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Marketplace

Homejoy shuts its doors

Molly Wood and James Perla Jul 22, 2015
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At the end of July, the on-demand cleaning start-up Homejoy will shut down in the wake of lawsuits challenging the company’s classification of workers as contractors rather than employees. It’s a familiar story that has affected companies like Uber, Lyft, and Handy.

Click the media player above to hear Marketplace’s Molly Wood talk with Christopher Koopman, research fellow at the Mercatus Center at George Mason University, about how this case signals to a change in the sharing economy. 

According to Koopman, the sharing economy’s growth in recent years “has been driven by the fact that this isn’t a traditional business model and it isn’t an employer and employee relationship.” Yet, this is precisely the point of contention for the numerous lawsuits levied against Homejoy and others.

Companies in the sharing economy toe a dubious line between online platform, social network, and employer. Koopman maintains that “saying they’re no longer a platform connecting people but in fact an employer could really spell doom for a lot of these companies like we’re seeing with Homejoy.”

In the wake of Google snatching up Homejoy’s tech and product team, Koopman sees the future as especially bleak for small outfits if these organizations are deemed employers: “Only the largest and most deep pocketed firms are going to be the ones that are able to weather that storm. So you’ll see firms like Uber, Lyft and the other really large players in the sharing economy likely survive. But this could be extremely difficult for the small startups.”

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