The 1099 Bind

The most valuable startups in America call their workers independent contractors. Courts are starting to say they arent. If your on-demand company must treat workers as employees, can the gig economy survive?

- Jeff Bercovici

When Aaron Felder applied for a job with Homejoy, the on-demand housekeeping service, in May 2014, he figured he’d undergo some training before getting turned loose on bathroom grout. The closest he’d come to professionally cleaning was sweeping popcorn at a movie theater. But when the 26-year-old Bay Area native showed up for his interview—after completing a lengthy online quiz—he was told there would be no training. Instead, he was subjected to a “cleaning evaluation,” two and a half unpaid hours in a client’s home demonstrating his familiarity with the various tasks involved—that is to say, cleaning it. Felder failed on his first attempt, but did it again and passed. For the next 13 months, he spent 20 to 30 hours a week cleaning houses and apartments around San Francisco and another 10 or so commuting between assignments. It was his only regular work.

For Homejoy CEO Adora Cheung, workers like Felder represented a conundrum. When Cheung and her brother Aaron launched the service in July 2012, they were so leanly staffed, she took some of the bookings herself, and quickly discosts in the form of Social Security and Medicare deductions, workers’ compensation insurance, paid time off, and other expenses. So Homejoy developed its hairsplitting approach, a vetting meant to establish some quality-control guardrails without explicitly telling workers how to do their jobs.