On-demand delivery service Shyp is now live in Chicago. But this is a unique launch for the company because it’s the first time all of its workers are designated as employees — not one of them is a 1099 contractor.
In July, company chief executive Kevin Gibbon made a significant change in how Shyp would operate. He wrote at the time that as the company geared up to expand nationwide, it needed to re-evaluate its current model and stated that 1099 contractors didn’t fit anywhere into it. This change only affects couriers, as satellite van drivers and warehouse technicians were already classified as W2 employees.
Gibbon told VentureBeat in an email interview that since Chicago is a new city for the company, it was able to start from scratch with a W2 framework. Its operations in San Francisco, New York City (and Brooklyn), Miami, and Los Angeles are going through a transition period: “It’s much easier, operationally speaking, to launch a new city as W2 versus transitioning from 1099,” he explained.
In designating couriers as employees, Shyp will likely avoid the legal troubles that have recently surfaced and are plaguing Uber and other on-demand services. The company also said that all its employees undergo training to prepare them for life at Shyp. This two-week course teaches couriers how to respond to customer inquiries because they are, after all, the only in-person touchpoint that customers have with the company.
Shyp prepares its employees to be able to answer questions like what happens after a package is picked up, how much it will cost depending on shipping method, where the warehouse is located, how the service works on the back-end, the difference between the courier app versus the consumer version, the structure of the company and its history, and more. They’re also taught about how schedules and zoning are determined.
All 35 employees in Shyp’s Chicago market are classified as employees. The rest of its team should be transitioning over to W2 status in the coming months, the company told us.