Say bye to Homejoy!
Homejoy, the home cleaning service startup, which works entirely on contractual labor, suddenly announced that it would be ceasing operations. The company is shutting down over allegations from people associated with the company who wanted to be treated as employees rather than independent contractors. Homejoy's co-founder Adora Cheung confirmed that the company would close its doors on 31 July 2015.
Homejoy is a home cleaning start-up based out of San Francisco, founded by siblings Adora (CEO) and Aaron Cheung (Vice President) in 2010. The company that originally started as 'Pathjoy' was an online platform that connected home cleaners with customers, charging a rate of $25–$35 per hour. Homejoy offered services in US, Canada and UK by 2014, with presence in 31 cities.
In 2010, Y Combinator put an undisclosed amount of funding in Homejoy. In 2013, Andreesan Horowitz, First Round Capital, Resolute. vc and other groups and individuals put $1.7 million in seed funding. The company raised a total of $38 million of funding in round A led by Google ventures (October 2013) and round B led by Redpoint ventures (December 2013).
Not many know this but Homejoy's co-founder Adora Cheung performed first of the few cleaning assignments herself and continued to take up at least one cleaning job per month till 2013.
The company launched itself in UK, its first branch out of North America. Its cleaning services in England had been priced at £13/hour ($21/hour). Homejoy's founders were certain that London would become its biggest market. Housekeep.co.uk and Hassle.com (both prices lower than that of Homejoy) were the home cleaning platforms in London which stood to compete with Homejoy.
Homejoy was slapped with 2 lawsuits: Zenelaj vs Homejoy and Ventura vs Homejoy. In both the lawsuits, the plaintiffs have demanded that they should be considered as full-fledged employees. The demands have been made on the premise that the company has much more control on its workers than that allowed when hiring contractual labour.
The Department of Labor released a new policy guidance document over the status of contract workers versus employees. The new policy has federal agencies looking closely on how contract workers were being treated. Increasing number of workers challenging the system, under which they work, has forced the government to put companies like Uber, Homejoy, Indtacart and Lyft under the scanner.
Before Homejoy, start-ups like Uber and Lyft and laundry service provider Washio have been slapped with similar law suits where contract workers have demanded employee status.
