Home-cleaning startup Handy sued over contract labor, another blow for on-demand businesses

Handy Desktop

Another high-flying startup in the on-demand economy is facing a lawsuit over its use of independent contractors.

Handy, a company that lets consumers book maid or handyman services through its website or smartphone app, is being sued by a Boston woman who says she was paid less than minimum wage and illegally forced to cover basic costs of her job.

In response to the lawsuit, Handy said that workers using its system “make on average over $17 an hour per job” while maintaining flexible work schedules. “We are creating opportunities for thousands of professionals who now have access to economic security for themselves and their families,” the company said.

The lawsuit was filed Tuesday in U.S. District Court in Boston.

Handy was founded by Harvard Business School classmates Oisin Hanrahan and Umang Dua and got its start at the Harvard iLab incubator before relocating its headquarters to New York. The startup, formerly called Handybook, has raised more than $60 million in private investment and is available in more than 30 cities in North America and the U.K.

Like many other technology companies providing on-demand services, Handy pays the people who perform its housecleaning services as independent contractors, rather than employees. That saves the company money, since it doesn’t have to guarantee minimum wages, cover employee equipment costs, or collect payroll and other employment-related taxes for the state and federal governments.

Some companies have been moving away from that contract-labor model in recent months, including grocery-delivery service Instacart and on-demand package shipping company Shyp.

This isn’t the first time Handy has been sued by workers who claim they’re being unfairly denied full employment status. Another federal lawsuit, filed last year in California, makes claims similar to those aired in the Massachusetts case.

In her lawsuit, Boston resident Maisha Emmanuel says that she has worked as a housecleaner for Handy since May. The company pays cleaners hourly for their cleaning jobs, and may raise or lower that wage depending on the quality of the work, Emmanuel claims.

But Handy doesn’t pay for the time spent on cleaning jobs that take longer than expected or the time it takes to travel between jobs, the lawsuit said. Cleaners also have to pay for their own cleaning supplies, including a starter kit that is deducted from a housecleaner’s paycheck, the lawsuit said.

In Emmanuel’s case, it took about six jobs to pay off that cleaner’s kit. “She worked more than 30 hours her first week of work but was only paid $14,” the lawsuit said.

Emmanuel’s case is the latest example of workers in the tech-enabled on-demand sector challenging the contract-worker arrangement favored by many startups. Emmanuel’s attorney, Boston-based labor lawyer Shannon Liss-Riordan, also is suing ride-for-hire service Uber and other companies over the issue.

“This company, like many others, is trying to save on its labor costs by denying that its workers are its employees and we don’t think that they should be allowed to do that,” Liss-Riordan said Wednesday.

It’s possible that the lawsuit could be sent to arbitration — that’s what happened in the California case after Handy pointed out that the agreement its contractors sign includes a clause forcing such disputes into private dispute resolution rather than the public courts.

Liss-Riordan said it’s possible that a Massachusetts-based judge could rule differently. But even if the case is sent to arbitration, she is hoping to first amass a roster of Handy contractors who have worked in other states in order to challenge the company’s policies.

“If 100 people or 1,000 people all opt in and they all get compelled to arbitration, great — we’ll file 100 or 1,000 separate arbitrations,” she said.

Updated 1:15 p.m. with statement from Handy.