Idea: 99Thursday, 09 April 2015By. Tal Raviv

Fairness, Inc.

— Stripe for labor

So there’s been some more developments in recent days:
! Shyp is converting its couriers to W2 employees, and
! A bunch of the larger uber-for-whatever companies are getting sued like Fedex was recently over 1099 misrepresentation

So here’s the problem:
~ The Uber-for-X wave of companies is lucrative, except many people doing this work are on 1099s and lacking proper employee benefits.
~ Individual companies find it hard to offer that W2 status early on, if ever, even though it’s good for business.
~ Servicepeople can choose to either hope for corporate benevolence, or bring lawsuits.

? How do you make this new economy more compatible with ethical labor practices?

Here’s one potential solution:

A third-party company, “Fairness, Inc.” that could serve as the on-paper W2 employer of service people, abstract bureaucracy, and reduce costs associated with full employment.

How it works:
$ Companies transparently pay FairX for that employee’s labor, plus an additional X% fee, which is less than the 30–40% cost of fully employing that person
+ FairX pays employees exactly what they would have earned beforehand.
+ If a service person works X hours a week or more, they get workers insurance, overtime, health, dental, and take care of the administration of taxes and payroll.
+ Companies can then focus on their value, which is building the marketplace. They’d still recruit servicepeople as before, they’d just have them employed by Fairness, Inc.

Value of aggregating labor compensation:
+ Lower costs of external costs like insurance and internal costs like processing payroll, taxes, payouts
+ Easy for servicepeople to work for multiple companies (combining different peak hours) and count all the hours as one job.
+ Network effects and defensibility — this becomes more valuable better as more companies join on one platform

What’s practically cool about getting this going:
> Everything here can start off manually (phone number, simple site, and an email address are plenty), automated gradually over time
> Still valuable to the first company we do this for, and only gets more valuable (no chicken and egg) — growth is biz dev
> Long term can grow so that all contractors can be on this model, even say, people who have no reason to be W2 employees but wouldn’t mind aggregating their hours and getting benefits.

? Given that I know nothing about employee administration or how to judge the many assumptions I’ve made here, I’m curious to hear your thoughts.