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Uber led employment model faces risks

July 10, 2018

By Cascade Employers Association,

Every business has, at some point, struggled with recruitment. The inability to find applicants means that sometimes you hire someone just to get a “warm body” in the seat, and hope they can complete the duties well enough to get by. In cases like these, staffing agencies may be utilized to help fill those roles that are harder to fill, or keep filled.

More recently, we are seeing a new kind of “staffing” service pop up, similar in style to how Uber conducts its business. Take for instance, Wonolo. You register your business with Wonolo, and they provide you with an “independent contractor” who will work for you in whatever job you need filled. They do an initial background check, but they do not claim them as employees and do not provide workers’ compensation, or benefits, or anything else the law would require from typical staffing agencies.

While a service like this may seem like a dream come true for companies who have unusual schedules, or random jobs that pop up, there are risks to think about when using such a service.

Since Wonolo is not claiming these workers as employees, you, the business, need to determine if you are willing to take the risk of allowing these people to work for you, without bringing them on as actual employees; even for just a day. Unless the worker qualifies as an independent contractor, it is highly unlikely you are in compliance with employment laws if you don’t hire them and give them the benefits any employee would be eligible for.

Some questions you should ask before bringing someone on board without hiring them are:

  • Do you have control or have the right to control what the worker does and how the worker does his or her job? For example, do you tell them where and when to do the work, what tools to use; do you provide training for that job?
  • Do you control the financial aspects of the job? For example, does the person have the opportunity to lose their own money or investment with this work? Are they guaranteed an hourly wage?
  • Is the worker providing a service that is a key aspect of the business? For example, do you have other employees who do the same type of work?

While there are many different rules regarding independent contractor requirements both at the state and federal level, these are just a few things to consider.

The best practice to make that determination is to look at all of the aspects of the relationship to determine whether you have an employment or independent contractor relationship with an individual. And as we’ve seen with Uber, this independent contractor model seems to present a significant risk to employers.

If you are interested in learning more about employment relationships and what makes someone an employee vs. an independent contractor, our Employment Law: The Basics training can help get you on the right path.

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