Shyp’s Move Follows California Labor Commission Ruling In Uber Case
In the latest signal that June’s California Labor Commission ruling regarding employee classification is having an effect on the 1099-economy, another San Francisco-based startup has announced it will start classifying workers as employees rather than contractors. The Wall Street Journal reports in its “Digits” blog that on Wednesday, Bay area shipping startup Shyp said it will transition its couriers from contractor to employee status in early 2016, making the workers eligible for benefits and reimbursement of expenses.
Bloomberg News reports that the move will give Shyp “greater control over its workforce at the expense of increased legal obligations and costs.” The new regulation will apply to all of Shyp’s 60 workers. Currently Shyp provides courier and package services in Los Angeles, San Francisco, New York, and Miami, and plans to soon expand to Chicago. Despite questions about the announcement’s timing, company spokesman Johnny Brackett said the change wasn’t prompted by legal issues against other startups. Brackett explained, “We are making this move to ensure that each time a customer uses Shyp, they have an incredible experience,” he said. “This requires that we provide our couriers with additional supervision, coaching, branded assets and training, which can only be done with employees.”
Business Insider notes that Shyp and Instacart are among startups being targeted by attorney Shannon Liss-Riordan, the lawyer who “sued Uber and Lyft for not classifying contract workers as employees.” Liss-Riordan is now “representing workers against four more on-demand companies:” Postmates, Instacart, Washio, and Shyp, alleging that the companies are “violating labor laws” in various ways.
What This Means For Small Businesses
This announcement is yet another troubling indicator for San Francisco small business owners that the line between employee and independent contractor is being blurred. As disruptive startups and small businesses increasingly seek affordable, efficient labor to grow their businesses, they may face growing pressure to classify workers in ways that significantly increase labor costs.
Additional Reading
Forbes, Forbes, Fortune, Fortune, the Huffington Post, the Next Web, and USA Today are among the outlets also covering the story. NFIB previously covered the California Labor Commission ruling on Uber worker status.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
