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> Maybe their business model just depended on exploiting cheap labor? How do you say that they were exploting cheap labor, when they claim that their business

> Maybe their business model just depended on exploiting cheap labor? How do you say that they were exploting cheap labor, when they claim that their business model enabled them to pay their caregivers 25% higher than industry average. > The 1099 independent contractor model, below, is very attractive as it removes excess cost and restrictions for employers. We were charging clients 30–40% less than industry average, and we were paying caregivers 25% higher than industry average. Both sides were winning. To me, it looks more like the Union Bosses at SEIU made a calculated -- and eventually successful - move to pull strings and get laws passed that would stifle HomeHero as they seem to be disrupting that Industry the same way Uber or AirBnB distrupted a different industry. > On Oct 15th 2015, the entire home care industry got rocked. The Department of Labor upheld a federal ruling stating that over 2 million home care workers would qualify for the Fair Labor Standards Act —essentially requiring all home care workers to be treated as W-2 employees and receive overtime benefits. This was viewed as a huge win by the controversial and outspoken labor union SEIU, as well as the “Fight for $15” crowd in California. Not saying it's the right (or ethical) thing to do, but if they'd had the funds, they should've gotten in front of that Act (before it got signed into law) and poured resources -- lobbyists, ads -- into killing it. They could've also asked the people receiving the service to write to their reps / senators / congressmen stating the Bill / Act would increase costs to them. Just like Uber and Lyft have done so in the past. Last year, when state officials tried to roll out a regulation the company didn’t like, Uber emailed their drivers and customers telling them to oppose it. The response flooded regulators’ inboxes and the state backed down. > In just the last month, the ride-hailing giants have secured a string of victories at the Capitol, killing or delaying legislation and regulations they didn't like and shepherding in new rules favorable to the industry. SourceL http://www.latimes.com/politics/la-pol-sac-why-uber-is-winning-in-california-20160507-snap-htmlstory.html http://www.latimes.com/politics/la-pol-sac-why-uber-is-winni...

gnicholas 9y ago
> How do you say that they were exploiting cheap labor, when they claim that their business model enabled them to pay their caregivers 25% higher than industry average. When I read this figure I wondered if they're looking at it on a pre-tax basis. 1099 workers have to pay employment taxes that W-2 workers do not shoulder (because they are paid by the employer). This wouldn't add up to 25% — probably more like 15%. So while I don't think they were "exploiting cheap labor", I think it's possible that the win-win scenario they claim wasn't as big a win for workers as it might seem.
- OmarIsmail 9y ago
  1099 workers also get to expense a lot more stuff from their taxes than employees (I think... please correct me if I'm wrong).
  - justboxing 9y ago
    > 1099 workers also get to expense a lot more stuff from their taxes than employees Correct. As of 2012, deductible expenses can include health insurance premiums, office supplies, auto and travel expenses, a portion of home rent or mortgage payments, and a portion of utility costs. IANAL/B yes, the HomeHero 1099 caregivers could've reduced their taxable income by rightfully claiming auto and travel expenses to and from the client, and if they were using their residence to do extra work for client (like research or preparing food etc, then they can also deduct business / home-office expenses. Related Reading: https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Top-Tax-Write-offs-for-the-Self-Employed-/INF18049.html https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employme...
  - gnicholas 9y ago
    Sure, that's because they're unlikely to be reimbursed, compared to employees. I believe that employees can get reimbursed for expenses also, but only after the "unreimbursed expenses" exceed a percentage of adjusted gross income. I think it's a 5% threshold, but I haven't checked in years.

gnicholas 9y ago

> How do you say that they were exploiting cheap labor, when they claim that their business model enabled them to pay their caregivers 25% higher than industry average. When I read this figure I wondered if they're looking at it on a pre-tax basis. 1099 workers have to pay employment taxes that W-2 workers do not shoulder (because they are paid by the employer). This wouldn't add up to 25% — probably more like 15%. So while I don't think they were "exploiting cheap labor", I think it's possible that the win-win scenario they claim wasn't as big a win for workers as it might seem.

OmarIsmail 9y ago
1099 workers also get to expense a lot more stuff from their taxes than employees (I think... please correct me if I'm wrong).
- justboxing 9y ago
  > 1099 workers also get to expense a lot more stuff from their taxes than employees Correct. As of 2012, deductible expenses can include health insurance premiums, office supplies, auto and travel expenses, a portion of home rent or mortgage payments, and a portion of utility costs. IANAL/B yes, the HomeHero 1099 caregivers could've reduced their taxable income by rightfully claiming auto and travel expenses to and from the client, and if they were using their residence to do extra work for client (like research or preparing food etc, then they can also deduct business / home-office expenses. Related Reading: https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Top-Tax-Write-offs-for-the-Self-Employed-/INF18049.html https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employme...
- gnicholas 9y ago
  Sure, that's because they're unlikely to be reimbursed, compared to employees. I believe that employees can get reimbursed for expenses also, but only after the "unreimbursed expenses" exceed a percentage of adjusted gross income. I think it's a 5% threshold, but I haven't checked in years.