California unemployment: Layoffs rock Bay Area delivery startup

MENLO PARK — Deliv, a startup with cutting-edge technologies to speed deliveries, has chopped several hundred jobs in Silicon Valley, just months after the company changed its business model to cope with controversial state rules regarding independent contractors.

Founded in 2012, Deliv burst on the scene with technologies that powered same-day deliveries to consumers who ordered items online from brick-and-mortar retailers and shopping malls with the added twist of using crowdsourcing to locate drivers available to pick up and speed the items to shoppers.

Menlo Park-based Deliv used an army of independent contractors as its delivery drivers and grew steadily, eventually reaching 1,400 cities in 35 markets in 2019 and partnering with a widening array of retailers that paid Deliv to undertake the shipments to consumers.

Last June, ahead of the pending approval of AB 5, a measure poised to transform the state’s bustling gig economy and possibly prompt companies such as Uber, Lyft, DoorDash, and Postmates to reclassify many of their workers as official employees, Deliv launched a sweeping change in how it would categorize many of its workers.

Deliv created a subsidiary, Deliv California, that would hire its drivers in California as full-fledged employees of the Deliv unit.

The company expressed confidence that transforming its gig workers into official employees wouldn’t harm its enterprise.

“Deliv’s ability to offer cost-effective same-day delivery is driven by its proprietary technology and unique business model, not the classification of workers,” the company stated last June.

In January, legislative bill AB 5 became a California law, but just a few months later, Deliv began to falter badly.

“Due to a confluence of events over the past few months, Deliv will, unfortunately, be winding down our operations over the next 90 days,” Daphne Carmeli, chief executive officer of Deliv, wrote in an email to employees in early May.

Deliv has decided to lay off 669 workers involving employees who are based in Menlo Park or report to the company’s headquarters in that South Bay city, according to an official WARN notice.

“Deliv Inc. and its wholly-owned subsidiary Deliv California have decided that they must permanently lay off a number of employees,” Regan Parker, head of legal compliance for Deliv, wrote in the official notice that was received by the state Employment Development Department on May 13.

The largest cluster of layoffs affected 591 drivers for Deliv California, the WARN notice showed.

“The sale of the company’s assets and closing of the company” were the primary factors behind the massive layoffs, Deliv stated in the WARN notice.