In the land of on-demand transportation, meals, and manicures, there is seemingly a service for everything. These premium services, previously reserved for the rich and famous, are now accessible to the slightly above average Joe. With advances in computing and a growing freelance labor market, costs have been reduced enough to offer services to a broader customer base. This is great for the consumer, but what about the workers providing these services?
This new model posits that we get the best of both worlds — services we want and are too busy to perform ourselves and a workforce that gets to set their own hours and be their own boss. As this plays out, we are seeing that this simplistic and idealistic view is not necessarily reality. At the On Demand Conference held on May 19, 2015, Dan Teran (CEO of ManagedbyQ) Nick Allen (CEO of Shuddle), and Salina Truong (CEO of PlaybookHR) weighed in on the impact to employees of these on-demand workforces.
Employees or Contractors?
For previously unemployed employees, workers who want an extra job on the side, or those who want to pick their hours are truly able to do so with the increasing amount of on-demand service companies. Nick Allen is the CEO of Shuddle, a ride sharing service for busy families. Due to their predominantly suburban customer base and mostly daytime rides, full-time employees don’t make sense with their business model.
“A 1099 makes sense because of the nature of the work. Having full time employees doesn’t make sense for our business” — Nick Allen [Tweet this]
Salina Truong, CEO of PlaybookHR (recently acquired by Intuit), which provides operations management for on-demand workforces. As such, she has a unique view into how companies are structuring their HR in regards to this growing class of workers. When asked how most companies structure their workforces,
“Companies do both 1099 and W2…but the majority use 1099. It’s faster and less costly from the employer’s perspective.”
Of course, between a 1099 and W2, it makes sense that the employer would choose what is fastest, easiest, and cheapest. But to be fair, there are only two options today.
This begs the question — As our definition of work and what it means to be an employee changes, should our legislation as well?
The promise of flexible hours with livable wages sounds like a dream. Set your own hours, be your own boss, but the reality is not always this cut and dry.
Today most of the on-demand workforce is classified as contractors, even if they are working 40+ hour weeks. For these people, this is not a flexible part time job where they make their own hours. This is where the challenge arises, when you find employees working a full time job without the benefits and security of a full time role. Some companies, such as Managed by Q, are trying to address this by more tightly integrating these on-demand workers into the workplace and allow for upward mobility within the company.
“We think about how to make meaningful careers, not just work for people to do in their free time.” — Dan Teran [Tweet this]
It’s still unclear as to what role the government will play in creating new legislature to deal with this new hybrid class of workers, but change seems inevitable. As the externalities of doing business are pushed out to these individuals, it is clear that if the companies are not paying for these services, someone has to. If the individual is unable to and this falls on the shoulders of the taxpayers, this notion of cheap services starts to look far more expensive.
This post was written by Michelle Marguth. Michelle is a product focused growth marketer at Tradecraft with a penchant for learning and creating. Thanks to Asma Mian and Misha Chellam for help editing this post.
You can find the full list of posts about the On-Demand Conference here.