Amazon is right up there when considering big tech Kool-Aid.

All by itself it has done more to addict consumers to near instant gratification, with no vision past themselves, than any other company.

In doing so it has actually killed people and ruined lives.

And it has done it in a way that shielded it from both notoriety and financial responsibility.

Rather than a synopsis and comments from me, take a few minutes to read the original ProPublica’s, in conjunction with The New York Times, investigative article.

This isn’t the first article detailing deplorable working conditions that have resulted in numerous walkouts by Amazon and contracted workers,

But the only walkout that would actually have an impact is a customer walkout.

Obviously, it’s unlikely that anyone will actually quit using Amazon.

But if just 1% of users stopped for just one week, Amazon would definitely sit up and take notice.

And if a higher percentage stopped even better.

Whether it’s Amazon, Uber or any of dozens of other companies whose business model is built on unfair/dangerous worker practices they need to step up and start taking responsibility for the actions of people who deliver their “experiences,” instead of claiming they are “independent contractors” while still controlling their daily actions at work.

Image credit: Mike Mozart

I’ve written a lot about the 1099 economy and its poster boy Uber; none of it particularly flattering.

Why?

Because the way the drivers are treated they are not “independent contractors” as described by the Feds.

They are revolting in the best way — by becoming the competition.

That was back at the end of February and in tech three weeks can be a lifetime.

The new news is that Talmon Marco founder of Viber six years ago and sold for $900 million two years later, is the guy behind Juno, Uber’s newest competitor — but a competitor that values it’s people.

“What Uber left out in the process of building their company is that they completely and totally forgot about the people who do the work, the drivers. Imagine a company where all the employees hate management; that is not a good place to be.”

And there lies the problem for most of the 1099 crowd.

Unlike most other 1099 businesses, full-time Juno drivers will be employees, not contractors, receive stock quarterly and have the potential to build  “as much equity as the founders.” according to Marco.

Remember the robber barons of the late 19^th-arly 20^th Century?

A robber baron is a wealthy, powerful businessman who employs practices including exerting control over natural resources, influencing high levels of government, paying subsistence wages, squashing competition by acquiring competitors, creating monopolies and raising prices  [emphasis mine], and schemes to sell stock at inflated prices to unsuspecting investors.

Even the inflated stock seems familiar when you consider that Uber’s unicorn valuation is based on funds raised, not revenue, and it’s losing hundreds of millions each year.

Robber barons indeed.

Image credit: Wikipedia

First it was Uber drivers, members of the so-called 1099 economy, who sued Uber.

Next, the general public woke up to tech’s rapacious abuse of their privacy and personal information.

And last week nearly half of shareholders voted against the executive compensation plan of a company whose stock is near its all-time high.

According to an SEC document filed Tuesday, nearly 47% of the total shareholders voted against Salesforce’s executive compensation packages at its annual shareholders meeting…

Maybe, just maybe, corporate America has finally gone too far and we’re ready to fight back.

Flickr image credit: Annelid

I’m not a lover of the so-called 1099 economy, primarily because I think the concept and the unicorns it’s spawned have been successful at gaming the system — so far.

But that’s unlikely to last.

More importantly, a company called Managed by Q is proving it doesn’t need to.

Managed by Q provides on-demand cleaning services for offices using an iPad, which it installs for free, and also offers other services like restocking the fridge or office supplies. With on-demand and subscription services for customers — and now 150 cleaners in New York — its services have become pretty popular: They’re used by other startups like Flatiron Health, Elite Daily, and Uber.

Managed by Q hires its “operators,” as it calls them, as employees, offering full-time and part-time employment with benefits and stock options. The work is flexible, and Managed by Q works with operators’ schedules.

I find it ironic that Uber, poster child of the 1099 model, hires a company that proves you can make money and still do traditional hiring, treat all employees well, draw investment and make money.

I’ve said it before and will continue saying it because it’s true, a company is like a three legged stool with investors, customers and employees being the legs. If one leg is longer or more robust than another the stool will tip over.

Managed by Q is part of the minority of on-demand services that is paying attention not just to its clients, but to the people carrying out its day-to-day work. And that’s what sets it apart.

Sets it apart, gives people a future, isn’t looking at lawsuits and seems to have missed the startup greed train.

All I can say is read the article and three cheers for Q, the anti-1099 heroes.

Image credit: Yelp

As has been pointed out in every media outlet on the planet, Uber is arrogant, pugnacious, obnoxious and plays fast and loose on matters from privacy to government regulations to customer charges to “contractor” relations and compensation.

Uber, in the person of CEO Travis Kalanick, has so enraged various officials that the company has been kicked out of cities, domestic and foreign, and entire countries.

Even Matt Kochman, Uber’s founding general manager in New York, left in disgust.

“Discounting the rules and regulations as a whole, just because you want to launch a product and you have a certain vision for things, that’s just irresponsible.” 

Kalanick pushed, denied problems and claimed that everything that disagreed with Uber’s plans was anti-progressive or nit-picking.

But in January the tone changed.

In January, Mr. Kalanick delivered a speech in Munich filled with talk about compromising with regulators he once sparred with, wanting to “make 2015 the year where we establish partnerships with new European cities.”

A couple of weeks ago I wrote of clouds on the horizon in the form of a class-action lawsuit from 2009 that could affect not only Uber, but every business based on so-called contractors.

Turns out they weren’t clouds, but a full-fledged storm.

A legal storm.

The Boston law firm representing Uber and Lyft drivers, Lichten & Liss-Riordan, won a 2009 decision that Massachusetts exotic dancers were employees because the club could set their shifts, and fire them. Judges in New York and Nevada followed that reasoning last year.

It will be interesting to see what happens in the California courts.

If the drivers win, it will be even more interesting to see how all the startups based on the 1099 business model play when the field is level.

Image credit: 401kcalculator.org

Last fall I asked if the 1099 economy might crash and burn considering the IRS rules governing freelancers and contractors.

I think that companies, like Uber and Instacart, etc., whose success is built on the basis that their workers aren’t actually employees are in for a shock one of these days.

But it’s more than my opinion.

Way back in 2013 a group of strippers brought a class-action lawsuit claiming employee status — and won.

Rick’s, a chain of “upscale adult nightclubs serving primarily businessmen and professionals” based in Texas, argued that its dancers were independent contractors, more akin to stand-up comedians than fry cooks. But Judge Engelmayer was not persuaded. He said the list of rules Rick’s laid down could be described as “micromanagement.”

Rick’s provided “Entertainer Guidelines,” including required heel height and when to strip; the company also set prices.

Uber tells its drivers what to wear, car requirements and sets prices, as do other 1099 employers.

One day soon, a few fed-up drivers are going to file suit and their lawyers will likely cite the judgment against Rick’s.

When that happens, compensation will change, as it did years ago with Microsoft’s contract developers (who were also awarded stock retroactively), and, hopefully, the playing fields will be leveled.

I, for one, am looking forward to it.

Image credit: HeadOvMetal

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

The so-called 1099 economy, where your workers aren’t actually employees, brings up questions.

1. Is worker welfare a valid consideration in terms of the bottom line?
2. How fair is it to reduce compensation, but maintain publicly that earning power is the same?
3. How ethical is it to encourage workers to take on substantial debt based on those unlikely earnings?

If you answered 1) not really, 2) fine, 3) no problem then you’re in line with Uber management.

…reliably ruthless Uber is in the thick of it. Two “partners” in Uber’s vehicle financing program are under federal investigation, but Uber hasn’t slowed its aggressive marketing campaign to get drivers with bad credit to sign up for loans.

Following in the footprints of the mortgage brokers who sold houses to people who couldn’t afford them, thus creating the subprime housing mess, Uber is aggressively pushing new cars and subprime auto loans to its drivers with bad/no credit.

One comment stood out for its clarity and applicability to Uber and the rest of the 1099 world.

Uber corporate gets venture capital and stock options. Uber drivers get subprime loans. Sound like pretty standard American-style capitalism. –buonragazzo

Sound familiar?

Image credit: HikingArtist

$97 million doesn’t sound like much today, but it was a lot 15 years ago when Microsoft lost a lawsuit and was forced to reclassify it’s contractors as employees.

Back then Microsoft called them “permatemps.”

These days startups of all kinds are relying on freelancers to drive their growth, so many that a new term was coined.

They’re called 1099 contractors and the over-all approach is termed the 1099 economy.

“The most famous examples of 1099 companies are on-demand car providers like Uber and Lyft, but there are dozens of others: Homejoy, Handy, Postmates, Spoonrocket, TaskRabbit, DoorDash, Washio.”

The Feds, in the person of the IRS, are very particular when it comes to classifying employees as independent contractors or freelance.

Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work.

The financial control factors fall into the categories of:

• Significant investment
• Unreimbursed expenses
• Opportunity for profit or loss
• Services available to the market
• Method of payment

I’m a long way from being an expert, but after reading through the IRS information at least some of these companies are going to be in trouble.

Uber sets prices, discounts, doesn’t reimburse expenses and terminates drivers who also work for any of the competition.

That’s a lot of control in the light of the IRS rules.

Obviously, any company that can eliminate payroll, taxes and benefits is going to be super profitable—at least until they have to follow the rules like everybody else.

Flickr image credit: 401kcalculator.org