“It’s not enough for Honor” — a startup that sends workers to take care of aging relatives — ”to create technology that helps make people’s lives better,” the company’s CEO Seth Sternberg wrote on Medium this past January. “We also have to create jobs that make people’s lives better.”
Sternberg wasn’t talking about the lives of the well-paid white-collar workers that make a tech company a tech company — it’s a given that they have good jobs already, at least when it comes to pay and perks. He was talking about improving the lives of the blue-collar workers at the base of the Uber-for-X economy: The drivers, maids, couriers, cooks, and, in Honor’s case, home care workers who do the bulk of the decidedly low-tech work.
To that end, Sternberg announced that the company would classify all of its caretakers (Care Pros, in the company lingo) as actual employees, rather than independent contractors, making them eligible for benefits and stock options. That’s a big deal in a tech industry that’s better-known for fighting tooth and nail to keep its independent contractors from becoming employees — and has seen a recent wave of successful lawsuits against companies like Uber, Postmates and Homejoy over that precise issue. In the domestic care industry, in particular, the change could make a major impact.
Almost half of home care workers live in poverty, with a mean salary of a little more than $18,500 (compared to the mean American salary of almost $46,500). For decades, the most basic labor laws in the country haven’t even applied to these jobs — like agricultural workers, domestic service workers have been exempt from the Fair Labor Standards Act from the get-go.
But the Supreme Court recently upheld a new Department of Labor rule that brings domestic workers under the FLSA, entitling them to minimum wage and overtime pay — if they’re classified as actual employees. Labor researchers have identified the industry’s “pervasive outsourcing of employer responsibility” and wage theft as major obstacles to turning poverty-level jobs into ones “that make people’s lives better,” to use Sternberg’s language. Honor itself was likely trying to avoid potential lawsuits by classifying its workers as employees: A fact sheet released by the National Employment Law Project in May found that “home care workers should very seldom, if ever, be classified as independent contractors” unless they are working directly for a family.
Still, if Honor can succeed financially while taking responsibility for its employees, it could disrupt the fastest-growing industry in the country and its history of treating workers poorly. “We do this because we believe it’s the right thing to do,” says Honor’s Head of Care Phaedra Ellis-Lamkins, when asked about the company’s decision to hire workers as employees. But she emphasizes that there’s a business reason, too. “Our goal has always been to provide the highest-quality care professionals, and clients want consistency.”
Honor won’t say just how many clients are using the service, but it makes sense that its value proposition — personalized care from qualified professionals using an app for scheduling and communication — would appeal to plenty of people. Since launching in 2014, the company has gotten two major votes of confidence in the form of venture capital: $20 million in its first round of fund-raising ($15 million of which came from Andreesen Horowitz, whose founder Marc Andreesen now sits on Honor’s board) and another $42 million in a series B funding announced two weeks ago, some of which Honor is using to fund its expansion from California into Texas.
But how is Honor’s commitment to good jobs playing out six months after its big announcement? Ellis-Lamkins is uniquely qualified to talk about what it takes to improve worker conditions. Before joining Honor, she had worked with unions and union-backed organizations for her entire career, from an job as an organizer for the SEIU in San Jose to leadership roles at multiple union-backed think tanks — a rare C.V. for an executive in an industry that’s not exactly famous for its pro-union politics.
Asked whether she sees her work at Honor as a continuation of her efforts on behalf of unions, she replies: “Yes, and here’s the thing I realized: I ran a lot of organizations, and what I know is that change is possible, but it only happens really effectively when you have an ability to scale.”
Can she see Honor employees unionizing?
“I love the labor movement and think it’s an important part of the foundation of this country, but Honor is not organized. Our commitment is to getting people in homes as quickly as possible with as high quality care as possible. … Right now we’re doing it the best way that we believe we can.”
It was far from the most hard-hitting interview. But immediately after my conversation with Ellis-Lamkins, Honor’s publicist who had been listening in our conversation, called me back. I answered, expecting to set up interviews later that week with a couple L.A. Care Pros, as we had previously discussed.
Instead, she told me that Honor was revoking my access; that the “union angle” was unwelcome; that the company didn’t want to attract the attention of organized labor, or subject Care Pros without media training to questions about organizing. I was dumbfounded — I thought I was writing a positive piece about a company doing things right. But apparently, asking an executive who had spent a career in unions about how that past connected to her new employer’s efforts to create “jobs that make people’s lives better” had crossed a line. The $62 million startup appeared spooked.
I wasn’t surprised that Honor isn’t gunning for an organized workforce — Silicon Valley has a storied history of being proudly anti-labor. A 2015 survey showed that, even though their politics on the environment and issues like healthcare reform line up with the Democratic party, tech company founders tend to be overwhelmingly anti-union. Steve Jobs famously called teachers’ unions “what’s wrong with our schools,” and Marc Andreesen, board member of Honor, once said at a conference that “There may have been a time and a place for unions, but not sure I see it anymore.”
Still, I was surprised by the abrupt, eject-button reaction to my even mentioning the issue. (Over email, Honor denied the two were related: “We chose to not work with you on this article. There is no tie to your specific questions.”) Even at tech giants famous for their press-unfriendliness, it’s hard to imagine a question on unionizing their coders or marketing teams being met with anything but a confused laugh. Does hiring home health-care workers as employees change that dynamic — and give Honor something to be afraid of?
Thirty percent of the home care workforce is unionized, compared to only 11 percent of all workers nationwide. (Most of those unionized workers are government employees, working for Medicaid-funded home care programs.) Outside of traditional unions, the home care labor movement has been buoyed by newer players like the National Domestic Workers Alliance. In the past few years, it managed to push a “Domestic Workers Bill of Rights” law through the legislatures of seven states, which ensured minimum wage and overtime rights for domestic workers (including maids and nannies, not just home care workers). And the Fight for 15 movement has proven surprisingly successful, working with the SEIU to pass laws to raise the minimum wage to $15 (incrementally over the course of several years) in cities like Seattle and Washington, D.C. and statewide in California and New York. They’re building on that momentum to expand their focus beyond fast food to home care workers and others.
Honor’s wages hover around the goal set by Fight for 15, but don’t quite hit the mark. In the Bay Area, new postings for Care Pro positions offer as much as $16/hour, but in the rest of California, including Los Angeles and it suburbs, that drops to $12, and in Texas, down to $11. Good benefits and stock options could add up to a better deal than a flat $15/hour, but Honor said it couldn’t share compensation details, so there’s no way to know.
As Silicon Valley continues to eat the world and more domestic workers find themselves employed (or at least dispatched) by VC-backed companies, the NDWA is trying to reach out to tech companies in particular. Palak Shah, the Social Innovations Director at the NDWA, helped create the Good Work Code, an effort to get tech companies to publicly declare their intentions to treat their workers right. As tools of labor agitation go, this is a lot closer to an olive branch than a picket sign.
“We want to offer proactive guidance on the kinds of values we want companies to pay attention to,” Shah said of the Good Work Code, “and what we’re hearing, especially from early-stage startups, is that it’s helpful to have a roadmap.”
Shah emphasized that she would love to work with Honor and get them to sign on with the Good Work Code, but admitted that there were limits to the opt-in system. “Workers need and want ways to assert their independent voice, and that’s where the innovation is going to be, that’s the kind of stuff we’re going to have to be really creative about. Because I don’t think the labor movement is going to be satisfied, nor should we as a public writ large be satisfied, with a company saying ‘no, no, we’ve got this,’ without consulting workers and worker advocacy groups.”
Without a place at the bargaining table, or a voice in corporate decisions, employees will always be subject to the whims of their employers, or their investors, who are ultimately dedicated to the bottom line. Honor wouldn’t let me speak to their employees; how do we know they’re going to give their employees a chance to speak up for themselves?
Still, Shah is genuinely optimistic about Silicon Valley’s growing presence in the home care industry. “I think there is a small window of opportunity right now, where labor and tech can work together to build systems that actually work for all of the stakeholders,” she said.
But not if Honor decides to slam that window shut.