Dive Brief:
- News reports of late are trickling in with examples of on-demand startups who are reclassifing independent contractors as employees.
- Some who haven't yet made that move are considering it. Those that made the change like to mention that even though they are part of the "sharing economy," they care about their workforces.
- While the general view is that some on-demand startups are wisely seeing the writing on the wall, an article at TechCrunch says employers are not reclassifying for political or altruistic reasons -- rather they are making the move because "it’s a better way to build their businesses."
Dive Insight:
Author Noah Lang is co-founder and CEO of Stride Health. He says that three "operational characteristics" are behind the change: ability to scale service with a high customer-to-worker ratio; build a specialized workforce required for high-quality service; and deliver services to the customer with a greater focus on convenience than timeliness.
In the end, Lang writes, there will be even more employee-based on-demand workforces along with mixed-classification workforces. But massive scale, truly "on-demand" gig work from employers such as Uber will not make the move to an employee-based model.
Employers who deliver a "commoditized or readily trained experience" will likely continue to use contingent workers, Lang writes, as will organizations like Home Depot (for installation contractors) and HourlyNerd (consultants delivered to businesses) that deliver contingent workers hired for their pre-existing specialized expertise. Other companies - he mentions TaskRabbit, Handy and Postmates - will continue to experiment with their business model until they find the best strategy.
