Another on-demand startup just turned its workers from contractors to full-timers

The dominoes are falling as yet another on-demand startup has decided to change how it classifies employees.

Luxe Valet, an on-demand parking service, will be making the switch from hiring independent contractors to classifying its valets as employees with benefits, according to the Wall Street Journal.

The switch comes at a time when the on-demand economy has been hounded by lawsuits and confusion over the employment of its workforce.

Many startups, like Uber and Lyft, have contracted their drivers or workers as independent contractors, or more generally known as 1099 employees because of the 1099 form they fill out for the IRS. However, many companies who had followed the Uber employment model are starting to switch to employees.

In the past two months, startups like Instacart and Shyp have switched their workers to W2 status instead of independent contractors. Luxe now joins that list as its competitor, Zirx, is reported to be mulling it over as well.

Luxe’s CEO and co-founder Curtis Lee told the Wall Street Journal that the bevy of lawsuits facing startups in the space was not a factor, though, and the company decided to make the switch after doing a business and legal analysis of Luxe.

Luxe has raised $US25.5 million in VC funding from Venrock, Redpoint Ventures, BoxGroup, Slow Ventures, SV Angel, SherpaCapital, Upfront Ventures, and others. Currently, Luxe also operates in San Francisco, Los Angeles, Chicago, Seattle, New York, Austin, and Boston. The company plans to expand to Washington D.C. and Philadelphia later in 2015.

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