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Codependent Contracting: Couriers Demand App Company Accountability 

Wednesday, Apr 22 2015
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Some of the names of people in this story were changed to shield their identities from the companies they work for.

It's last call for frozen yogurt on a warm, March evening, and Loving Cup, the hand-churned frozen yogurt parlor at Union and Polk streets, is packed. Evelyn and I had raced over here after delivering a mac and cheese and "decadent toast" — practically a bargain at $3.95 — to a young woman in Pacific Heights. Now we're waiting to ferry a single order of chocolate froyo with black bottom fudge, crunchy peanut butter, and pretzels to a man in the Marina.

Everyone in this tiny storefront is playing the San Francisco waiting game — staring at their smartphones, staring at their neighbor's smartphones. But for Evelyn, who is pissed that her frozen yogurt order wasn't placed in advance, every minute that ticks away has a price. This job will probably only be worth $5 or $6, and the longer it takes, the worse that figure looks.

The only other person of color in the store (Evelyn is African-American) is a young Asian woman who appears to be similarly agitated about the wait. She turns and eyes Evelyn's phone.

"Postmates?" she asks.

"Yeah, Postmates," Evelyn responds.

The woman smiles and makes a joke, taking credit for the car parked illegally right outside the front door. Evelyn and I laugh. We're parked illegally in the spot next to hers.

It takes a half hour to get our order, and then we're delayed further by a brief contretemps with an angry delivery driver for the Thai restaurant next store, whose reserved parking spot Evelyn took. The driver has double parked in front of Evelyn's Prius, but she climbs through the passenger side, leans on the horn, exchanges rude gestures and profanity with guy, and wins a glaring contest. We speed off to the Marina and make the drop.

As we walk back to the car, Evelyn checks her phone. The commission for the frozen yogurt job, which has taken almost an hour, is $6.60. "You better appreciate that ice cream," she mutters.

Two months ago, a bum job would have been no big deal, because Evelyn was pulling in $25 an hour working for Postmates. But an app upgrade in February turned the Postmates system on its head and left workers scrambling — or crawling over the emergency brake, in Evelyn's case — to make ends meet.

Welcome to the world of codependent contracting, where a wage cut is recast as a software upgrade.

Postmates is the kind of startup that populates the dreams of a thousand weary brows in SOMA's tech hostels. Launched in 2011, it's a leading competitor in the growing on-demand economy alongside similar companies like Amazon Prime Now (same-day delivery of Amazon orders), WunWun (whatever you want, within an hour), Caviar (meal delivery from select restaurants), and Instacart (groceries brought to your door). If you live in a Postmates market — a growing list of cities including San Francisco, New York, Washington D.C., Los Angeles, Seattle, and Boston — you can order any item from a restaurant or store and expect it to be delivered within one hour.

According to TechCrunch, Postmates has raised $58 million in venture capital, including $35 million from Spark Capital at the end of February, and is valued at between $150 million and $200 million. In March, co-founder Bastian Lehmann tweeted a graph of Postmates' growth that helps explain that high valuation: The company is "scaling." It took Postmates 116 weeks (two years and three months) to reach 500,000 deliveries, but the next half-million deliveries took just 20 weeks. The next half-million deliveries after that were completed in just 10 weeks. With new markets opening all the time, and a new partnership in the works to deliver Starbucks coffee, Postmates is hoping to corner the market for on-demand delivery to professional urbanites.

Powering Postmates' rapid expansion are people like Evelyn, who make up the supply side of this on-demand gig economy: the workers. These are the men and women racing around major metropolitan areas on cars, bikes, and scooters at all hours, catering to people with 9-to-5 jobs and enough disposable income to pay a delivery fee on top of the $7.25 cost of an artisanal frozen yogurt. Those workers are part of the growing legion of freelancers in the United States — 53 million strong, or 34 percent of the entire workforce, according to a study commissioned by the Freelancer's Union in 2014 — who are patching together a living with a delivery here and a four-hour shift there, dispatched by smartphone from 21st-century digital hiring halls.

Postmates and its ilk may be raking in venture capital because they promise to change the way their customers live, but the companies have already changed the way people work. Apps like Postmates are putting paid work into the hands of anyone (well, anyone with a car, bike, or scooter who lives in a major city and can pass a background test). Once a potential worker has gone through a quick "onboarding" process — usually just an hour or two seminar that teaches workers how to interact with the app — they can work as much or as little as they please.

There's no obvious downside for the companies to make work easily available to as many people as want it, because the companies are not paying couriers as employees. Instead, the workers sign on as independent contractors, responsible for their own schedules, expenses, health insurance, and taxes. Postmates has about 10,000 couriers working nationwide (the company refers to its couriers as "Postmates"), all classified as independent contractors. Uber, which pioneered the independent contractor model for tech startups, had about 160,000 drivers using its platform in December. According to a study of the so-called "sharing economy" by PriceWaterhouseCoopers, this kind of online staffing is projected to grow 37 percent by 2025.

Well, there's no obvious downside yet. Shannon Liss-Riordan, a Boston labor lawyer, has filed a series of class-action lawsuits challenging various tech companies' classification of frontline workers as independent contractors. Liss-Riordan started with the ride-hail companies Uber and Lyft, but recently filed similar suits against Caviar, Homejoy (which provides home-cleaning services), and, on March 19, Postmates.

"It is clear that the way that work is organized in the United States is undergoing a real paradigm shift from longterm, stable jobs to these one-time, part-time, maybe only a-few-hours-long kind of jobs that a lot of people call the gig economy," says Rebecca Smith, deputy director of the National Employment Law Project. "In the last century, we established minimum wages, overtime pay, protection from discrimination, and the federally protected right to organize, and we tied all those rights to the employment relationship. So if workers are working outside that relationship, they lose all those rights, and they gain this additional burden as 1099 employees who have to pay self-employment taxes on top of their income taxes."

By changing the nature of work, these apps are changing the lives of workers. Any little alteration to the code of Postmates or Uber or Instacart reverberates out into the real-life experience of workers like Evelyn. The question for Evelyn, and other workers like her, is whether they can gain enough power to make changes in the apps. Will the coders listen to the coded? Or is the independent contractor economy lead to a codependent contracting relationship, where the little guys with their smartphones are stuck in a cycle of abuse with their cash-rich task masters?

Evelyn could be a poster child for the gig economy. A self-described "Girl Friday," she says that she always has at least three or four jobs going at once. Right now, in addition to driving for Postmates most evenings from about 6 p.m. until 2 a.m., the 35-year-old is working part time as a nanny, part time as a personal assistant for a lawyer, and picking up occasional jobs on Wonolo, an app that connects businesses with temps for one-off gigs. She fills in with her friend's dog-walking business sometimes, other times with another friend's daycare.

"I just refuse to go back to a nine to five job," Evelyn says. "I've been offered. To me, a full-time job needs to be paying me $60,000 to $70,000 a year. A full-time job paying $15 an hour is a joke. I'd rather just work odd jobs and pay taxes when I get ready."

Evelyn signed up for Postmates in January, tempted by the company's promise of earnings of up to $25 an hour and the ability to set her own hours. She's planning to go back to school in the fall, and wanted something she could keep doing on the side once her classes begin. She lives about 30 miles away from San Francisco, in Concord, but makes the drive and pays the tolls each day because San Franciscans love Postmates and work in the city is plentiful.

"I could make $25 an hour no matter what time of day I worked," she says of her first few months working for the company.

Evelyn's partner also has felt the allure of the gig economy. He has a full-time job as an evening-shift grocery-store security guard that pays $10 an hour, but he's started working for various startup apps as well. Right now he's driving for Uber, Lyft, and Caviar, and he's planning to attend an onboarding session for Washio (a pick-up/drop-off laundry service that refers to its drivers as "ninjas"). The money he's earning is good enough that he's been cutting back on his hours working security.

The couple share a car (they bought a new Prius in January and have already put 11,000 miles on it), so they have to trade off hours working "on the platforms," as Evelyn calls it. Right now they're each bringing in about $500 a week, but Evelyn hopes they can push that higher, possibly by buying a second car so they can both work peak hours.

"It's not great," Evelyn says, "but it's damn good for not having to punch a clock."

When Evelyn is working for Postmates, she's plugged in to several of the powerful algorithms that increasingly direct our modern world. The Postmates algorithm collects orders from customers and dispatches them out to the various couriers who are signed in on the platform. Priority for assignments is based on a courier's location and whether he or she is signed up for that particular hour.

Once she accepts a job, Evelyn receives the restaurant or store location and quickly copies it over to Waze to find out her route. As she drives, she's checking out the order total (the larger the order, the better the chance for a good tip), keeping an eye on whether Postmates is placing the order by phone or internet (she wastes less time waiting at a restaurant if the order is placed in advance), and speculating about how big a commission she'll receive based on the route she's following on Waze. (Drivers get 80 percent of the delivery fee charged by Postmates as commission, and it's calculated by the distance the courier has to drive. The company also charges a 9 percent service fee, but that goes entirely to Postmates. If there's a tip, the courier gets to keep all of it.)

It's probably partly due to Evelyn's personality, and partly due to the line of work she's chosen, but when talking with her, you feel as though she's internalized some of the algorithms that dictate her work. She is always calculating something. As we drive around San Francisco, she updates me every 15 minutes or so with the total amount of money she's made so far, breaking it down into an hourly rate, and comparing it to other dates and times she's worked. Her conversation is littered with percentages, rates, and statistics that she's compiled from her experience with Postmates.

So when Postmates made a change to its customer interface in February, Evelyn noticed it and calculated its effect right away. "An instant drop — 30 to 50 percent. It was a huge blow," she says. "I was like, Oh God, I have to work twice as long now to make the same amount of money."

News of the change to Postmates' system came, of course, electronically. On Feb. 20, the company's customers received an email with exciting news: "You asked, we listened. After careful consideration, we've improved the checkout process to ensure faster drop-offs and less friction. Starting today, tipping and rating your Postmate takes place on your device at your discretion.... From now on, check yourself out." The email included a photograph of the new Postmates checkout interface on an iPhone. It displayed tip options as "No Tip/$2/$4/$6," with an option to type in a higher amount.

Couriers had received warning of these changes the night before, in an email from Postmates Chief Operating Officer Peter Hazlehurst that promised the change was good: "You can say goodbye to awkward iPhone handoffs and explaining the checkout process to customers. It's all about speed and efficiency."

For couriers, two separate and important issues were involved in this update. Previously, customers had to fill out a checkout screen on the courier's smartphone — OKing their order and adding a tip if they chose. But with checkout moved to the customer's phone, the only interaction at the door became the handing off of the delivery items. There was less time for couriers to humanize themselves and less interpersonal pressure on the customer to acknowledge the courier's work with a tip. The new tip screen also changed the tip options from percentages (5%/10%/15%) to dollar amounts, undermining the chances that a big-ticket order would result in a proportionally large tip.

For Daniel, these changes were devastating. A 34-year old artist who lives in Oakland and works in San Francisco, delivering for Postmates on his scooter has been his main source of income for about six months.

"I used to tell people it was like serving tables on the street," Daniel says by phone. His cheerful conversational style is interrupted frequently by his anxiety: He is very concerned that if Postmates can identify him in this story, he will lose his livelihood. He loved working for Postmates — riding his scooter around the city, chatting with vendors, setting his hours around his creative endeavors — and dreamed of traveling across the country, working Postmates in the cities he passed through to pay his way.

But under the new system, Daniel's earnings fell by about a third. "A lot of people will just say, 'Oh thank you,' and they'll take their merchandise, they'll take their burritos or whatever, and they'll just turn around and go back in the door," he says. "There's no interaction. It seemed more professional when you showed the order to them and they had to sign it. There was kind of a community feeling, having this brief but pivotal exchange. It meant something. Now it's just like, 'I'm going to get something dropped off to me, see ya!'"

Where once Daniel could check his earnings and see a line of significant tips, now, he says, "I have more zeros than anything."

Other Postmates felt the pinch as well. Evelyn says her earnings dropped 30 to 50 percent. Jane, a 39-year-old Bay Area courier who splits her time between Instacart and Postmates, said that prior to the change, tips made up 60 percent of her earnings from Postmates. Afterwards, they fell to just 15 percent. She tracks her earnings carefully. "I'm totally into numbers," Jane says. "Now it's like there's no point."

Sandra, a 33-year-old community organizer who signed up with Postmates in January to tide her over between jobs, found herself making just $11 an hour in the East Bay — less than the Oakland minimum wage.

Couriers around the country started reporting the same experiences on social media. A meme posted on Postmates' corporate Facebook page announcing the company's "Check Yourself Out" change elicited a flood of angry comments from couriers:

• Last night I made 10$ an hour not counting tax and gas money which comes out to under minimum wage thanks to this update.

• Worked all night yesterday. For the first time ever, not a single dollar in tips. I guess it is time to find something else.

• Postmates drivers use their own cars and pay for gas. Delivery fees just about cover that. Now with barely any tips, this job is becoming a fool's errand! Please be humane. Drivers need to pay rent and eat, too.

• I say we strike, I wonder how much money postmates would lose if we ALL took a Saturday off in March???

Within a few hours, the angry comments (more of which you can see in the sidebars accompanying this story) were deleted.

In another time and under another employment structure, Postmates workers might have been able to bargain collectively over changes in working conditions that materially impacted their compensation. But in the world of codependent contracting, the smartphone has replaced the shop floor, and workers are unlikely to ever meet another co-worker, let alone organize a rebellion together.

Shannon Liss-Riordan is attempting to turn back the clock with her series of class-action lawsuits. The test cases are the suits she's filed against Uber and Lyft that argue the drivers are direct employees who should be entitled to reimbursements for expenses such as gas, insurance, and car maintenance. If juries agree that drivers for ride-hail companies are more employee than small-business owner, Uber and Lyft also could be on the hook for other responsibilities, including minimum wage, overtime, worker's compensation, and unemployment insurance.

The Uber and Lyft cases are making their way through the courts, with trials possible next year. They will likely set the precedent for Liss-Riordan's other suits against Postmates, Caviar, and Homejoy.

"The cases are all pretty similar legally as well as factually," Liss-Riordan says. "What we have here are a number of companies that are shifting the cost of running a business to their workers. Like Uber and Lyft and a number of other companies that have started in recent years that provide their services through a smartphone application, they seem to think that offering their services to customers through this use of technology somehow gets them around the employment rules, but it doesn't."

In California, the courts have set out a multi-factor test for determining whether a worker is an employee or an independent contractor. According to Liss-Riordan, "The most important test is control: how much control the company has over the workers." Other factors include whether the employer can fire workers, and whether the type of service the worker is performing is a "core function" of the company's business.

The legal precedent for the multi-factor test comes from a workplace that couldn't be more different from today's legion of smartphone directed contractors: a pickle farm. The 1989 case S.G. Borello & Sons, Inc. vs. Department of Industrial Relations involved a "sharefarmer" agreement between the grower (Borello) and the farmworkers who harvested the crop. The grower claimed that the farmworkers were independent contractors because, "They manage their own labor, share the profit or loss from the crop, and agree in writing that they are not employees." The court found against that argument: "[The grower] simply chooses to accomplish one integrated step in the production of one such crop by means of worker incentives rather than direct supervision.... In no practical sense are the 'sharefarmers' entrepreneurs operating independent businesses for their own accounts."

Postmates has yet to respond to the class-action lawsuit, but the grower's arguments seem similar to the defenses of Uber and Lyft in their suits. Since couriers for Postmates sign up for shifts to work in advance (couriers can work if they're not signed up for a shift, but they receive priority for jobs if they're on the schedule), Liss-Riordan thinks the case for an employer-employee relationship is even stronger.

If the lawsuits result in reclassification of gig economy workers as direct employees, organizing unions would be a possibility. (Courier organizing isn't unheard of. In the late 1990s, bike messengers in San Francisco affiliated with the International Longshore and Warehouse Union and won contracts with some companies.) Another possibility is regulations that would give contractors more rights.

Rebecca Smith, of NELP, compares the employers of the new gig economy to old-fashioned labor brokers. Companies like Postmates and Uber, she says, act as though they are different from old-style businesses simply because the new companies operate online. "But in fact they are operating just like farm labor contractors and garment jobbers and day labor centers of old," Smith says. Different states enacted legislation to provide various job protections to those earlier types of workers, based on the particular conditions of the industry, she says, and it would be possible to act similarly toward the new online labor brokers.

"In each of these industries, you could regulate the labor brokers by requiring them to register and to pay a business license and to extend worker's compensation and minimum wage and protection against discrimination," Smith says. "You could also add, industry by industry, rules that respond to the particular needs of the workers in that industry."

Legal and policy changes may be on the horizon for the workers of the gig economy, but workers like Daniel don't have time to wait. He's living "hand to mouth" with "bottom-of-the-barrel health care with a huge deductible," hoping that customers remember to tip and that cars look where they're going. (Daniel has already experienced two scary incidents on his scooter, once getting clipped by a car door opening into the street, and another getting swiped when he was making a left turn. In the second case, one of the other cars involved was another Postmates driver.)

Postmates couriers hit by the new policy had to take action with the tools at hand, and, interestingly, Postmates created an opening for a mini-rebellion with its own "community"-building policies. Unlike other gig economy employers, where workers have no way to contact each other or even find out the names of other people working on the platform, Postmates actually helps couriers connect with each other. The company has created invite-only Facebook groups for couriers within individual markets, and also hosts in-person meetups. "We use Facebook groups to foster the community," April Conyers, a spokesperson for Postmates wrote in an email. "It is a place where couriers can give tips and points as well as ask questions."

It was in those groups that couriers self-organized. In the days after Postmates implemented its changes to the checkout system, couriers flooded the private groups with complaints about the new system — and just as quickly saw those comments deleted, according to several group members who expressed frustration at the "censorship." But since those couriers now knew each other's online identities, they were able to form their own Facebook group, away from the prying eyes of corporate moderators. Conyers declined to respond to a question from SF Weekly about the deletion of comments on the company's public and private Facebook pages.

The couriers' new group was also by invitation only, but it spread quickly as workers added each other, and now boasts more than 900 members. In the private forum, couriers shared screenshots of their interactions with managers, encouraged each other to email their grievances to Postmates' chief operating officer, and swapped tips about applying for other delivery apps that promise higher remuneration.

In an email to couriers on March 3, Postmates acknowledged that the new system had "generated mixed reactions from the fleet," saying, "On average tips are only down around $1-1.75 per delivery, and some deliveries receive an even higher tip than with the old system." The email announced that percentage tipping was returning to New York City. By March 20, percentage tipping was back in San Francisco as well, according to a Postmates email, now with the options reading "10%/15%/20%."

"Thanks for being patient as we worked out the best checkout process for customers and Postmates," the email update read. "This one's here to stay."

Postmates did not agree to be interviewed for this story by phone or in person. In response to a detailed list of questions about the changes to the checkout system, plans to implement a new compensation structure that will account for the time couriers wait for orders, and other details regarding the company's interactions with its courier fleet, Conyers wrote the following:

"I can't provide answers to all of your questions, but I did want to say that we test a lot of different things in the app to make sure we provide the best experience for both couriers and customers alike. After we roll out changes to either the courier or customer facing apps, we always look at the data to ensure these changes are beneficial to our fleet — our goal is always to optimize courier earnings. That is why we moved tipping to the customer phone and why we iterated on tipping a couple of different times. In this example, we ended up switching tipping back to percentages because we listened to what the fleet was saying, plus the data showed it was the best outcome for Postmates. We are very transparent with our couriers and always welcome their feedback."

Conyers declined to comment on the pending lawsuit.

Sandra, the community organizer who is between jobs, began working for Caviar and Postmates simultaneously. She stuck it out with Postmates for a few weeks after the checkout change, but now is working for Caviar only, and says she is making closer to $20 an hour.

Sandra thinks Postmates was forced into changing back to percentage tipping by the courier rebellion on social media, but also because the independent contractor model gives couriers the freedom to withhold their labor. "Because people are independent contractors, that's where the power is," she says. "One of the hugest things about being an independent contractor is you can just stop."

It wouldn't be possible to know exactly how many Postmates workers have left because of the checkout change, unless each one of them were called and questioned. But the anecdotal evidence is compelling. Following the update, Daniel applied at GrubHub, Jane is focusing on Instacart, and Evelyn is waiting for an old ticket to clear off her driver's license before she applies to Caviar.

"The people who want to be independent contractors, who like being independent and setting their own schedules, they're also people who are kind of rebellious," Sandra says. "That's the kind of workforce you're dealing with, so you have to kind of be willing to put up with people who are speaking out and trying to take more control over their own labor."

Evelyn likes to work Postmates at night, when the traffic in San Francisco is negligible and the meter maids have gone to bed. We're making great time driving from the froyo drop-off in the Marina to the Papalote at Fulton and Masonic, but even though we snag a parking spot right out front, we're eight minutes past the hour, and the taco joint's doors are closed.

Evelyn knocks and gestures toward her phone, but the workers inside respond with exaggerated shrugs. They're mopping the floors and wiping down the countertops. Their workday is done.

Frustrated, Evelyn calls Postmates' support line to let them know the job has to be canceled. Then we hang around for a few minutes. We have to wait for someone sitting behind a computer somewhere to cancel the job manually before a new job gets sent her way, and it takes time.

I ask Evelyn whether she'll be compensated for this wasted drive across town, and she takes the opportunity to take a screenshot on her phone. She tells me she'll submit the screenshot like a receipt, and hopefully get some kind of payout for the mileage.

"I used to let this kind of thing go," Evelyn says. "But not anymore. Now I need to get paid."


About The Author

Julia Carrie Wong

Julia Carrie Wong's work has appeared in numerous local and national titles including 48hills, Salon, In These Times, The Nation, and The New Yorker.

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