This year, Misty Heitman began teaching Chinese kids online at night to help support her family. Early one morning in her home west of Nashville, the mother of six was logged on for class when tragedy struck.
This year, Misty Heitman began teaching Chinese kids online at night to help support her family. Early one morning in her home west of Nashville, the mother of six was logged on for class when tragedy struck. Her nine-year-old daughter, who’d been suffering migraines, died in her sleep. Heitman was heartbroken. She canceled classes and mourned. The family ended up moving to a new house because they couldn’t live with the memories. Then things got worse. Heitman, 42, lost her job at VIPKid—though she says she told the Chinese startup what happened and was assured her job was secure. “I got an automated email marking the days I’d been out, including some that had been cleared, and saying I’d been terminated,” she says. Heitman wrote about the incident online in September, fueling fury among her fellow teachers. They took to Facebook and other forums to express their outrage and call for justice for Heitman and other workers. VIPKid apologized, sent flowers and reinstated Heitman, who later told Bloomberg News: “They did the right thing in the end.”
That didn’t quell the controversy. Some teachers say the company’s policies—like those for cancellations—are more applicable to employees than contractors, the designation VIPKid prefers. The startup says it complies with all U.S. labor regulations and constantly searches for ways to improve the service for students and teachers. VIPKid is the latest gig-economy company to be ensnared in the contractor-versus-employee debate. Uber Technologies Inc., which treats drivers as independent contractors, was sued last year in the U.S. by drivers claiming that it misclassified workers, allegedly depriving them of overtime wages and tips. Food-delivery service GrubHub Inc. was sued on similar grounds. Both have denied wrongdoing and are fighting the lawsuits.
“This is an increasingly pervasive problem,” says David Weil, former administrator of the U.S. Department of Labor’s Wage and Hour Division and now Dean of the Heller School for Social Policy and Management at Brandeis University. “Companies come up with a way to provide service by tapping on a screen instead of making a phone call and they want to call their workers contractors.” VIPKid is one of the fastest-growing companies in the Chinese education sector, with revenue on pace to reach 5 billion yuan ($755 million) this year and about 30,000 teachers. It said in August it’d raised $200 million from investors including Sequoia Capital China and Tencent Holdings Ltd. Eventually, VIPKid plans to go public, which could be complicated if there are outstanding legal questions over the status of its teachers.
A company that uses contractors doesn’t pay taxes for them, meaning workers have to write checks to cover income taxes, Social Security and Medicare. But if the teachers are deemed employees, VIPKid could be compelled to start paying more—and may be liable for taxes from previous years. So far, no one has filed a lawsuit or made public a complaint to U.S. regulators about VIPKid’s practices. With good reason, says Joshua S. Lipshutz, a partner at Gibson Dunn & Crutcher who represents the company. “Teachers who sign up to use VIPKid enter into an independent contractor relationship with the company and, as a result, enjoy a tremendous amount of independence and control,” he said in an emailed statement.
Weil, the former Labor Department official, cautions that his information is limited and that determining whether someone is a contractor or employee is a complex undertaking. Much depends, he says, on how much control a given company has over pricing, customers, hours and the services delivered. But based on what he knows of VIPKid, Weil says, the startup’s teachers are “more likely than not employees” under the Fair Labor Standards Act. Whatever the legalities and potential policy prescriptions, the debate isn’t going away. After Heitman’s post, emotions about her treatment ran hot. “You fired somebody because her daughter died?” Emily Weaver, 38, another U.S. teacher at the company, said in an interview. “What happens to me if I get in a car accident or something else happens?”
Another teacher told how she taught classes from her hospital bed the day she gave birth for fear of losing her job. Another said she had an emergency appendectomy, but taught two days later in case the company didn’t view her illness as serious enough to warrant skipping classes. A third woman says she was hospitalized for migraines, filed proof with VIPKid but then learned that wasn’t strong enough to miss class.The company says that this month it began to allow teachers to cancel classes 24 hours ahead of time with no penalty for emergencies under a so-called medium cancellation policy. They can also scrap classes within 24 hours, but pay a financial penalty to do so. The new medium cancellations do not count against the six allowed per contract, the company said.
It’s not clear whether any of this will affect VIPKid’s ability to recruit American teachers, which it touts as a key advantage to Chinese parents. Ratings on Glassdoor, a website for workers to share their experiences with employers, have dropped to 3.9 stars from a near-perfect 5 early last year. On the same site, 75 percent of reviewers said they would recommend it to a friend, while 84 percent approve of CEO Cindy Mi. Shannon Mabry, a 28-year-old who runs an 11,000-member Facebook group for VIPKid teachers says the vast majority of teachers are happy with the company. Heitman is no firebrand. She wrote about her experience online only because she wanted to figure out when she could reapply to VIPKid. After the apology and reinstatement, she’s ready to move on. “I was hurt at first, but we worked it through,” she says. “I know they’re a young company.”
Sentiment has shifted though. VIPKid is a company that teachers have raved about, praising its management, curriculum and flexibility in giving chronically underpaid American teachers a way to make extra money on their own schedule. But some workers now think the company has to loosen its policies—or face pressure to classify them as employees. “It’s a really big deal if a company gets caught misclassifying workers,” says Weaver, who has worked as a contractor much of her entire career and says she checked the company’s practices against state and federal criteria. VIPKid says it’s open to more input. “We are constantly searching for ways to improve the VIPKID experience for both students and teachers, and we welcome any and all feedback from the teacher community to help us achieve that goal,’’ Adam Steinberg, a spokesman for the company, said in a statement.