1099, Being Freelancer, Freelancers, Future of Work, On Your Own, Self-Employed, Uber

The Five Faces of the On-Demand Economy

Originally published at Smallbizlabs.com

Last week Intuit released The Five Faces of the On-Demand Economy, which covers 5 common profiles of on-demand workers.

This is a follow on report to their On-Demand Workforce report from several weeks ago, which covers the motivations, attitudes and demographics of those working via on-demand economy (ODE) work intermediation platforms such as Uber, Upwork, Fiverr, etc.

The Five Faces and their percentage share of all on-demand economy workers are:

  • The Business Builders – Primarily driven by the desire to be their own boss, they represent 22 percent of on-demand workers.
  • The Career Freelancers – Happily building a career through independent work; 20 percent.
  • The Side Giggers – Seeking financial stability by supplementing existing income; 26 percent.
  • The Passionistas – Looking for the flexibility to do something they love; 14 percent.
  • The Substituters – Replacing a traditional job that is no longer available; 18 percent.

These profiles were developed using cluster analysis to group ODE workers who share similar motivations and attitudes.

As Intuit VP Alex Chriss points out in his article The Future of Work Doesn’t Look Like You Think it Does, these groups are not fixed. Key quote:

The data shows five different faces. But in meeting hundreds of our customers I have come to appreciate that these profiles are fluid and there are often several motivations that influence people’s decisions on how to own their own career.

This is an excellent point. These “faces” – much like the pirate’s code – should be seen “more as guideline than actual rules“.

The reason these faces are important is they show how differently ODE workers view ODE work.

Satisfaction is a good example. As the chart below shows, most Substituters are not sastified with ODE work while the vast majority of Business Builders and Career Freelancers are.

See the report for more differences and details by segment.

Emergent Research worked with Intuit on this study.

Freelancers, Insurance, On Your Own, Uber

Insurance Options for On-Demand Drivers

Ridesharing is a phenomenon that is popping up in new cities every day. And to keep up with the demand, more and more workers are signing up to be drivers for on-demand car sharing and delivery companies such as Uber, Lyft and InstantCart. You can’t be work for one of these companies, however, unless you know your insurance options.

Independent contractors for such companies can make a considerable amount of income, even supplementing full time salaries. However, one of the primary concerns is insurance. Drivers use personal cars and are not considered employees of the companies. Therefore, the protection and liability coverage can be a bit confusing. If you’re are a on-demand driver or considering becoming one, read this guide first and understand what you are and are not protected against:

Is insurance provided by the company and if so, what kind?

In short, the answer to this question is yes. But it does get complicated. Drivers are protected in some ways if using their car for the purposes of transporting clients but the amount and level of insurance depends on what they are doing. The categories or stages typically consist of:

  • Logged into the app and waiting for pick-up requests
  • On way to picking up a passenger/client
  • Transporting a passenger/client to destination

The major ridesharing companies offer some level of protection in each of these stages but they vary. Let’s take a closer look by company:

  • UberX:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial Liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($1000 deductible)
      • Minimum amount of personal injury protection coverage (if required by law)
  • Lyft:
    • Logged into the app and waiting for pick-up requests: Contingent liability coverage (50/100/25 limits); covers losses not covered by driver’s personal policy
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Uninsured bodily injury ($1 million limit)
      • Contingent comprehensive and collision coverage ($50,000 limit and $2,500 deductible).
  • Sidecar:
    • Logged into the app and waiting for pick-up requests: Collision insurance ($50,000 limit and $500 deductible); covers losses not covered by driver’s personal policy. Note: Policy may differ in California, Washington State, and Chicago
    • On way to picking up a passenger/client AND/OR transporting a passenger/client to destination:
      • Commercial liability insurance ($1 million limit)
      • Collision insurance ($50,000 limit and $500 deductible)
      • Policy may vary in Washington state and Chicago

Keep in mind that when your car is used for personal driving, there is no insurance provided under all companies.

What insurance should I purchase myself?

As a driver, you should have auto insurance whether or not you are using it for business. Some ridesharing companies say that a personal insurance policy along with their supplementary coverage is enough coverage. However, this area is still very gray, particularly when you are using your car for business. Consider these policies:

  • Commercial car insurance: Many states require ridesharing drivers to purchase commercial car insurance so it’s important to understand the rules and regulations of your state. This insurance is typically required for taxis and many states consider rideshares to be under the same category. You do need a commercial driver’s license to purchase commercial car insurance.
  • Policies targeted toward ridesharing drivers: With the rise in on-demand ridesharing, many insurance companies are now experimenting with policies specially geared toward these drivers. Ask your insurance company about their policies.

What else do I need to know to stay protected?

If you are a driver for a ridesharing company, it’s important to understand your rights and how your are protected. Drivers are considered independent contractors, not employees, and so protection is typically limited. Depending on your budget, purchase an insurance policy that can cover you as much as policy. Rules and regulations for ridesharing companies and drivers are constantly shifting. It’s important to stay up to date to keep your protected in any situation.

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Portable Benefits for the On-Demand Worker

The emergence of the gig economy has opened an important debate about having portable health and other benefits for the On-Demand Worker. There has been a number of calls for a new category for those who occupy the gray area between employees and independent contractors. Freelancers often work through a middle man or a marketplace (think Upwork.com or 99Designs) or an intermediary, typically an “app,” that customers use to identify themselves as needing a service—for example, a car ride, landscaping service, etc. This enables the employer to maintain some sort of arms-length distance from the worker. (We all know this is often broken, however). How can you work for someone without them giving you some sort of direction?

It’s increasing, but today it appears that at least about 600,000 or .4% of the US Workforce work with an online intermediator. The Hamilton Project at Brookings (I once interned there while I was a student across the street at Johns Hopkin’s University’s SAIS program across the street), recently hosted a gig economy event where Brookings made a proposal for  Modernizing Labor Laws in the Online Gig Economy. The talk focused on health and other benefits, and how to ‘force these new forms of work (from Uber, etc.) into a traditional employment relationship could be an existential threat to the emergence of online-intermediated work, with adverse consequences for workers, consumers, businesses, and the economy. “One of their One of the key benefits they proposed was portable benefits, which is a fascinating idea because (Independent contractors tend to have multiple gigs at one time). Their definition:

As we are defining it, the online gig economy involves the use of an Internet-based app to match customers to workers who perform discrete personal tasks, such as driving a passenger from point A to point B, or delivering a meal to a customer’s house. Note that this definition excludes intermediaries that facilitate the sale of goods and impersonal services to customers, such as TeacherPayTeachers.com, a Web site where teachers sell lesson plans and other non-personal services to other teachers, and Etsy.com, a Web site where individuals sell handmade or vintage goods. It also excludes Airbnb, a Web site where people can rent apartments, houses, and other accommodations.

The authors of the Hamilton Report highlight that ‘because it is conceptually impossible to attribute their (workers’s) work hours to any single intermediary.” Today, these independent workers do not qualify for hours-based benefits, including overtime or minimum wage requirements. These independent contractors rarely, if ever, qualify for unemployment insurance benefits. If intermediaries could pool independent workers, however, for purposes of purchasing and providing insurance and other benefits at lower cost and higher quality without the risk that their relationship will be transformed into an employment relationship, then they might be open to pooling their resources and having portable benefits for the contingent workforce.

The Ubers of the worls could then save on the costs if they have to eventually hire these workers full-time and on legal fees (although Uber has changed their driver terms of service agreement that bars drivers from participating in class action lawsuits against the company and instead requires them to enter into arbitration in the case of disputes).

As Steve King points out in his short analysis of this proposal, this new portable benefits law probably should include gig economy workers who work in the B2B sector, or sell goods, or rent real estate, but they do. But even though they are excluded from their analysis, they would likely be included in any portable benefit laws. Portable benefits seems to be a hot topic. Next week the Aspen Institute is holding a workshop on portable benefits.

Protection of the 1099 is important. I have heard of companies (the employer and the intermediary) using algorithmic scheduling to ensure their works never go beyond 29 hours of work a week, which ensures they don’t have to pay them health benefits or provide the other goodies full-time employees receive. It’s important to figure out how to address this barrier to benefits.  Ouch! Talk about Big Data hurting the worker!

Another reason to address this is that Brad Smith, the CEO of Intuit and one of the best leaders I have ever worked for, has indicated that his company’s data data shows that 40% of their self-employed customers also have income from a W2 job. (I know several people who wear these two hats). So this problem of multiple employers with different tax and benefit regimes started way before the Ubers, Lyfts, Instacarts came on the scene.

Portable Benefits basically means a person should be able to use the same benefits when they work for different on-demand companies. The Hamilton proposal is a start – it has accelerated the discussion about a new class of employees or at least the call for examining how workers are currently classified. Their proposal really doesn’t focus on online or offline, but instead stresses that workers should be protected and receive benefits. As the chart below indicates, this will continue to become an increasingly important issue to address in our On-Demand Society.

You can read The Hamilton Report here

Handy’s Corner of the Gig Economy Is a Mess. Doesn’t Bother Startup Investors!
Companies, Health Care, Industry Research, Ondemand Platform, Services, The American Dream, Uber

Home Services need to be Cleaned Up

Originally Published in Slate

The startup world is full of ironies and poetic justices. The bubbly race to wash your clothes. The club of billion-dollar “unicorns” that boasts more than 100 members. And the undeniably messy market for on-demand cleanings and home services.

In recent months, the home-services market has repeatedly proven one of the riskiest and most muddled in the burgeoning “gig” economy. The clearest evidence of this came in mid-July, when Uber-but-for-cleaning platform Homejoy announced it was shutting down. At the time, the company attributed its exit to problems with raising money and to a lawsuit over its employment practices;other reports since have traced the collapse to substantial losses, poor customer retention, costly expansion, and Homejoy’s inability to keep its best workers on the platform.

Similar problems have plagued Handy, another Uber-but-for of the home-services sector, and Homejoy’s main competitor before it went under. Like Homejoy, Handy poured money into scaling up its operation, spending tens of thousands of dollars a week—if not more—to onboard cleaners. Like Homejoy, Handy struggled to retain those cleaners, with 20 to 40 percent becoming inactive after two to three months. Like Homejoy, Handy is in litigation over its independent contractor-based business model. On top of that, Handy has faced tough criticism about its customer service—in particular, a signup system that automatically enrolled users in repeat bookings and made it extremely difficult to cancel them.

And yet the gig economy keeps chugging. Handy said Monday that it had raised $50 million in a Series C funding round led by Fidelity Management and several of its current investors. That brings the company’s total funding to $110 million, for an unofficial valuation of around $500 million.

In its press release, Handy points to its 1 million-plus bookings (a milestone it celebrated over the summer), and that 80 percent of them come from “loyal, repeat customers.” Presumably a good deal of the company’s valuation and new funding is tied up in this claim—repeat customers are much more likely to actually pay off than one-time users—though the fact starts to sound less compelling when you wonder how many of the 80 percent were repeatedly using Handy of their own volition, and not because they couldn’t cancel those automatic recurring bookings.

“Handy has demonstrated to consumers that it is the company to trust when it comes to finding professionals to take care of their homes,” Handy co-founder Umang Dua says in the release. “Professionals love the flexibility, high-paying jobs and high demand for their services, while consumers enjoy the convenience and high quality.” It’s nice PR boilerplate that becomes less convincing once you consider the cleaners who have filed lawsuits against Handy, the customers stuck with followup bookings they didn’t want, and the customer-experience employees at Handy’s headquarters who had their jobs outsourced and were fired en masse between late 2014 and early 2015. For more on most of that, see my Slate story from this summer.

On the other hand, it’s possible that Handy, in the spirit of its sector, has started cleaning up its act. In late August, a former Handy employee notified me that the company had finally reviewed its compensation and payroll practices and issued back-pay to some customer-experience employees for their rest periods. As part of that, back-wage recipients were asked to “stipulate and agree that my accepting this payment does not constitute, for any purpose whatsoever, either directly or indirectly, an admission of any violation of law or contract or any other legal obligation whatsoever by Handy,” according to a copy of one agreement provided to Slate. They also released Handy from “any and all individual and/or class claims under the New York Labor Law and, to the extent allowable, any other federal, state or local law, related to the payment of wages, benefits or other compensation related to my employment with Handy,” so you have to assume that’s something the company was nervous about.

Could such changes, plus the Homejoy exit, be enough to pave Handy’s way toward establishing a profitable, sustainable business?Or is the market for home-cleaning and other household services fundamentally too tough? Those are questions that as of yet don’t seem to have clear answers. For now, though, Handy doesn’t need to convince the world one way or another. It just needs metrics that are aspirational enough to attract a few investors—to keep the cash flowing in from one end to be burnt up on the other. Fifty million dollars might not feel like much compared to the $1 billion rounds that Uber raises with casual regularity. But for a company in a space as murky and fraught as Handy’s, it’s an equally big vote of confidence.

 

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Freelancers, The American Dream, Uber, Your rights: Presidential Election, Laws, etc.

Game Changer: Uber Drivers will get their day in court

Drivers for Uber Technologies Inc. will get their day in court.

A California federal judge has set a trial date of June 20, 2016 for a class-action lawsuit that could help decide the employment status of Uber drivers, according to the lawyer representing the plaintiffs.

The case, O’Connor v. Uber, concerns the ride service’s classification of drivers as independent contractors rather than employees.

The plaintiffs say that, because Uber controls things like ride prices and performance standards, they should be considered employees and eligible for reimbursement of expenses such as gas and vehicle maintenance.

Judge Edward Chen already certified the case as a class action, rejecting Uber’s argument that drivers should take their claims to individual arbitration proceedings. Uber has appealed the class certification to the Ninth Circuit Court of Appeals.