Fancy Hands, the service that assigns virtual assistants to complete tasks at ridiculously low prices is facing a misclassification lawsuit for minimum wage and overtime pay. It really shouldn’t come as a surprise. Although many people sought out the services at Fancy Hands, any logical person had to surmise that the virtual assistants doing those tasks couldn’t be making minimum wage at the rates the service was charging. Of course, in their search for the much touted but seldom realized $4 an hour virtual assistant I’m sure they shrugged it off and sent off a few more tasks to be completed.
Which begs the question, how ethical is it to take advantage of a situation like the one at Fancy Hands, Fiverr, Guru, Elance and other services that so many have turned to for extremely low cost virtual services?
One could argue that it’s not the job of the person hiring through one of these services to be ethically responsible for making sure that the employees of such services are being compensated fairly. And while some people choose not to think about what their virtual assistant is being paid, others find it a concern. In Lauren Smiley’s recent post on Medium regarding our new shut in economy one of her interviewees said regarding a Homejoy app maid:
…She also wonders about the workers. Rogers wishes the companies were a bit more transparent about the payment structure. (“Some of them say there’s no need to tip. I’m like why? How much are they actually going to earn?”)
There’s a reason to be concerned. Fancy Hands isn’t the first at your service’ type company to face a lawsuit for misclassification of workers. Uber and Lyft, both taxi alternative ride services, are both facing lawsuits as well. In fact on March 11, 2015 both lost a key motion in which federal court judges rejected their argument that they had correctly classified their drivers as independent contractors. Two separate judges might as well have said “Oh no you didn’t” and determined it would be up to a jury to decide whether the drivers fit the independent contractor definition.
In training virtual assistants I’ve always stressed to my students the need to remind clients of the restrictions required to be considered independent contractors. I’ve seen so many virtual assistants, in their attempts to build a client base, agree to things that don’t fit those restrictions. Things like agreeing to work only for one client, following client handbooks on how things get done or devoting so many hours to just one client that it would be impossible to take on more. I stress that as virtual professionals we can’t rely on clients to adhere or even to be aware of Independent Contractor rules. It’s our responsibility to educate the client in cases where they are requesting services at an employee level.
Does that mean that clients shouldn’t be aware or concerned with those rules? Certainly a multi-virtual assistant firm like Fancy Hands should be held accountable for knowing them, but what about the individual client teaming up one on one with a virtual services provider?
If they want to stay out hot water with the IRS and eliminate the risk of being named in a lawsuit they should.
The same way a virtual services provider should never assume their clients know the rules, as a client you shouldn’t assume your virtual assistant knows them. There is no governing body for virtual services providers that requires that they understand independent contractor rules and regulations. There is no standardized training either. So while a program like mine might stress the need to learn the rules, another might never mention them.
Before working with any virtual services professional learn the rules. Don’t listen to any advice or instruction that tells you how to train your virtual assistant or suggests creating a handbook to tell them how to do your tasks. Those two things alone will put you in violation of the rules. Understand that requiring them to be available during certain hours or to work exclusively with you is not what an independent contractor does.
If it seems your virtual services provider requires that type of detailed instruction to complete your tasks, chances are you’re working with the wrong virtual professional. Which could very well land you in hot water just like Fancy Hands.
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A couple of months ago, I answered a Craigs List ad for a virtual office manager. During a telephone interview with the ad-poster, it sounded like the job would entail more than 40 hours a week, so I mentioned the IRS rules for independent contractors (ICs). The ad-poster seemed to think that the rules didn’t apply to ICs who aren’t doing clerical work. His thought was that since I had a background writing standard operating procedures (SOPs), he would have me write those, as well as do clerical work, as a way to get around the rules.
Still sounded hinkey to me, but I haven’t had the time to ask an expert.
Although it is technically possible to provide 40 hours of service a week to one client if the IRS took a close look at the relationship there would have to be no supervision by the client, no setting of what hours you provided those services, no instructions for how the work was to be done. The chances of you providing 40 hours of service and passing what the IRS deems to be the definition of IC would be tricky. The 40 hours a week alone would put up a red flag I would think, and even if you or the client you were abiding by the other rules, when examined closely the client could be considered your employer due to verbiage in communication, etc. I have never provided more than 20 hours a week to one client, leaving me plenty of time to take on additional client work. Although I make sure the other rules are followed as well, keeping the weekly hours lower makes it easier to stay in the IC zone.