I always wondered about companies like Honor. Their initial pitch was basically all existing home care companies are still in the stone ages, very inefficient, still using paper (typical SV storyline).
The reality is there are a few really well built SaaS companies (Clearcare is the one we use) that can do all the automated scheduling, compliance, billing, caregiver ratings, family portal, etc.
Elder care is a really tough business. Seniors are extremely susceptible to abuse and all kinds of things often go wrong. Dispatching caregivers through an app sounds like a nightmare.
Seems from the article these guys are beginning to learn the ropes of the business. I hope they figure it out. The growing number of seniors is going to be an incredible challenge.
Other things like triple diapering to not have to change the elder more than 1x per shift and massive yeast infections underneath the breasts due to lack of bathing and not changing clothes.
The worst types of places I have seen are the "board and care" facilities for mentally disabled adults run by Russians in the east bay. There were a few rotted/unchanged/septic g-tubes that were absolutely horrific. It's been years and that specific smell of a rotting gtube is still burned into my brain.
There was also this case in the East Bay where the facility abruptly shut down and stopped paying their workers and so all the caregiving staff just left except for the janitor and the cook who stayed on and cared for the seniors for several days until the fire department and sheriff finally responded:
http://www.npr.org/2014/11/21/365433685/if-we-left-they-woul... <--- Honor should give those two dudes who stayed jobs!
It's a very challenging industry.
That said, these workers need to be paid more.
I took care of an old friend. I would have taken care of him for free, but since I was offered minimum wage; I took it.
I think what bother me most were the people who used the system to get out of taking care of a parent, or family member. I live among very wealthy individuals. They are very cheap when it comes to take care of dad, or mom.
Yes, they have busy lives. What am I saying--usually one sits home figuring out the color palate for the third bathroom remodel--that, "just isn't right?".
They are shocked to find what Home Heath Care individuals are paid, but go along with the program. "That life?". When they are offered a someone qualified, and charges a living wage for the county; they quietly go with the cheapest option. If the senior is still all there, they always hire the best help. The problem is when it's up to the kids. They cheap it out. I just don't get it.
I took care of my friend, until I opened that door, and he was dead on his cheap, rented hospital bed. (Medical rentals charged $200/month for a bed most of you would sit on.)
Ah, this is putting me in a bad mood. RIP RB. We had some great times! Those river trips were legendary. I miss the fun we had. I even miss the weekly phone calls asking about the new sound your car is making. He was my best friend.
Totally agree about the wealthy being very cheap about taking care of their parents! I know a "California super lawyer" who lives in a mansion in Belvedere who was recently kvetching about how his father's medication copays went up a total of an extra $4 per month. He honestly complained to me that because of this $4 increase his father wouldn't be able to EAT any more. It took everything I had not to be like, "I know you drive a Tesla and live in an $8 million dollar mansion so I think you can swing dad's extra copays!" He wanted me to try and find his dad government assistance copay relief, which is a process I'll happily help out with for actually low income patients.
I think a lot of other cultures (Asian, Jewish) do eldercare a lot better than we do. To this day, if someone asks me for a recommendation of a place to put mom and dad, I always recommend the Jewish Home for the Aged, they are fantastic and you don't have to be Jewish to live there. They just have a 3+ year waiting list because everybody knows they are the best in the industry.
I'm sorry about your friend. Sounds like you were a great friend and caregiver to him.
Perhaps giving their workers full time employment and equity will help Honor grow market share at a time when it's harder for other firms to staff.
Uber's attempt to block class action suits and force arbitration failed. US District Court Judge Edward Chen rejected the validity of the arbitration clause. He called the clause "both procedurally and substantively unconscionable."
Uber is going to lose this.
Homejoy already lost, and shut down. Postmates, Shyp, Instacart, Lyft, and Washio are being sued too, over the same issue. Labor law is pretty clear on this.
It's not clear to me what distinguishes Uber drivers from, say, Airbnb hosts, who are clearly not employees.
(There are factors that point towards Uber workers being employees, but no single factor is determinative.)
The Homejob article actually focusses on the leakage aspects. I think their business model was doomed regardless of how they classified their employees.
If Uber/Lyft were like AirBnB, it would be providing you a car with keys with the occasional optional driver.
With AirBnB, getting "service" beyond the lodging is optional (and less common than it used to be).
However, Uber/Lyft always provides the driver. The fact that the driver is an inseparable part of the service is what is eventually going to cause them to lose.
In the US, I think it's pretty clear that they are employees.
"Does Uber control how the worker does his or her job?" - Yep.
"Are the business aspects controlled by the payer?" - Yes, almost entirely.
Even if they passed that, there's a special category for workers called "Statutory Employees", where some contractors are treated as employees even if they don't meet the normal check, which includes :
"The service contract states that all services are to be provided by them personally" - Yep. Uber drivers can't accept a route for someone else, or vise-versa
"The services are performed on a continuing basis for the same payer." - Yep. Uber drivers routinely drive for Uber.
If the court respects the current rules as written, I don't see any way Uber can claim their employees are independent contractors.
That section you quoted applies if someone is in one of the four categories for a statutory employee. It's to decide whether to withhold Medicare and social security taxes from those already determined to be statutory employees.
The closes of the four categories is the first (beverage or food delivery driver), but it doesn't fit Uber.
Whether or not someone can subcontract is generally an important factor in employee contractor, but it's not necessarily determinative. In a variety of personal service cases you wouldn't want your contractor switching with someone else. However, you wouldn't mind if they hired others to handle the non-personal aspects of their business. Similarly, Uber doesn't care if drivers subcontract out cleaning and maintenance of their cars and other non-driving aspects.
Whereas they would care if "Steve" is in fact "John", because the service depends on reviews. That's similar to, say, Upwork, where if I hire "Steve" I want to know I'm talking to Steve. I don't care if he subcontracts, but at least part of the situation must be handled by him, because he's the one with reviews.
Meanwhile, you quoted a line from the financial services section, business control. But take a look at the factors actually listed in that section:
As far as I understand it, Uber drivers have significant investment (their car), they have unreimbursed expenses (car maintenance, food while driving, etc.), they can profit and lose money (if they are no good and their expenses exceed earnings), their services are available in the market (they can drive for others), and payment is per trip rather than an hourly salary (this last one is the most ambiguous, there are likely special considerations for the transport market).
I really don't think it's as clear cut as you're making it out to be.
I wouldn't make that bet. Here's why.
There are 2 paths forward for companies like Uber:
Option 1: Keep all of their "control" rules such as non-negotiated pricing, etc and then be forced by the government to convert all drivers from contractors to employees. Government to Uber basically boils down to: "hey, you CONTROL the drivers too much so you must pay the price by becoming their employer."
Option 2: Tweak some of their control rules so they are closer to the model of eBay's sellers and Apple App Store and iTunes musicians. This avoids the reclassification of drivers to employees.
#2 seems to be a much more realistic option. Currently, ebay's sellers are not employees. Also, the programmers submitting iOS apps and musicians that upload music to Apple iTunes are not employees either. There also doesn't seem to be any political pressure or worker's rights advocates pushing for reclassifying them either.
#1 does not seem financially possible unless Uber drastically raises the fares to pay minimum wages, extra employee taxes and maintain profit margins to provide returns on the capital invested.
Which seems more realistic? Raising fares to become a big employer of drivers like UPS, or relaxing the code of conduct rules for drivers so they are perceived more like eBay/Apple?
Specifically, Uber would have to allow drivers to set their own rates.
From an end user's perspective, that's a big shift from where we are today. The vast majority of people taking Uber/Lyft never took Lyft when you set your own "tip." There is a reason Lyft switched: users hate "tipping", drivers sometimes get screwed, and it is confusing. Humans aren't known for their rational purchasing decisions.
On the other hand, letting drivers set rates now requires users to pay attention whenever they call a car. Rates fluctuate rapidly with wild variation—think how much we love buying airline tickets—so drivers who want to make a living are now in effect playing the stock market.
Maybe that's a good thing, to leave it to the market. Maybe it isn't. Either way, it is a large change in the status quo.
They aren't the bad guys here. The taxi unions, which stifled innovation, forced out all competition with the medallion system, and created a monopoly, which resulted in terrible, overpriced, and outdated systems only hurt the consumer.
Home care givers are a special case under US tax code that requires them to be employees . As honorable (yuk yuk) as it is that Honor is making them employees, they would have the worst case out of all the on-demand companies.
Uber, for example, can point to nearly all taxi drivers being independent contractors. Honor would have to point to other home care individuals, who are either employees of a staffing agency or employees of the family (note: there are surely families who aren't complying).
Based on IRS code + the reasons brought against Uber/etc, Honor would have a very low chance of winning the lawsuit.
Overall, I do think making on-demand workers employees is a potentially smart move to differentiate. Having the best workers will be the key to winning longer term, because these are service companies enabled by tech, not tech companies. Code has no feelings; people do. Right now Uber is winning ridesharing because it has the most volume and hence most money making opportunities for drivers; but Lyft is putting up a fight almost purely because they treat their drivers better.
As far as the content goes though, I think this is fantastic. Elder care is a role that can be _incredibly_ challenging. It's nice to see folks getting the respect they deserve.
On an unrelated note, it's interesting to see that the decision to do this was less related to the current contract vs full-time debate and more related to Honor's specific industry and business model.
It's the same thing in the restaurant world with tipping. Danny Meyer can assert that he's eliminating tipping because he can more fairly compensate employees, and I believe that's part of it, but the motivating factor is certainly the increase in minimum wage and its impact on the economics of the restaurants.
Same issue Homejoy had, but in this case, it's even more important who works for you.