<div class="image-container float_right" style="width:480px"><div class="image"><img src="http://static4.businessinsider.com/image/51f53ce169beddb51f000017-1000-750/mike-sharf.jpg?maxX=480" border="0" alt="mike sharf" width="480" /><keyword id="1777991" type="UNKNOWN" weightage="60" keywordseo="MyClean">MyClean</keyword>Mike Scharf, CEO of MyClean</div></div>Three years ago, former Citibanker Mike Russell turned to his friend at Bank of America, Mike Scharf, with a business idea. 
The New Yorkers had busy lives and thus, messy apartments. They also had disposable incomes. But when you live in a non-doorman building with no cleaning service readily available, getting your home cleaned can be tough. 
Cleaning services are largely found via word of mouth or direct mail advertisements. A reliable, easy to peruse database of cleaning people online didn't exist.
The pair bootstrapped <a href="http://www.myclean.com">MyClean</a> with the help of a $267,000 friends and family round of financing. The site makes finding and ordering a cleaning service in the New York City area as easy as ordering food on Seamless or GrubHub.
Scharf and Russell had to overcome a lot to make the business work. They scrapped the original idea to outsource cleaners after clients received disappointing results and left scathing Yelp reviews. Problems with the site were tough to fix; neither Scharf nor Russell are technical. But now Scharf and Russell have created a business that sustains more than just themselves. 
MyClean now oversees every part of the cleaning cycle, from managing site orders to dispatching its workers to various locations on the fly. Scharf, the company's CEO, works with government sponsored agencies to find people who are looking for a steady paycheck, gives them training, and hires them as full-time cleaners working six days per week. MyClean now employees 125 cleaners in addition to the dozen people who oversee the entire operation.
Scharf estimates his staff cleans 1,000 homes and businesses each each week. Users are loyal; 80% buy into MyClean's subscription model, which allows them to book cleaners consistently every week, two weeks or month. There's a 5-15% discount given to subscribers, who can also pick how thoroughly they want their residences cleaned.
To tidy up a one bedroom, one bath in Manhattan, the going rate is $84. To get it really clean, it's $135. If your house is in really bad shape, MyClean's team will give it a deep clean, which includes a complete wipe down of the oven, cabinet shelves and more for a little over $200. Tip is not included. Cleaners can be dispatched the same day you order the service, as long as the request is in before 4:00 PM.
At $135 for a thorough clean, it's more expensive than a cleaning service you could find yourself. But MyClean makes it so easy to find and book a cleaning online, many people don't mind paying a little extra. 
MyClean isn't profitable yet but it's breaking even. And as the cleaning startup space heats up (venture-backed startups Exec have launched competitive businesses on the west coast), MyClean's business is too.
Under the leadership of Ken Schultz, a former lawyer who is MyClean's VP of Operations, MyClean is generating $4-5 million annuall. It's raking in $400,000 per month, up from $15,000 a few years ago.
To continue growing the business, MyClean will be launching a mobile app and expanding to more cities. Currently, the service only operates in Manhattan, Queens, Bronx and Brooklyn. Scharf's team is eying New Jersey cities where many New York City commuters live.
For Scharf, a first-time entrepreneur, growing a multi-million-dollar business hasn't been predictable. When asked what's surprised him most about running a startup he replied, "You have to be willing to do everything yourself and follow through."

How Bankers With Messy Apartments Bootstrapped MyClean, A Brilliantly Simple Cleaning Startup That Generates Multiple Millions

<div class="image-container float_right"><div class="image"><img src="http://static2.businessinsider.com/image/5225d5d469bedd804beca9f5-516-387/cleaning-stain-3.png?maxX=480" border="0" alt="cleaning-stain" width="480" /><a href="http://www.flickr.com/photos/topastrodfogna/5543986274/in/photostream/">Flickr via topastrodfogna</a></div></div>Moving can be quite an arduous process.
A couple of days before my move-out date last Saturday, I received a couple of startling text messages from my then-roommate.
Some of those messages seemed to to suggest that if I were to leave my room in the current shape it was in, I would not get the bulk of my security deposit back. That worried me.
So I had to act fast. I logged on to MyClean and set up a one-time appointment in a matter of minutes.
<a href="http://www.businessinsider.com/myclean-2013-7" target="_blank">MyClean, a relatively new housecleaning service out of New York,</a> will help you get your entire security deposit back with a deep clean. For those who don't need as intense of a clean, MyClean offers two other <keyword id="6412409" type="UNKNOWN" weightage="60" keywordseo="Cleaning">cleaning</keyword> tiers to just tidy up, or a basic cleaning option called "Get it Clean."
Even though $124 to clean a very dirty bedroom and bathroom may sound steep, I would say it was worth it. That's because what I had to lose surpassed that sum by a long shot. 
I opted for the "Get it Clean," but the housekeeper assigned to me appeared to do the work of a "Deep Clean." In fact, she said she could even do a "ghetto clean." I wasn't entirely sure what that meant, but it sounded like she knew what she was doing.
Within three hours, the place was spotless. In fact, it looked better than it did on the day I moved in, in my opinion. 
Of course, this is based on my one-time experience with MyClean. So just because my appointment went smoothly, it doesn't necessarily mean that yours will, too. 
It depends on, among other things, which housekeeper you get and also how reasonable your expectations are. 
But based on some Yelp reviews, it's clear that not everyone has a great experience with MyClean. Recent reviews range from <a href="http://www.yelp.com/biz/myclean-nyc-new-york#hrid:ulF4efE18YC2SIETk0jfTg">positive</a> to absolutely <a href="http://www.yelp.com/biz/myclean-nyc-new-york#hrid:LcB5guXuQhGcuP7dXhCI-g">terrible</a>. 
Here's a look at <a href="http://www.yelp.com/biz/myclean-nyc-new-york#hrid:LcB5guXuQhGcuP7dXhCI-g" target="_blank">one not-so great review from August 22, 2013</a>, in which a customer claimed the cleaners did not bring the right equipment, and left the place "filthy." Be sure to read MyClean's response below the review.
If MyClean doesn't fit your fancy, there are a handful of other comparable services out there. There's Hipstermaid, Handybook, and Task Rabbit - to name a few.

This Home Cleaning Startup Saved Me Hundreds Of Dollars, And Can Save You Money, Too

<div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Reuters/Wikimedia" title_caption="John Zimmer (left), the founder of Lyft, and Travis Kalanick, the founder of Uber." class="zoomin" href="https://static-ssl.businessinsider.com/image/541aec536bb3f7ce2e3c96d1-960/uber-lyft-travis-kalanick-john-zimmer-1.jpg"><img src="https://static-ssl.businessinsider.com/image/541aec536bb3f7ce2e3c96d1-1000-500/uber-lyft-travis-kalanick-john-zimmer-1.jpg" border="0" alt="uber lyft Travis Kalanick John Zimmer" /></a>Reuters/WikimediaJohn Zimmer (left), the founder of Lyft, and Travis Kalanick, the founder of Uber.</div></div></div>
New York Magazine's Kevin Roose just <a href="http://nymag.com/daily/intelligencer/2014/09/silicon-valleys-contract-worker-problem.html">wrote a story exposing a big threat to a whole host of successful startups.</a>
Lately, there's been a rise in a new type of startup: "on demand" startups.
Basically they are like Uber, but instead of summoning taxi drivers, they summon other service providers - food deliverers, people who do laundry, people who clean homes, flower deliverers, and so on.
Like Uber, many of these startups do not actually employee the people who provide those "on demand" services. The startups hire contractors.
Roose even says there is a term for this trend. It's the "1099 economy" named after the tax form companies fill out when they hire contractors - 1099 MISCs, not the W2s companies have to fill out for full time employees.
<div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Instacart via Facebook" title_caption="An Instacart delivery. Instacart is an on-demand company that delivers groceries from local stores." class="zoomin" href="https://static-ssl.businessinsider.com/image/541af5a66bb3f72f4e3c96d5-960/instacart-4.jpg"><img src="https://static-ssl.businessinsider.com/image/541af5a66bb3f72f4e3c96d5-1200-600/instacart-4.jpg" border="0" alt="instacart" /></a><a href="https://www.facebook.com/Instacart/photos/pb.369288959794283.-2207520000.1401300622./724966024226573/?type=3&amp;theater">Instacart via Facebook</a>An Instacart delivery. Instacart is an on-demand company that delivers groceries from local stores.</div></div></div>
The reason Uber, Homejoy, Instacart, Washio, SpoonRocket, and other startups are hiring contractors is simple: contractors are a lot cheaper than employees. For example, the companies don't have to worry about withholding taxes or paying into social security.
New York-based "on demand" housekeeper company MyClean used to use contractors. When it switched to full time cleaners, its labor costs went up 40%.
MyClean chose to switch to full time employees because it felt the quality of its product went up.
Some startups may not get to make the choice. They may be forced to hire their contractors on full time.
It turns out its against the law to treat contractors the same way you would treat employees. 
<a href="http://nymag.com/daily/intelligencer/2014/09/silicon-valleys-contract-worker-problem.html">Roose explains:</a>
In June, a group of Uber drivers joined a class-action lawsuit against the company in California and Massachusetts. The drivers, represented by Boston attorney Shannon Liss-Riordan, alleged that Uber misclassified them as independent contractors, thereby requiring them to bear upkeep and maintenance costs that normal employees wouldn't be liable for. (Uber, in a statement to the Boston Globe, said it would "vigorously defend the rights of riders to enjoy competition and choice, and for drivers to build their own small business.")
Start-ups aren't the only companies being targeted for worker Misclassification. But they are the most vulnerable to a change in the law. Require a 1099 start-up to reclassify its workers as W-2 employees, and you radically change its ability to lower prices and undercut the competition - which was, in many cases, a key reason investors were interested in the first place.
"If their drivers are classified as employees then that suddenly makes their business model untenable," Denise Cheng, a research assistant at the MIT Center for Civic Media, told the Globe.
One warning shot for 1099-dependent start-ups came in an <a href="http://www.sfgate.com/bayarea/article/Court-to-FedEx-Your-drivers-are-full-time-5717048.php" data-track="Body Text Link: External">August ruling</a>by a federal appeals court, which found that 2,300 FedEx delivery drivers in California were being misclassified as independent contractors, since FedEx exercised broad control over their schedules and methods. "The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx's appearance standards," Judge William Fletcher said. The three-judge panel ultimately ruled that since the contractors were being treated like employees, they were entitled to employee benefits such as overtime pay and reimbursement of expenses. 
The implicit threat to start-ups like Homejoy, Spoonrocket, and Uber couldn't have been clearer. If you want to use independent contractors, the judges told FedEx, you've got to give them real independence.
The threat to lots of rich startups is this: if they lean on cheap contractors too much, and require them to act like full time employees too much, they may have to start paying them like full time employees. 
That could seriously spike costs for many startups - <a href="http://www.businessinsider.com/fred-wilson-on-startup-burn-rates-2014-9">at a time when prominent VCs are already worried about how much money startups are spending</a>.

There's A Looming Threat To The Way Uber And Other Rich New Startups Do Business

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/5501931b6da81145188dbfb4-1200-924/uber-lyft-1.jpg" border="0" alt="uber lyft">REUTERS/Stephen LamDemonstrators hold signs during a protest organized by the San Francisco Taxi Workers Alliance against ridesharing services Uber and Lyft outside the 8th Annual Crunchies Awards in San Francisco, California February 5, 2015.</img></div></div></div>A California court <a href="http://www.businessinsider.com/california-labor-commission-rules-uber-drivers-are-employees-2015-6">ruled Wednesday</a> that&#xa0;Uber drivers are employees and not independent contractors.Though Uber plans to appeal the ruling, it could potentially strike a huge blow to Uber's business model, at least in California, one of Uber's largest US markets. Uber and rival Lyft have both&#xa0;<a href="http://www.reuters.com/article/2015/01/28/us-uber-lyft-workers-idUSKBN0L11BN20150128">faced lawsuits that could dramatically change both companies' business models</a>.The lawsuits, which were separately brought on by drivers for the two companies, say drivers should be reclassified as employees as opposed to independent contractors.&#xa0;Previously, Uber and Lyft&#xa0;<a href="http://www.reuters.com/article/2015/03/11/lyft-drivers-idUSL1N0WD2ME20150311?irpc=932">unsuccessfully argued in court that their drivers are independent contractors</a>. The judges in the cases decided the cases would have to be decided by juries.A ruling in favor of the drivers "could significantly raise their costs beyond the lawsuits and force the companies to pay social security, workers' compensation, and unemployment insurance," Reuters reports.&#xa0;Generally, drivers&#xa0;and other independent contractors want full-time pay - or at least predictable pay - but employers have their sights set on maximizing profits.Employees are expensive for companies.&#xa0;<a href="http://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">According to the IRS</a>, for common-law employees, employers "must withhold income taxes, withhold&#xa0;and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid" to full-time employees.&#xa0;The same is not necessarily true for an independent contractor.Benefits are another aspect often extended to employees but not independent contractors. And employers but not independent contractors have the right to control how a worker behaves - how to dress, for example, or specific customer-interaction protocol.&#xa0;You have more labor protections when you're an employee.&#xa0;From a company mindset, it's easy to see why a fast-growing company like Uber would favor independent contractors.But hiring laborers as employees not only makes them happy - it gives company more control over their employees. Companies can enforce a dress code or uniform, for example, with employees, or they can dictate on-duty behavior.&#xa0;In a 2013 lawsuit, a judge ruled that FedEx had&#xa0;<a href="http://www.law360.com/articles/455495/fedex-misclassified-drivers-as-contractors-judge-rules">misclassified its delivery drivers as contractors when they were really employees</a>, saying that it's&#xa0;"beyond cavil that the pickup and delivery drivers are essential to FedEx's business."Shannon Liss-Riordan, the&#xa0;same attorney who served on behalf of the 11 FedEx drivers who filed the lawsuit in 2013, is the attorney for the lawsuits drivers have filed against Lyft and Uber.As independent contractors for Lyft and Uber, drivers pay all their expenses out of pocket: gas, maintenance, insurance, and detailing, just to name a few.&#xa0;The drivers, should they win these lawsuits, could be entitled to either hourly wages or a regular salary, as well as reimbursement for the money they've spent on things like gas and insurance as drivers for Uber and Lyft.In addition, drivers would be able to organize formally. Right now, drivers - especially those unhappy with their working conditions - have <a href="https://www.facebook.com/uberdriversnetwork">informally organized by region</a>&#xa0;or in forums like <a href="http://www.uberpeople.net/">UberPeople</a>. In August, Southern California Uber drivers <a href="http://teamster.org/news/2014/08/uber-drivers-southern-california-form-association-teamsters-local-986">aligned with a local Teamsters union</a>.Lyft has argued that because drivers are in control of how often they work, they are independent contractors. Drivers have contested this classification. They see themselves as employees because they are told how to behave with customers and can be deactivated without notice from Lyft's system."Uber's whole business model is built around having other people take the risks as independent contractors. And I don't know if they can change that; it's built into their business model. It's how they're making so much money," Joseph De Wolf Sandoval, an organizer for the California App-Based Drivers Association (CADA) <a href="http://www.businessinsider.com/uber-drivers-across-the-country-are-protesting-tomorrow--heres-why-2014-10">told Business Insider back in October</a>.The lawsuits, which are both seeking class-action status in San Francisco Federal Court, would apply to drivers only in California. But a ruling in favor of the drivers would set a precedent for Uber and Lyft, as well as other companies that follow the independent-contractor business model.Here's why.There has been a rise in on-demand startups recently. You may have heard it called the "1099 economy," so named for the 1099 MISC forms that employers fill out when they hire contractors, as opposed to the W2 forms companies fill out when they hire full-time employees.Uber and Lyft are chief among these on-demand companies, of course, but there are many others. Postmates and TaskRabbit are delivery services. Washio and FlyCleaners do your laundry on demand. Handy and MyClean are home cleaning startups. <a href="http://www.businessinsider.com/luxury-tech-startups-2015-1">The "Uber for X" category goes on, and it's seemingly endless</a>.The people who work for these companies - not the executives, but the people who do the dirty work of delivering your laundry and <a href="http://www.businessinsider.com/when-on-demand-is-and-isnt-appropriate-2014-9">dropping off your bag of potato chips</a>&#xa0;- are not usually employees - they're contractors.Startups use contractors for the simple reason that they are a lot cheaper than employees. When you're an independent contractor, your employer does not have to consider paying into Social Security or withholding taxes. It saves them money.When home-cleaning startup MyClean switched from an independent-contractor model to one with full-time employees, the startup <a href="http://nymag.com/daily/intelligencer/2014/09/silicon-valleys-contract-worker-problem.html">saw its labor costs go up 40%</a>.From a financial perspective, it makes sense why companies are clinging to the independent-contractor model. But drivers have a lot to gain from rulings in their favor. These drivers are only asking for reimbursement for their expenses. But if juries rule against Uber and Lyft, drivers stand to gain more than just lost wages. These lawsuits could change Uber and Lyft's business models entirely, increasing their labor costs. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/iphone-power-user-hacks-apple-tricks-2015-3">5 hard-to-find iPhone tricks only power users know about</a></h3> <div> <div> <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="dzb3ZxczpW1JgYelTy6QXfo_lrpK_Xyi" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> <script> if (typeof RunFunctions === 'undefined') { var RunFunctions = []; } RunFunctions.push(function() { var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'dzb3ZxczpW1JgYelTy6QXfo_lrpK_Xyi',{ autoplay: 'false' }); }); </script> <noscript><div>Please enable Javascript to watch this video</div></noscript></div> </div> <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script> </div>

A California judge just ruled that Uber drivers are employees - here's why it could dramatically change Uber's business model

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/54cba52becad04380139c040-1200-924/uber-protest-14.jpg" border="0" alt="uber protest">Lucy Nicholson/Reuters</img></div></div></div>Both Uber and Lyft are <a href="http://www.reuters.com/article/2015/01/28/us-uber-lyft-workers-idUSKBN0L11BN20150128">currently facing lawsuits that could drastically change both companies' business models</a>, Reuters reports. 
Both lawsuits, which were separately brought on by drivers for the two companies, say they should be reclassified as employees as opposed to independent contractors. 
The difference between the two, <a href="http://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">according to the IRS</a>, is that for common-law employees, employers "must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid." 
The same is not necessarily true for an independent contractor. 
Benefits are another aspect that's often extended to employees but not independent contractors. And employers have the right to control how a worker behaves - how to dress, for example, or specific customer interaction protocol - when they're an employee and not an independent contractor. You have more labor protections when you're an employee.
As independent contractors for Lyft and Uber, drivers pay all their costs out-of-pocket: gas, maintenance, insurance, and detailing, just to name a few. 
The drivers, should they win these lawsuits, could be entitled to either hourly wages or a regular salary, and reimbursement for the money they've spent on things like gas and insurance as drivers for Uber and Lyft.
"If the judges rule against Uber and Lyft, it could significantly raise their costs beyond the lawsuits and force the companies to pay social security, workers' compensation, and unemployment insurance," Reuters reports. 
In addition, drivers would be able to organize formally. Right now, drivers - especially those unhappy with their working conditions - have <a href="https://www.facebook.com/uberdriversnetwork">informally organized by region</a>, or in forums like <a href="http://www.uberpeople.net/">UberPeople</a>.
Uber goes to court Friday afternoon. A summary judgment hearing for Lyft was held in San Francisco Thursday. Lyft has argued that since drivers are in control of how often they work, they're independent contractors. Drivers have contested this classification. They see themselves as employees because they are told how to behave with customers, and can be deactivated without notice from Lyft's system.
"Uber's whole business model is built around having other people take the risks as independent contractors. And I don't know if they can change that; it's built into their business model. It's how they're making so much money," Joseph De Wolf Sandoval, an organizer for the California App-Based Drivers Association (CADA) <a href="http://www.businessinsider.com/uber-drivers-across-the-country-are-protesting-tomorrow--heres-why-2014-10">told Business Insider back in October</a>.
De Wolf Sandoval helped organize a multi-city protest against Uber in October, citing low fares and Uber's tipping policy among unhappy drivers' main complaints about the company. Here's more from him:
From my perspective and CADA's perspective, it seems it's a gray area right now, whether we're truly independent contractors or employees. Because Uber does exercise quite a bit of control over how the drivers conduct their day to day basis. They really are reaching quite a bit behind that driver's wheel in how the driver does business. It's something that I'm sure will be looked at more closely because it is a pressing issue.
The lawsuits, which are both seeking class-action status in San Francisco Federal Court, would technically only apply to drivers in California, Reuters reports. But, a ruling in favor of the drivers would set a precedent for Uber and Lyft, as well as other companies that follow the independent contractor business model.
Here's why.
There's been a rise in on-demand startups recently. You may have heard it called the "1099 economy," so named for the 1099 MISC forms that employers fill out when they hire contractors, as opposed to the W2 forms companies fill out when they hire full-time employees.
Uber and Lyft are chief among these on-demand companies, of course, but there are many others. Postmates, Wunwun and TaskRabbit are delivery services. Washio and FlyCleaners do your laundry on demand. Handy and MyClean are home cleaning startups. <a href="http://www.businessinsider.com/luxury-tech-startups-2015-1">The "Uber for X" category goes on, and it's seemingly endless</a>.
The people who work for these companies - not the executives, but the people who do the dirty work of delivering your laundry and <a href="http://www.businessinsider.com/when-on-demand-is-and-isnt-appropriate-2014-9">dropping off your bag of potato chips</a> - are typically not employees. They are contractors. 
Startups use contractors for the simple reason that they're a lot cheaper than employees. When you're an independent contractor, your employer doesn't have to consider paying into social security or withholding taxes.
When home cleaning startup MyClean switched from an independent contractor model to full-time employees, the startup saw its labor costs go up 40%, according to Kevin Roose, <a href="http://nymag.com/daily/intelligencer/2014/09/silicon-valleys-contract-worker-problem.html">writing for New York magazine</a>.
From a financial perspective, it makes sense why companies are clinging to the independent contractor model. But drivers have a lot to gain from rulings in their favor. Both Lyft and Uber's lawsuits are in their early stages right now, but soon these companies - and others like them - may not have a choice about what business model they can use.
We have reached out to Uber and Lyft for comment on this story and will update this post when we hear back.

Two lawsuits could drastically alter Uber and Lyft's business models

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/5501931b6da81145188dbfb4-1200-924/uber-lyft-1.jpg" border="0" alt="uber lyft">REUTERS/Stephen LamDemonstrators hold signs during a protest organized by the San Francisco Taxi Workers Alliance against ridesharing services Uber and Lyft outside the 8th Annual Crunchies Awards in San Francisco, California February 5, 2015.</img></div></div></div>Both Uber and Lyft are <a href="http://www.reuters.com/article/2015/01/28/us-uber-lyft-workers-idUSKBN0L11BN20150128">facing lawsuits that could dramatically change both companies' business models</a>.The lawsuits, which were separately brought on by drivers for the two companies, say drivers should be reclassified as employees as opposed to independent contractors.&#xa0;On Wednesday, Uber and Lyft&#xa0;<a href="http://www.reuters.com/article/2015/03/11/lyft-drivers-idUSL1N0WD2ME20150311?irpc=932">unsuccessfully argued in court that their drivers are independent contractors</a>. The judges in the cases decided the cases would have to be decided by juries.Now, US District judges Vince Chhabria and Edward Chen say juries will decide how Uber and Lyft drivers should be classified.A ruling in favor of the drivers "could significantly raise their costs beyond the lawsuits and force the companies to pay social security, workers' compensation, and unemployment insurance," Reuters reports.&#xa0;Generally, drivers&#xa0;and other independent contractors want full-time pay - or at least predictable pay - but employers have their sights set on maximizing profits.Employees are expensive for companies.&#xa0;<a href="http://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">According to the IRS</a>, for common-law employees, employers "must withhold income taxes, withhold&#xa0;and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid" to full-time employees.&#xa0;The same is not necessarily true for an independent contractor.Benefits are another aspect often extended to employees but not independent contractors. And employers but not independent contractors have the right to control how a worker behaves - how to dress, for example, or specific customer-interaction protocol.&#xa0;You have more labor protections when you're an employee.&#xa0;From a company mindset, it's easy to see why a fast-growing company like Uber would favor independent contractors.But hiring laborers as employees not only makes them happy - it gives company more control over their employees. Companies can enforce a dress code or uniform, for example, with employees, or they can dictate on-duty behavior.&#xa0;In a 2013 lawsuit, a judge ruled that FedEx had&#xa0;<a href="http://www.law360.com/articles/455495/fedex-misclassified-drivers-as-contractors-judge-rules">misclassified its delivery drivers as contractors when they were really employees</a>, saying that it's&#xa0;"beyond cavil that the pickup and delivery drivers are essential to FedEx's business."Shannon Liss-Riordan, the&#xa0;same attorney who served on behalf of the 11 FedEx drivers who filed the lawsuit in 2013, is the attorney for the lawsuits drivers have filed against Lyft and Uber.As independent contractors for Lyft and Uber, drivers pay all their expenses out of pocket: gas, maintenance, insurance, and detailing, just to name a few.&#xa0;The drivers, should they win these lawsuits, could be entitled to either hourly wages or a regular salary, as well as reimbursement for the money they've spent on things like gas and insurance as drivers for Uber and Lyft.In addition, drivers would be able to organize formally. Right now, drivers - especially those unhappy with their working conditions - have <a href="https://www.facebook.com/uberdriversnetwork">informally organized by region</a>&#xa0;or in forums like <a href="http://www.uberpeople.net/">UberPeople</a>. In August, Southern California Uber drivers <a href="http://teamster.org/news/2014/08/uber-drivers-southern-california-form-association-teamsters-local-986">aligned with a local Teamsters union</a>.Lyft has argued that because drivers are in control of how often they work, they are independent contractors. Drivers have contested this classification. They see themselves as employees because they are told how to behave with customers and can be deactivated without notice from Lyft's system."Uber's whole business model is built around having other people take the risks as independent contractors. And I don't know if they can change that; it's built into their business model. It's how they're making so much money," Joseph De Wolf Sandoval, an organizer for the California App-Based Drivers Association (CADA) <a href="http://www.businessinsider.com/uber-drivers-across-the-country-are-protesting-tomorrow--heres-why-2014-10">told Business Insider back in October</a>.The lawsuits, which are both seeking class-action status in San Francisco Federal Court, would apply to drivers only in California. But a ruling in favor of the drivers would set a precedent for Uber and Lyft, as well as other companies that follow the independent-contractor business model.Here's why.There has been a rise in on-demand startups recently. You may have heard it called the "1099 economy," so named for the 1099 MISC forms that employers fill out when they hire contractors, as opposed to the W2 forms companies fill out when they hire full-time employees.Uber and Lyft are chief among these on-demand companies, of course, but there are many others. Postmates, Wunwun, and TaskRabbit are delivery services. Washio and FlyCleaners do your laundry on demand. Handy and MyClean are home cleaning startups. <a href="http://www.businessinsider.com/luxury-tech-startups-2015-1">The "Uber for X" category goes on, and it's seemingly endless</a>.The people who work for these companies - not the executives, but the people who do the dirty work of delivering your laundry and <a href="http://www.businessinsider.com/when-on-demand-is-and-isnt-appropriate-2014-9">dropping off your bag of potato chips</a>&#xa0;- are not usually employees - they're contractors.Startups use contractors for the simple reason that they are a lot cheaper than employees. When you're an independent contractor, your employer does not have to consider paying into Social Security or withholding taxes. It saves them money.When home-cleaning startup MyClean switched from an independent-contractor model to one with full-time employees, the startup saw its labor costs go up 40%, according to Kevin Roose,&#xa0;<a href="http://nymag.com/daily/intelligencer/2014/09/silicon-valleys-contract-worker-problem.html">writing for New York magazine</a>.From a financial perspective, it makes sense why companies are clinging to the independent-contractor model. But drivers have a lot to gain from rulings in their favor. These drivers are only asking for reimbursement for their expenses. But if juries rule against Uber and Lyft, drivers stand to gain more than just lost wages. These lawsuits could change Uber and Lyft's business models entirely, increasing their labor costs.We reached out to Lyft and Uber for comment and will update this post when we hear back. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/iphone-power-user-hacks-apple-tricks-2015-3">5 hard-to-find iPhone tricks only power users know about</a></h3> <div> <div> <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="dzb3ZxczpW1JgYelTy6QXfo_lrpK_Xyi" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> <script> if (typeof RunFunctions === 'undefined') { var RunFunctions = []; } RunFunctions.push(function() { var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'dzb3ZxczpW1JgYelTy6QXfo_lrpK_Xyi',{ autoplay: 'false' }); }); </script> <noscript><div>Please enable Javascript to watch this video</div></noscript></div> </div> <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script> </div>

How two lawsuits could destroy Uber and Lyft's business models - and set a precedent for the rest of the sharing economy

<div class="KonaFilter image-container display-table float_right"><div><div class="image"><img src="https://static-ssl.businessinsider.com/image/53e8c113eab8ea4729cb91bc-1200-924/q-9.jpg" border="0" alt="Q">QDan Teran and Saman Rahmanian co-founded Q, a mobile dashboard that helps office managers book cleaning and other maintenance services easily.</img></div></div></div>When your day at the office is ending, it's just beginning for another set of workers: the cleaning staff.
Cleaning staffs are often hired by buildings or companies through legacy agreements. There isn't some sort of app to help speed up the scheduling, management, or payment process between the cleaners and the offices who book them.
Often, companies have to hire employees dedicated to office management to oversee the process; they also handle day-to-day issues such as changing lights, fixing Internet problems, and stocking fridges.
<a href="https://managedbyq.com/">Q</a> (named after the Star Trek character and James Bond's Q Branch) is a software and management startup that wants to make it easier for companies to work with cleaning services and other service providers on a routine basis. Its mobile platform allows office managers to book cleanings, leave notes for the cleaning staff, assign tasks to be completed, and pay for the service all in one place. Q buys hours in bulk from cleaning services in the NYC area, then turns around and sells them to offices at a slightly higher price, for $25 an hour. 
When a cleaning is booked through Q, the workers clock in on a Q-provided iPad in the office. They can check off what they've done (vacuumed floors, cleaned desks, etc) so the office manager can see. Offices are required to book at least 4 hours worth of cleanings per week on the platform. Q also has a network of local service providers (electricians, exterminators, etc) that can be booked and payed for through its mobile app. 
Founded by Daniel Teran and Saman Rahmanian, Q launched this past April with 15 customers. The technology is used by companies like Uber, Elite Daily, and Flatiron Health, and Q estimates it will be used by over 100 offices by the end of this summer.
"Right now, no [office manager] really knows what they're paying for," Teran says of hiring a cleaning service. "There's a paper list of things people say they're going to do...We're creating an operating system for offices, providing the products, services and technology to make it easy to run an office."
<div class="KonaFilter image-container display-table float_left"><div><div class="image"><img src="https://static-ssl.businessinsider.com/image/53e8c611ecad045c1535c064-1200-924/q-10.jpg" border="0" alt="q">QQ provides a tablet to all its offices so cleaning services can clock in and clock out and keep track of their tasks without piles of paperwork.</img></div></div></div>Already, Q's looking at an annual run rate of more than $1 million. It recently raised a $775,000 seed round from notable angel investors including Behance co-founder Scott Belsky, College Humor founders Ricky Van Veen and Josh Abramson, Barkbox co-founder Henrik Werdelin, Max Burger and Jay Livingston. Path founder Dave Morin and early Facebooker Kevin Colleran also invested through their fund, Slow Ventures, as well as Panarea Captial's Len Blavatink and Alex Zubillaga.
Teran was the first employee at another New York City-based startup, Artsicle. He and Rahmanian first met at Prehype, a design and incubation shop that builds innovative new ideas for businesses. The pair got the idea for Q when they noticed how terrible communication was between service providers and their apartment buildings. 
"I moved into a condo and we had really terrible service in the building," says Teran. "I started thinking about what building things in maintenance looks like. So we came up with the idea for an iOS dashboard."
<div class="KonaFilter image-container display-table float_left"><div><div class="image"><img src="https://static-ssl.businessinsider.com/image/53e8c9b969beddda48a02e99-1200-800/g-13.jpg" border="0" alt="q">QQ cleaning supplies</img></div></div></div>"We start talking about what the problems were and communication problems with maintenance workers," Rahmanian agrees. "We started off with an iPad in the hallway of the condo, that was our initial product. Then we had interest from office managers. So we set up a bunch of meetings switched from a residential product to office buildings." 
<a href="http://www.businessinsider.com/myclean-2013-7">MyClean</a> is a similar mobile platform for booking residential cleanings in New York, but there didn't seem to be similar widely-used product for local businesses. So Teran and Rahmanian met with 30 local cleaning services to gauge interest and onboarded some of them to Q. 
Q currently has 14 employees including a former Apple employee who leads its tech operations. The team is split between New York and Buenos Aires. 
Eventually, Q wants to expand beyond cleanings to run more like one of its customers - Uber - with on-demand services for anything offices need.
Scott Belsky, an early investor in Uber, sees that promise in Q. "I love businesses that replace the pipes and upgrade the user experience for some aspect of everyday living - I call these 'interface layer' businesses," Belsky told Business Insider via email. "Uber did this for transportation. Shyp [another investment] is doing it for shipping. And Q is doing it for office/space management."
Belsky says that Q might look like just a cleaning service platform right now, but it has the potential to become a lot more than that. 
"I was impressed by the potential for customers to rely on Q for other services such as ordering more office/cleaning supplies, handymen, etc.," he says. "The interface of Q has the potential to revolutionize many industries that operate underneath."

You Searched For "MyClean" and got 8 results

How Bankers With Messy Apartments Bootstrapped MyClean, A Brilliantly Simple Cleaning Startup That Generates Multiple Millions

Alyson Shontell

This Home Cleaning Startup Saved Me Hundreds Of Dollars, And Can Save You Money, Too

Megan Rose Dickey

There's A Looming Threat To The Way Uber And Other Rich New Startups Do Business

Nicholas Carlson

A California judge just ruled that Uber drivers are employees - here's why it could dramatically change Uber's business model

Maya Kosoff

Two lawsuits could drastically alter Uber and Lyft's business models

Maya Kosoff

How two lawsuits could destroy Uber and Lyft's business models - and set a precedent for the rest of the sharing economy

Maya Kosoff

Q Raises $775,000 From Big-Time Angel Investors To Become A Godsend For Office Managers Everywhere

Alyson Shontell

The 'On-Demand Economy' Is Reshaping Companies And Careers

The Economist