US lawmakers are calling for a Department of Labor investigation into $12B HR startup Deel over its use of independent contractors, citing Insider's investigation
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- Democratic lawmakers are demanding a Department of Labor investigation into HR startup Deel.
- In March, Insider reported on internal concerns at Deel over its use of independent contractors.
- California rep. Adam Schiff is now leading the call for a federal investigation.
A group of Democratic congresspeople led by California representative Adam Schiff are calling for a federal investigation into the $12 billion HR startup Deel for allegedly misclassifying employees as independent contractors.
In a letter to Acting Labor Secretary Julie Su on July 26, citing an investigation by Insider, the group urged the United States Department of Labor to investigate whether Deel had misclassified employees as independent contractors "on purpose to increase their profitability and growth." The letter was first reported on by Bloomberg.
Insider's March 2023 story found the startup, which helps large organizations hire and manage workers around the world, classified at least half of its workers as independent contractors. It also distinguished little between the responsibilities of full-time staff and independent contractors. Many workers told Insider they believed they were applying to be full-time employees, but were offered the same job as long-term contractors.
The startup has hired workers as contractors in the US, Canada, the UK, Australia, France, Germany, Spain, Greece, Brazil, Turkey, India, Pakistan, Hong Kong, Singapore, the Philippines, and Nigeria, among other countries.
Deel workers who are hired as independent contractors do not receive certain employment rights that they would otherwise be entitled to if they were full-time employees. Depending on location this can include the right to join a union, legal protections against unfair or sudden dismissal, pension contributions, health insurance, and mandatory severance pay.
Numerous current and former workers previously told Insider they had concerns the company may be misclassifying contract workers' employment status.
Even Deel's CEO, Alex Bouaziz, was an independent contractor, he told Insider in March. But a Deel spokesperson confirmed Bouaziz is now a full-time employee.
"If it is likely that Deel is unable to abide by employee classification laws themselves, and they are in the business of helping their clients classify their employees, how sound can their advice be, and what is the broader systemic and economic impact as a result," wrote Schiff and Bill Pascrell of New Jersey, Raúl Grijalva of Arizona, André Carson of Indiana, John Garamendi of California, and Haley Stevens of Michigan.
The letter also cited the lawmaker's concerns over Deel's promotional material advertising products like Deel Shield, which offers Deel's services to other companies to hire independent contractors. Deel is currently used by some of the world's largest companies including Nike, Dropbox, Shopify, and Red Bull.
"Our concern is that this will lead the company's growing client base to embrace the independent contractor model, short-changing workers of their rights and shrinking the tax base for essential government services," the letter adds.
In June, California State Senator Stephen Padilla called upon the state's Labor and Workforce Development Agency to investigate the company on similar grounds, also citing Insider's investigation.
In a statement, a Deel spokesperson called the allegations "wrong" and "based on inaccurate reporting." Insider stands by its reporting, and Deel has not asked Insider for any corrections.
We want the same things as the government does — to help and educate companies to classify their workers properly. That is what we do, in over 120 countries," the statement said. "Today we have over 100 compliance experts in house and have invested together with universities on tools and technology to help clients with classification worldwide.
"The letter alleges we advise clients improperly — that would be at complete odds with our business model."
Do you work at Deel, or use its services as a customer? Contact Insider reporter Rob Price via encrypted messaging app Signal at +1 650-636-6268 or email at rprice@insider.com. Confidentiality offered. Use a non-work device to reach out.