Following a similar announcement by Instacart last week, Shyp has decided to shell out for insurance benefits and other protections for all of its workers.
Shyp is a San Francisco startup that mails things for you. It cutely promises to make sure you never wait in line at the post office again. To do that, the company employees three groups of workers — drivers, warehouse packers, and couriers. Heretofore, the drivers and packers have been employees of Shyp, while the couriers have been independent contractors. But today, per a company blog post, Shyp is transitioning its courier workforce from contractors to employees.
"We're doing this because we want to make the Shyp experience as good as it can be, for our customers and workforce alike," wrote Shyp CEO Kevin Gibbon. One of the main differentiators between employees and contractors is how much control an employer can have over them. Employees can be trained, told when and where to be, given performance reviews, etc., while contractors, legally, need greater independence. By shifting their couriers to employee status, Shyp is better positioned to own "the entire, end-to-end Shyp experience."
Indeed, it would seem that, before today, Shyp was implementing some measures that were potentially inappropriate for independent contractors. The couriers — or Heroes, in Shyp parlance — were expected to wear Shyp brand t-shirts, locate themselves in hot spots while on the clock, repeat certain brand catch phrases, cover shifts they were unable to work, and more, according to a company source.
Managing worker performance, referred to in the email below as "constantly measuring hero success," is one reason why it makes more sense for Shyp Heroes to be classified as employees.
As a result of this change, going forward, Shyp couriers will have access to the same benefits and protections — such as worker's comp and, depending on hours worked, healthcare — that all other Shyp employees, who number in the hundreds, have. Though this increases labor costs, a representative for the company wrote in an email that "long term, this will positively effect our bottom line and our investors are on board."
Recently, Instacart, an on-demand grocery delivery company, made a similar announcement, reclassifying some of its workers as employees. Instacart, along with a handful of other on-demand labor platforms, is being sued by workers over misclassification. Both Shyp and Instacart claim that their decisions to employ their workers are unrelated to those suits. But with decisions like that of the California Labor Commission case — which found that a former Uber driver should have been classified as an employee — fresh in the minds of the public, it would seem at the very least beneficial to these companies from a PR standpoint to pivot toward a more worker-friendly model.
Some on-demand companies, as BuzzFeed News has previously reported, have been relying entirely on employees to get the job done for a while. Dan Teran, CEO of Managed by Q, an on-demand office management startup, has long believed that workers can be both flexible and protected. In an email, Teran was glad to hear the news of Shyp's decision.
"I'm optimistic that other on-demand employers will continue to follow suit," he wrote. "It is hard to say how much of this is reacting to the California Labor Commission ruling, but honestly I'm just glad to see more companies making a shift towards being responsible employers."
Managed by Q and Shyp, notably, share a funder — Homebrew — and Teran says he's "had a number of conversations with their operations team about our employment practices."
While some Shyp Heroes will be able to take advantage of the benefits afforded their coworkers in the warehouse and behind the wheel, one of the core contradictions of the on-demand economy is that, while workers do want to be well compensated, many of them truly do value the flexible schedules and independence that contract work affords.
Steven Grady is a current Shyp courier who, like Teran, was happy with Shyp's decision to change, writing in an email that "most couriers I know will be very excited" about the "huge improvements to their work and personal lives." But Grady himself might not be with Shyp for long.
"I think there will be some turnover as certain standards are enforced, and of course as some leave because they prefer the flexibility of being an independent contractor," he said. "I'll likely be unable to meet the requirements to be an employee as I'm one of those who needs the flexibility that 1099 work provides."
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