Do Start-Ups Have to Rely on Exploiting Independent Contractor Rules?
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I confess I don’t really understand why we need a real estate agent start-up company, but the answer to the above question is no, as this profile of Redfin demonstrates.
“I think Silicon Valley is still a pioneer of work force models — but the model we pioneered is the 1099 model,” Mr. Kelman said, referring to the tax form that independent contractors file. “This huge work force of laborers doesn’t get to participate in the wealth that was created.”
Mr. Kelman argues that full-time employees allow him to offer better customer service. Redfin gives its agents salaries, health benefits, 401(k) contributions and, for the most productive ones, Redfin stock, none of which is standard for contractors. Redfin currently employs more than 1,000 agents.
Now with his company on a stronger footing, Mr. Kelman says he believes his approach has been vindicated. He has even become an informal counselor to other tech entrepreneurs exploring a shift to employees from contractors.
But they are still the exception. The idea of building a large work force of full-time employees, outside of core disciplines like engineering, is not part of the ethos of most companies in today’s tech industry, observers who have studied the industry say.
“They don’t see job security and workplace benefits as something that’s valuable,” said Louis Hyman, an associate professor of labor relations, law and history at the ILR School of Cornell University and author of a forthcoming book on temporary labor in the United States. “What’s valuable is doing cool stuff and scaling up and making a better tomorrow.”
The use of independent contractors is about greed, not about making a better tomorrow, however Silicon Valley libertarians see it. I have no particular love for yellow cab companies. And I have no problem with competitors with those companies. I do have problem with labor exploitation. If Uber wants to classify its drivers as employees, pay them fairly, and provide them benefits, then all my objections to it are gone. But of course not doing that is the whole point of Uber’s existence. However, it does not have to be that way.