We’re back with another installment of IF:Then, the legal podcast about strategy and career intentionality at intersection of law and technology. To stay up to date with interviews, news recaps, and all things IF:Then, hit that subscribe below.
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Another year, another Super Bowl in the books. We got a very strong, pure hip hop halftime show, a reasonably entertaining game, and enough memes to power us through spring. Pretty much all you can ask for, unless you’re a Bengals fan. But at least one good thing happened to Southwest Ohio this weekend, and that was Cincinnati native Katherine Kirkpatrick Bos appearing on the IF:Then podcast! Katherine is the newly appointed General Counsel of crypto-lending protocol maple.finance after the career as a seasoned investigator at King & Spalding LLP.
The NFL is no stranger to investigations - the existence of the New England Patriots alone has sparked several high profile “gate”-suffix incidents. And let’s not even get into the dumpster fire that is the Washington Commanders. Whether you’re a massive sports league or a 20 person startup, if you receive a subpoena, are faced with a whistleblower, or generally find yourself in a position where you need to understand “what’s going on” internally, you might call someone like Katherine.
Legal Strategy
Katherine’s career as an investigator set her up to help Maple define crypto capital markets.
Building a career in investigations is an ideal role for the fact-finders among us. You pick up significant skills in how to plan, prepare, execute, and adapt. The problems tend to be centered more on human interaction than legal jurisprudence. As an investigator you often find yourself working in the context of regulatory regimes, domestic, international, and cross-border. Learning new industry and regulatory environments on the fly is really what keeps an investigations practice interesting. You need to dive deep and you need to do it quick. Katherine channeled an internal drive an efficiency to see that this practice was suited to her, and relentlessly pursued it.
But a successful career in BigLaw is not the focus of an ideal IF:Then interview. Katherine walks us through how as a partner focused on investigations, she became intellectual curious about crypto, started writing about it, and helped form a fintech/blockchain working group at her firm. Diving in helped her start to see the demand for legal services up close, and she saw an opportunity to pivot into a fast-growing niche she found interesting. The first step was to just start doing - she took on smaller matters continued writing and networking in the space, and went from interested to excited like many who have tumbled down the crypto rabbit-hole.
That progression led to Katherine joining Maple Finance as General Counsel to develop the protocol’s legal strategy. Maple’s goal is to become the dominant institutional capital network for crypto. Undercollateralized lending has yet to be effectively utilized at scale in crypto, but Maple is one a few companies tackling this problem head-on by putting together a smart-contract platform that facilitates institutional lending interactions between borrows and lenders - generally with sophisticated institutions on both sides of the transaction.
On the Lending side, a business can earn yield on stable coins for example by depositing them in a Maple smart contract. Those lenders receive MPL token in return which automatically generates interest returns. If the lender wants to take on additional risk, they can stake that token, which will give them greater yields, but means that they will be first-risk capital in the even of a default.
On the other side are institutional borrowers. These are generally sophisticated crypto-native entities — hedge funds, traders, who use the debt capital to fund their operations. Because these loans are undercollateralized, these entities need to be KYC’d, vetted, and underwritten, in order for the protocol participants to be able to determine the likelihood of default and risk to the return on assets in the pool.
Lastly you have Pooled delegates - effectively a set of underwriters incentivized by protocol tokenomics to assess the creditworthiness of borrowers. They are able to do this in part because the Maple protocol KYC’s the borrowers, lenders, and the delegates themselves.
While undercollateralized lenders like Maple and Goldfinch are currently limited to institutions and/or accredited investors, you can see the tracks being laid to bring crypto more into the mainstream. Even if the process needs to include things otherwise anathema to crypto like KYC and underwriting, it opens the door to so many more users who may need to borrow funds. The biggest difference between this and the traditional system is the value capture. Without a bank soaking up the returns from lending, we’ve opened the door for people who want to earn stable fixed-income yield on their assets. DeFi resets the ownership paradigm at play in finance, and this seems to be only the beginning. We will see new products, new avenues for yield, new possibilities for financial instruments, and new aspects for risk. It should be a fun ride, and IF:Then will be there along the journey to help.
"Writing forces you to stay up to date and actually learn what's happening . . . it forces you to become an expert and you don't realize it." - Reggie Young of Fintech TL;DR and Lithic
We’re back with another installment of IF:Then, the hottest newsletter podcast about strategy at the intersection of law and technology. To stay up to date with interviews and news recaps on career intentionality and product strategy, hit that subscribe below.
You know the drill. Subscribe to the pod on Apple or Spotify, but more importantly drop what you’re doing and go rate that bad boy 5-star! We’ll wait.
I started writing this newsletter largely as a vehicle to discuss with the IF:Then community my thoughts on product and regulatory strategy, largely as in-house counsel, and to generally support IF:Then’s goal to encourage the community to embody the Legal Wayfinder spirit, as well as keep others up to date on interesting topics and items at the intersection of law and technology. After a handful of articles and a pivot to podcasting, the main takeaway from this experience is quite clear: it’s really helped me learn.
Content creation - especially if it involves some sort of topical analysis - is fairly similar to writing briefs in litigation. In order to make an argument, break down a topic, or spot a trend, you need to support the thesis with background and facts. Even if you have a good grasp of the subject, the need to cite your claims forces you to read. It forces you to synthesize disparate pieces of information. It forces you to think. Research!! If you want to explain something clearly and concisely, you have to know it well enough to simplify it. It’s harder than it sounds. Sitting down and writing The Underwrite Stuff helped me organize my thoughts around consumer lending in a way that I really hadn’t appreciated before putting pen to paper.
I also think writing makes you really challenge yourself to try to understand what you find interesting about a topic. The majority of newsletters I’ve written did not end up where I thought they would after writing. This is largely because as I was researching one take, the sources I was consuming ended up sending me on a different path. That type of microevolution was a huge part of self-discovery. What did I really want to write about? I think that can apply to your work or career as well. Where does your attention go when you’re creating whatever output your job requires? If you’re lucky enough to distill that, and it has any chance of being a productive trait, follow that instinct!
Content Kings
Just a couple of content guys making some content
This week’s guest on the podcast is newly minted Product Counsel at Lithic and the author of the questionably capitalized FinTech Law TL;DR. Reggie previously spent some time at Bluevine after doing fund formation work at a few law firms. Notably, Reggie was into content creation from the very beginning of his career, starting out as an editor for his college newspaper, penning a crypto blog for his early law firm, and eventually starting and maintaining Fintech Law TLDR.
Reggie chronicles for us how much he has been able to teach himself by writing. He details how it forces you to stay up to date with the news and deep dive yourself into your research topics. He also goes through his take on US stablecoin regulation before letting us in on the idea loosely featuring a Michael Scott run-in with the Juicero.
Lastly, Reggie walks us through his new job at Lithic, how #content plays directly into it, and the opportunity for card issuer processors.
Make sure you tune in, and even if you don’t, please subscribe on Apple Podcasts or Spotify, give us a 5-star review, and tell your friends that the If Then Podcast is full of wonders, insights, and joy. As I always say, do interesting work your are interested in. And if what you’re interested in is a strategic community full of attorneys and regulatory professionals, IF:Then is here to help.
"The way you earn the trust of the Product people . . . You have to learn the shit out of the product. You have to learn their jobs inside and out." - Shahab Asghar, on the If Then Podcast.
We’re back with another installment of IF:Then, the hottest newsletter podcast about strategy at the intersection of law and technology. To stay up to date with interviews and news recaps on career intentionality and product strategy, hit that subscribe below.
Welcome back everyone! Where’ve you been!? Ok fine. You may have noticed (hopefully you noticed) that If Then took a few months off the content-creation grind, and its probably left a meme-shaped hole in your heart. But just because the takes haven’t been flying to your inbox doesn’t mean that IF:Then has stopped thinking intently about legal careers, a growth mindset, and product and regulatory strategy.
That’s why we’re pivoting to podcasts.
Written internet content is tough business when you’re fully absorbed in a startup, but I’m happy to practice what I preach and turn the obstacle into an opportunity. Thankfully, the If Then Community has a deep bench of Legal Wayfinders applying a strategic mindset not only to the products and projects they work on, but to their own careers as attorneys shaping technology. It’s time to learn more about them and what they do.
Ultimately, every If Then Podcast should cover two high level topics:
Product Strategy - using legal skills and regulatory acumen to build a product, create the best user experience, grow a business, and add the most value to company. This goes for and applies to anyone in legal, policy, or simply building in a regulated space.
Career Intentionality - like many professions, a legal career can be navigated or it can navigate you. IF:Then is particularly interested in the choices Legal Wayfinders made along the way to do interesting work they are interested in, and actively seek to be their best professional selves.
Beyond that, we will always try to have a good time and have a conversation that is both entertaining and informative. Personally, one of my favorite things about writing the newsletter was how much I myself learned about the topic from doing research, refining ideas, and distilling thoughts onto the internet. I’m equally excited to chat with attorneys and builders, learn how really smart people have navigated their own journeys, and dig in to the topics that have interested them enough to make careers out of.
The Innovation Game
Behind every code . . . is a developer. But somewhere nearby that developer, hopefully, is a really good attorney.
As with all things IF:Then, the focus here is on community. That is why this week’s guest on the podcast is my good friend Shahab Asghar. When it comes career intentionality, Shahab has consistently been an early adopter. Shahab did something very unique early in his career - he took time off to reflect on his experiences along the typical BigLaw path in order to figure out exactly how to align his work and his interests. Not his hobbies, but work that made him eager and willing to continuously learn.
The way you earn the trust of the Product people . . . You have to learn the shit out of the product. You have to learn their jobs inside and out.
The Innovation Game charts Shahab’s path to joining Coinbase as their third lawyer in early 2015, and carving out a practice in privacy and security law years before Equifax, Cambridge Analytica, the general existence of Mark Zuckerberg, and GDPR brought those conversations to the forefront and made “Privacy Counsel” a huge market.
Shahab walks us through how, in his over six years at Coinbase, he learned to work collaboratively with product and engineering teams as a thought partner rather than as a check and/or balance, and his pitch on how to make Privacy a competitive advantage for the company.
We also touch on the inherent tension in blockchain/crypto between privacy (particularly anonymity and pseudonymity) and transparency (an immutable public ledger), and how that informs as we think about digital identity and how we interact with institutions and each other over the internet going forward. We don’t even mention the word metaverse, because if you say metaverse three times, a creepy VR avatar of Zuckerberg tries to get you to play Wordle with him or something, but I’ll just write it here. Metaverse!
Lastly, he takes us through his new role with Scale LLP, a sort of “decentralized law firm” that aims to reduce the costs of top-tier legal services by building an elite community attorneys with an entrepreneurial spirit. Scale attorneys are able to pool and share resources allowing them to give high-quality advice to clients while maintaining a lifestyle with a different incentive structure than the standard law firm affords.
Bonus Content!
We’ll try to put out one of these a week, and if I’m feeling spicy will find a way to put out an additional more news / current event oriented episode from time to time as well. I would love any feedback on the podcast or anything else - hopefully every episode going forward will be simultaneously the best one yet, and the worst it will ever be from that point forward.
As a bonus: below is the very first episode recorded with my good friend Ryan Taggett, building technology products at PricewaterhouseCoopers. Ryan takes us through what it’s like to be a technology company at a Big Four accounting firm, gives us some details on PwC’s role in that whole Moonlight/LaLa Land screwup, and pitches us an updated version of Tom Cruise’s The Firm.
Make sure you subscribe on Apple Podcasts or Spotify, give us a 5-star review, smash that like button (ok that one doesn’t apply), you know the drill. Hurry, before I pivot this into a TikTok. But most of all, do work that is interesting and that you are interested in. You have the skills to take control. And if you need some strategic help, a sounding board, or just generally a community, IF:Then is here to help.
We’re back with another installment of IF:Then, the hottest newsletter about legal strategy at the intersection of law and technology that all the kids are talking about. If you want to be in the know, make sure you go ahead and subscribe.
Gary Gensler is on a warpath! Janet Yellen is comin’ for your coins! It’s regulation szn in the world of crypto, and here in the US a clear trend is emerging. Subponeas. Are. Flying. Speaking at a crypto conference? You might get served on stage. Thems the breaks.
Technically, this trend of extreme service isn’t limited to subpoenas exclusively. We’ve got C&Ds, OSCs, MP3s . . . it’s hard to keep track. I don’t think Oprah is moonlighting as a federal regulator, but don’t ever tell me she wouldn’t kill it if she did. The point is, people are getting served, and apparently it can happen anywhere. Let’s dig into it!
It feels like ages ago we were talking about crypto-lender BlockFi getting tripped up by New Jersey, Texas, and Alabama, throwing a wrench into their perpetual fundraising machine. Not to be outdone, BlockFi competitor Celsius is now in the regulatory cross-hairs, having received regulatory missives from those same three states. And lest we point our fingers and laugh at the centralized platforms, decentralized exchange Uniswap is getting a look of their own, with news that the SEC has opened an investigation.
But perhaps the most interesting battle in this securities supermarket sweep spilled onto the mean streets of social media earlier this month with leading cryptocurrency exchange Coinbase getting served with Wells Notice (basically a “hey we’re going to sue you” letter) from the SEC. In response, Coinbase Chief Legal Officer Paul Grewal, LinkedIn’s last hero this side of Dan Price, teamed up with CEO and "mission-focus" aficionado Brian Armstrong to let loose an early-festivus airing of grievances. Grewal took the pen on the Coinbase Blog with a post titled, “The SEC has told us it wants to sue us over Lend. We don’t know why.” Armstrong, on the other hand, took to twitter with a thread calling out the SEC’s “sketchy behavior”, including Armstrong personally getting snubbed by the regulators on a trip to DC.
Coinbase wanted to engage with the regulator on their planned “Lend” product, a Blockfi-esque yield account for their users, but instead were notified that they would be sued if they launched Lend. While the “how can lending be a security?” posture is playing dumb at best, Gary Gensler’s SEC has clearly been far less collaborative than many in the media initially assumed when he was appointed given Gensler’s recent history teaching blockchain/crypto classes at MIT. What gives Gensler? We thought you were cool.
Things are moving so fast, that while I was typing the preceding paragraph, Coinbase announced that they are in fact bailing on the Lend product. So much for the social media strategy. Sad. Collaboration by twitter is great #content.
Even though Coinbase ultimately wasn’t willing to go to the mat (i.e. court) with the SEC, bold moves are a necessary part of any holistic strategy for the industry writ-large to define crypto’s legal standing. But one government request that Grewal pointed out raised a lot of eyebrows:
They also asked for the name and contact information of every single person on our Lend waitlist. We have not agreed to provide that because we take a very cautious approach to requests for customers’ personal information. We also don’t believe it is relevant to any particular questions the SEC might have about Lend involving a security, especially when the SEC won’t share any of those questions with us.
It’s not difficult to view an overreaching request for consumer data as the machinations of a surveillance-state power grab, especially in light of what appears to be a multi-faceted government swarm. But hey, why not ask? Some companies might just turn it over.
Coinbase is certainly no stranger to working with law enforcement and/or regulators - they’ve executed enough government contracts to make Palantir thinks its starting to seem a bit nefarious. Even so, declining to provide this level of user information was probably a pretty easy call. But for all you folks out there who haven’t yet reached that $50B market cap (stay on the grind, you’ll get there) there are a few things to make sure you have in place when it comes to handling an over-eager Uncle Sam.
Enjoying IF:Then? Why not spread the love? Think of just one like-minded individual and spread the joys the legal strategy and meme-based humor.
There are a few ways you might interact with a law enforcement whether or not you’ve actually been served. Depending on your business you might want to start with something proactive. An opportunity for education, putting a face to a name, and making sure you’re not seen as a bad actor. Even if you’re “moving fast and breaking things” it always helps to try to reach some common ground.
Hmmm. Ok bad example. What I mean is, it’s alway best if a regulator understands what you’re doing, why you’re doing it, and of course how it helps them and their goals.
On perhaps the other end of the spectrum, you might receive a notice that you’re being actively investigated. In that situation, well you should probably stop reading this newsletter and get a white-collar/investigations attorney who works well with prosecutors. Or, depending on the situation, one who doesn’t. Either way get your litigation hold procedures in order and if you’re not a skillful enough grifter to fake a deep voice for a decade, resist the urge to destroy any documents. But anyway, I’m digressing…
Setting Expectations
Outside of those aforementioned extreme ends of the spectrum, companies do have some leeway to push back, especially when it comes to consumer privacy. It’s easy to see why Grewal mentioned it in his public appeal. Apple didn’t exactly face a ton of public backlash by spent years fighting with the FBI over unlocking iPhones in connection with high-profile criminal investigations.
“The government is asking Apple to hack our own users and undermine decades of security advancements that protect our customers — including tens of millions of American citizens — from sophisticated hackers and cybercriminals,” the company said at the time. “The same engineers who built strong encryption into the iPhone to protect our users would, ironically, be ordered to weaken those protections and make our users less safe.”
Taking a stand like that requires a well thought out point of view, and its helpful to set those expectations - both with the government and with your customers - publicly, and from the beginning. Most companies map this out somewhere in their privacy policy setting the expectation that they will generally only reveal consumer information to law enforcement if “required to by law” or if necessary to protect someone or something from harm. Going back to Coinbase, for example, they have a fairly standard provision.
With law enforcement, officials, or other third parties when we are compelled to do so by a subpoena, court order, or similar legal procedure, or when we believe in good faith that the disclosure of personal information is necessary to prevent physical harm or financial loss, to report suspected illegal activity, or to investigate violations of our User Agreement or any other applicable policies.
There is a lot of wriggle room by design in those type of statements - they call out discrete but broad parameters that allow them to essentially do what they think is right. Whether or not you’ve been subpoena’d, there is a big difference between complying with AML reporting requirements, actively helping to prevent crime, and handing over the names of some folks who clicked “yes” on a waitlist. At some point, the company needs to make a value-judgment and stand behind it, and while government compulsion is certainly one of the determining factors, there are times to push back against that as well.
Keeping it Simple
But overall, for most companies and most situations, interactions with law enforcement eventually becomes a standard part of doing business. Most of the time law enforcement asks for more specific pieces of information, and its much easier to make an assessment of a narrow request than some categorical sweep. For those circumstances, an established internal policy along with some workflows and process can take you pretty far.
Some simply create a dedicated email for law enforcement requests. If Trust and Safety is a bigger part of the business, a dedicated workflow or portal makes more sense. For example, Airbnb and Uber provision logins to law enforcement agencies, who are generally happy to follow a company-defined process if it makes their jobs easier and makes the company more willing to give information.
Both Uber and Airbnb are of course marketplaces that involving in-person interactions where users may have disputes with each other, and in unfortunate circumstances need to file claims with the police revolving around their use of the service. There are plenty of circumstances where it makes perfect sense for the company to reveal as much information about a particular user as possible.
Ultimately, most would do well to recall a tried and true concept in constitutional law: the “reasonable expectation of privacy.” The evolution of Fourth Amendment jurisprudence is largely based on that concept and its fairly fitting for companies to use as a rubric for their own internal compass. While the internet has a very, very long way to go in terms of privacy, businesses should have the awareness to gauge how they position their own users expectations of privacy. Apple has set the expectation that it will not break into users’ phones for the government and has been willing to stick by that principle. Coinbase correctly recognizes that users credibly accused of crimes or exhibiting suspicious behavior do not have the same expectation of privacy as those clicking on a waitlist button for a yield product. It’s much easier to make that determination if you’ve drawn out the line for yourself in advance, and set your own expectations.
If you’re interested in joining the IF:Then Syndicate, or are an early-stage founder looking for strategic partners, please reach out to david@ifthen.vc
We’re back with a post-Labor Day installment of IF:Then, a newsletter about legal strategy at the intersection of law and technology. To get this content to work its way into your inbox each week, go ahead and subscribe below:
I hope everyone had a wonderful Labor Day. In honor of the holiday, I decided to write about the laborious battle between labor unions like Service Employees International Union (“SEIU”) and rideshare/gig-economy apps like Uber, Lyft, Doordash, and Instacart. If you thought this story was over, a Superior Court Judge in Alameda County recently ruled that Prop 22, the quarter-billion dollar successful ballot initiative funded by the aforementioned rideshare companies that codified their business model, was unconstitutional under the California constitution. The purported violations were more about California procedure and separation of powers than anything else. To sum it up - you doin’ too much.
The story is well told and still relatively fresh but Uber and Lyft upended the taxicab industry, ushered in a new era of growth-at-all-costs in venture-backed technology companies, and helped change the fabric of work as we know it. No big deal. A decade later, Uber and Lyft rides may be hilariously expensive compared to where they were a few years ago, but they remain an entrenched part of our society.
These companies, and the “gig economy” writ large, have since their inception relied on “app-based drivers” classified as 1099 independent contractors rather than W-2 employees. Proponents of this system — which purportedly included 71% of Uber and Lyft drivers when last surveyed by the Rideshare Guy — would say that independent contractor status affords drivers flexibility. Set your own hours, location, playlist, iPhone charging policy, whatever. Detractors would say that this setup simply allows these companies to skirt minimum wage laws, provision of benefits, and fear of collective bargaining.
Regardless of where you sit on this issue, its clear that this type of work doesn’t fit neatly into our previous notions of skill-based freelance work vs traditional employment, and the future of work generally is rapidly shifting post-pandemic. If the future of work is independent, led by the creator economy, or fueled by overemployed.com, a service that helps you work two full-time remote jobs, the present is a much murkier - an in-between zone where we don’t quite know if in-office teams will or should even be a thing anymore.
In this post, we’ll eschew discussion about the future and talk about the Present of Work. How companies can navigate a shifting landscape, and stay ahead of the curve, keep employees happy, and not get sued into oblivion in the process.
The pandemic has thrown the nature of how and where we work into a total blender, particularly for folks in what used to be known as office jobs. The remote vs in-person vs hybrid debates and experiments will likely rage on, as interminable as the pandemic that sparked them. But going back to the before-times, the rideshare debates have been the biggest catalyst for the nature of how we legally classify workers, particularly in the United States, with California as the initial battleground. Do you work for yourself? For a tech company? Both? It’s becoming a blur.
Who do you work for!!???
After years of back and forth, the first major public salvo came from the California Supreme Court in April 2018 in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (“Dynamex”). The court in Dynamex instituted a new standard for determining worker classification, instituting a presumption of an employment relationship unless an entity could show that the worker was an independent contractor through an “ABC test.” Under the ABC test, a worker is presumed to be an employee unless the entity can show each of the following requirements:
(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Seemingly the goal of this test is to delineate between the type of work we’d generally associate with “freelance” and what app-based drivers do, but its inelegant at best and concepts like what constitutes “control and direction” or the “usual course of business” will probably require years of caselaw to really nail down.
The Dynamex decision combined with the proliferation of gig economy work left a lot of uncertainty for everyone except plaintiff’s labor firms (when in doubt, sue). A little more than a year after the decision, the state legislature codified, clarified and expanded the ABC test with Assembly Bill 5 (“AB5”). With AB5, the legislature applied the ABC test more broadly throughout the state’s employment scheme, but also rattled off a list of exempted occupations for whom the older Borello multi-factor test (mostly based on “employer” control ‘a la prong “A” of the ABC test) still applies.
Not to take this lying down, the rideshare/food delivery companies mobilized, and by mobilized I mean poured hundreds of millions of dollars into Prop 22, a ballot initiative campaign that successfully exempted app-based-drivers from AB5 and provisioned some benefits and reimbursements for drivers. Living by the go big or go home ethos, Prop 22 also prevents any sort of organization/collective bargaining by drivers and requires a 7/8 legislative majority to make any amendments (or a majority vote and subsequent ballot).
It’s those last bits that led to the judicial decision, particularly the idea that preventing collective bargaining was outside the scope for the ballot initiative, which should have a “single-subject” which ostensibly was pertaining to contract work, not organization. The judge also dinged the rideshare companies on the totality of the acts ability to prevent amendments by keying in on a constitutional requirement that the legislature be freely able to dictate worker’s comp regime. By that reading, such a provision would need to be made by constitutional amendment rather than by statute as was Prop 22.
In any case, this will shake out after years of appeals…. somewhere. But as Uber and company fight over their carveout from AB5, here in California the law remains in effect.
Find your closest loved one, or perhaps an early-stage founder in a regulated industry ,and give them the give of sharing IF:Then. If you are that founder, shoot me an email david@ifthen.vc.
The rideshare / labor battle will continue in other venues, but two lessons from California are fairly clear (1) it’s going to take years for this to all play out; and (2) the rideshare discussion is bringing employment classification to the forefront across the board and will reverberate in nearly all industries. In meantime, here in California we’ve got the ABC test, we may or may not have some aspects of Prop 22, and we absolutely will have misclassification disputes.
Why does this matter for a fintech? Or a B2B SaaS company? Or a social network? While you may not be deploying an independent contractor fleet at scale, businesses have always used contractors for specific tasks, time-boxed projects, or seasonal engagements.
Using influencer marketing?
A part-time social media manager?
How about third-party on-site employee training?
Or maybe an event planner for your quarterly off-site (on-site?).
While none of these are new concepts - the barrage of litigation, lobbying, and legislation, supercharged by a global pandemic, have massively shifted the way we think about employment, and brought these issues to the forefront. Playing fast and loose with your classification process isn’t an option anymore - the gig economy is officially mainstream.
Prong “A” of the ABC test is most universal aspect any employment classification analysis.
that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact
Unlike prongs (B) and (C), which are mostly backward looking concerning the scope of the hiring entities business and the trade the worker is customarily engaged in, prong (A) deals with both the relationship as established (i.e. the contract) and how it actually plays out in practice. The concept is the most similar to the previously used Borello standard, and is fairly generalizable even in states that don’t explicitly use California’s verbiage.
The main takeaway should be that what you put in your contract is not the be-all and end-all. Words matter, but their impact is limited. That said, as the first opportunity to memorialize the understanding of the parties at the time of your relationship, adding as much detail as possible into the contract lays the appropriate groundwork for any engagement. So let’s cut to the chase: some very basics that should be in any work contract
Scope of work - what they are there to do and why they are doing it;
Expected deliverables - what constitutes completed work, and the timeframe on which it should be done;
When and where the work should be performed - i.e. wherever and whenever at the contractor’s own discretion;
Identify the tools, equipment, and access needed, especially if the contractor is using their own;
Attach the experience and resume of the worker to the contract to establish their prior work or general occupation
The contract will help, but that’s the easy part. When you’re mixing contractors with employees, there are times where the responsibilities can blur. Maintaining clear boundaries is key, but this can get tricky when those boundaries create friction. Or where you need to balance them with other concerns like security.
Site access - contractors need to generally be free to choose their hours, but that needs to be balanced with on-site security concerns.
Email and systems access - contractors may need access to certain tools or apps within your system in order to communicate or collaborate with team members. The ability to provision access control is important, and not something all organizations (especially startups) have.
Invoicing and payment - while employees will generally be on payroll contractors should invoice their work. Hiring entities should be clear about the level of details they’re looking for in the invoices.
Detailing deliverables - If possible, encourage contractors to detail in real time when/where/how they worked on something. If a dispute arises later this type of contemporaneous reporting is invaluable.
None of these lists have any groundbreaking information in them, but its important to recognize that the present of work is clearly headed towards a more flexible future. Not all of us will be part of the creator economy (at least until I start charging for this substack, heyo!!), or have the tenacity to work two simultaneous full-time jobs, but the connectivity of the internet is ceaselessly encompassing, and the pandemic has laid bare that many of the constraints we place around how, where, and when we work are artificial or outdated.
While we can be sure more change is coming, we will continue to feel our way through the dark with hybrid experiments. Ballot initiatives outlawing collective bargaining may not be the way they get there, but they’re certainly making the conversation salient. Any business that is not careful and deliberate in how they hire and manage workers going forward is likely to be caught off-guard. But don’t worry, if describes your business, IF:Then is here to help.