This Startup Melted Down After Its Workers Fought to be Employees

In another report, Mattermark ranked the company as one of the five fastest-growing Series A startups alongside the likes of ClassPass and Casper.

The company, founded by sister-and-brother team Adora and Aaron Cheung in 2012, hadn’t raised venture capital funding since 2013. In both lawsuits, the plaintiffs alleged that they should have been treated as employees rather than independent contractors. The company has 100 employees and employs over 1,000 independent contractors. Grocery delivery service Instacart recently began converting many of its delivery people to part-time employees, while package delivery startup Shyp made a similar move earlier this month.

Those lawsuits made fundraising that much harder, Adora Cheung told Re/code.

As Uber and Lyft have been fighting their lawsuits in court, Homejoy’s decision to shut down is the first major casualty in the 1099 economy debate.

After the California Labor Commission’s decision to classify one Uber driver as an employee, more independent contractors are jumping into the ring and bringing cases forward. Prior to the announcement of a shutdown and canceling future appointments with the company, Homejoy had operated in 35 cities across the United States, France, the United Kingdom, Canada, and Germany. The San Francisco Chronicle reported in late May that the company was up for sale, and had been operating at significant losses. Around 20 members of Homejoy’s product and engineering team will be joining Google to build out the company’s technology for matching local professionals – lawn mowers, painters, plumbers, cleaners and the like – with online users, according to sources. Handy has also been sued by its independent contractors.