there are companies using the "on demand" app-based strategy who are going the FTE route and succeeding.
Homejoy raised $38 million in 2013 but charged prices so low for its services that it likely burned through that funding, reports Wired. With the 2016 election coming up, workplace-related issues such as the misclassification of workers will likely garner more media attention.
