First-mile delivery startup Shyp said Wednesday that it will hire its contract workers to part-time or full-time positions.
The San Francisco-based company uses couriers to pick up packages from offices and homes to prepare them for shipment for $5 plus shipping costs. Shyp operates in San Francisco, Los Angeles, Miami, New York and soon Chicago.
The move follows a California Labor Commission ruling that an Uber driver was treated as an employee rather than as a contractor and so was entitled to reimbursement of more than $4,000 in expenses.
While the employee-contractor issue is getting a lot of attention recently because of the Uber decision, federal and state agencies have been scrutinizing these kinds of workplace setups for years, and have long been cracking down on companies that employ freelancers but set expectations that should be reserved for employees.
Shyp apparently has done its due diligence here, and may have decided that the added costs that come with hiring people outright — which Shyp says will include workers’ compensation insurance, federal withholding for Social Security, benefits, and couriers’ expenses — is worth the ability to set the kinds of parameters and expectations a company needs to maintain control of its performance and growth.
Instacart recently made a similar announcement, and many other delivery companies already employ their workers rather than take them on as contractors.
“This is an operational decision based on our interest in owning the entire, end-to-end Shyp experience,” Shyp CEO Kevin Gibbon wrote in a blog post. “It is not in response to recent lawsuits against other technology companies.”