This Startup Melted Down After Its Workers Fought To Be Employees

This Startup Melted Down After Its Workers Fought To Be Employees

Pour one out for home cleaning startup Homejoy, one of the first big casualties of the brewing fight between workers and “gig economy” apps like Uber and Taskrabbit.

Homejoy is shutting down, and it’s due to lawsuits filed by workers who wanted to be treated like employees instead of contractors. Google has already picked apart the corpse, hiring Homejoy’s technical team to work on its own services marketplace, which could become another big platform for hiring gig workers.

Homejoy made it easy to order a maid to come scrub your toilet from your smartphone, but it had a hard time keeping those cleaning workers happy: In four separate lawsuits, workers fought to be classified as employees.

Recode talked to the CEO about how the battle for worker classification tanked the company, mentioning the recent California court decision in favour of an Uber employee trying to get reclassified as full-time:

The company had already been facing growth challenges, but CEO Adora Cheung said the “deciding factor” was the four lawsuits it was fighting over whether its workers should be classified as employees or contractors. None of them were class actions yet, but they made fundraising that much harder.

By treating people like independent contractors, companies like Homejoy don’t have to pay for benefits or deal with payroll taxes — and as they continue to grow, the debate around how to classify workers will only get more heated.