Last September, as California legislators considered Assembly Bill 5, a measure designed to limit which workers can be classified as independent contractors, companies like Uber and Lyft bemoaned a potential blow to their bottom lines—bottom lines that were, for the record, already suffering. But one gig economy CEO cheered the bill from the sidelines.
“We're big proponents of AB 5,” says Adam Roston, CEO of Bluecrew, a Chicago-based startup that matches workers with shifts at employers. Bluecrew is, in other words, a temp agency. It hires workers and vets them with background checks and in-person interviews. But from there, tech takes over. Roston candidly compares his business to gig economy apps, offering algorithmic job matching and work-when-you-want flexibility. The main difference: Bluecrew hires workers as W-2 employees, not contractors. “Uber and Lyft were providing something that people wanted and we believed that we could bring it to the W-2 worker environment,” Roston says.
Much remains uncertain after the passage of AB 5. While the law came into effect on January 1, legislators and judges are still deciding how some workers, such as writers, should be treated under the rules. Uber and Postmates filed a lawsuit saying lawmakers overstepped their authority. Also under debate is the future of the contractor workforce—whether the new rules will prompt some companies to ditch their workers, as the gig companies have suggested, or to hire them as employees, as labor advocates hope. A third option would put workers somewhere in between, as W-2 employees of a company like BlueCrew.
San Francisco saw an early glimpse of that trend in October, when the city required companies bidding for scooter operator licenses to hire W-2 employees for tasks like charging and repairs. Members of the local board of supervisors bristled upon discovering that all but one of their approved vendors planned to use staffing firms, rather than hire employees directly, singling out Bluecrew as an example. The board passed a nonbinding resolution asking the city transit agency to force scooter companies to hire employees directly.
Three of the four companies selected by the city—Lime, Uber, and Bird-owned Scoot—told WIRED they still use staffing agencies to hire W-2 employees. The fourth company, Ford-owned Spin, committed to hiring employees directly. Spin employees have since unionized with the Teamsters.
Roston notes that gig industries built using contractors, like scooter shares, remain a relatively small part of Bluecrew’s business. The company was founded in 2015, when the storm clouds of employee misclassification were still on the distant horizon, and has focused on more traditional temp jobs, like warehouse work. But Bluecrew potentially stands to benefit if AB 5-like laws spread elsewhere and more gig jobs shift away from contracting. Already at least one of its competitors, Wonolo, which pairs more than 300,000 workers with jobs in industries like warehouses and retail, has said it will stop listing California jobs. Rachel Kim, a company spokesperson, told WIRED that the company, which primarily uses contractors, did not want to be in a position of policing which positions were legal under the new law. Wonolo’s departure was earlier reported by the San Francisco Business Times.
Indeed, most “gig” work predates apps, says Susan Houseman, a labor economist at the Upjohn Institute. Companies have long used temp agencies to give themselves more flexibility, whether to manage seasonal demand or reduce the likelihood that workers organize. But she’s seen a surge in interest among both startups and traditional staffing agencies in algorithmic work assignment. Even Uber itself is getting into the business. In October the company launched a staffing platform called Uber Works. It expanded to Miami last month, offering food service jobs just in time for the winter vacation rush. Uber is working with staffing agencies, who do the actual hiring.
For workers, there’s obvious appeal in signing on for W-2 work, as opposed to contracting. Employees receive basic guarantees like a minimum wage and overtime pay. Roston highlights workers compensation as especially important in warehouse roles and tasks that involve driving. Per Obamacare rules, health benefits are also on the table, provided you work more than 30 hours per week. In all, companies using Bluecrew can expect to pay 30 to 50 percent more than the base labor cost.
Roston says the model works well for most employers, who save money by matching their labor force to demand, and he argues that it protects workers. “The fundamental thing Uber and Lyft have argued is that it takes away their flexibility, and the reality of that is there's nothing in the law that says you can't have any flexibility,” he says. After the passage of AB 5, “it looks a lot more obvious that W-2 is the way to go.”
Still, the picture is complicated. Temp work is typically part-time, meaning few workers are eligible for health benefits, and still fewer are in a financial position where they find paying for coverage attractive. Roston says Bluecrew workers average 25 hours per week. He declined to say how many people opt into health plans, noting he doesn’t see it as a priority for the kind of workers Bluecrew attracts. “When you're thinking about people living paycheck to paycheck, health insurance is a luxury,” he says.
Alex Rosenblat, an ethnographer at Data and Society who studies gig labor, says it’s good to see contractors moving into the realm of labor law and protections. But algorithmic management—whether it’s Uber assigning rides to drivers or retailers doling out shifts through automated scheduling—often keeps workers in the dark, she says, giving them less say over how and when they work. That sort of precarity isn’t new for most workers—the idea of workplace stability has historically been “a myth” for all but a privileged class of worker, she notes. Even if gig economy labor shifts away from contracting, employers likely will look to retain the flexibility through temping and other arrangements.
Bluecrew says its job-matching algorithm relies on a variety of inputs, including responses to behavioral questions, prior experience, proximity, and performance in similar roles. That mix of inputs could prove hard to parse for bias, and harder to argue with if you’re unhappy with the jobs you receive. Roston says Bluecrew hasn’t seen complaints about how the system surfaces jobs, and he notes that the company doesn’t penalize workers for turning down gigs. He says many workers find full-time work through the app, whether through a single company or across multiple gigs.
Still, the reality for many on-demand workers, says Houseman, is that they’re using their shifts to supplement other work, which itself is likely unstable—another gig job or a job with automated scheduling. Data from other staffing firms suggests many temp workers are taking short-term gigs. “It arguably relieves pressure on the market to offer more stable schedules and incomes to workers,” Houseman says.
That trend is unlikely to let up, she adds. “The gig model has been highly successful and has grown to use W-2 workers,” she says. “I don’t buy the notion that AB 5 will sink this.” Even if Uber doesn’t get its way in this fight, the economy will likely continue to look a lot more like Uber.