US lawmakers want a Department of Labor investigation into $12B HR startup Deel for using independent contractors, according to Insider’s investigation.

US lawmakers want a Department of Labor investigation into $12B HR startup Deel for using independent contractors, according to Insider's investigation.

HR Startup Deel Faces Federal Investigation for Misclassifying Contractors

Deel HR Startup

A group of Democratic congresspeople, led by California representative Adam Schiff, is urging the United States Department of Labor to launch a federal investigation into the HR startup Deel. The lawmakers allege that Deel has misclassified employees as independent contractors, a move that could potentially increase the company’s profitability and growth.

The call for an investigation stems from concerns raised in a March 2023 report by Insider. The report revealed that Deel, a $12 billion startup that facilitates global workforce management for large organizations, classified at least half of its workers as independent contractors. Furthermore, the responsibilities of full-time staff and independent contractors were often indistinguishable. Many workers believed they were applying for full-time positions, only to be offered long-term contractor roles.

Deel has utilized independent contractors in numerous countries, including the US, Canada, the UK, Australia, France, Germany, Spain, Greece, Brazil, Turkey, India, Pakistan, Hong Kong, Singapore, the Philippines, and Nigeria. However, as contractors, these workers are denied certain employment rights and benefits. Depending on their location, they may be unable to join a union, lack legal protections against unfair dismissal, miss out on pension contributions, health insurance, and mandatory severance pay.

Previous and current workers expressed concerns that Deel may be misclassifying employment statuses. Even Deel’s CEO, Alex Bouaziz, was initially an independent contractor. However, a Deel spokesperson confirmed that Bouaziz is now a full-time employee.

In their letter to the Department of Labor, the lawmakers also highlighted their worries about Deel’s promotional material, particularly Deel Shield. This service allows other companies, including major brands like Nike, Dropbox, Shopify, and Red Bull, to hire independent contractors through Deel’s platform. The lawmakers expressed concerns that Deel’s clients embracing the independent contractor model could negatively impact workers’ rights and diminish the tax base for vital government services.

This call for a federal investigation follows similar actions at the state level. In June, California State Senator Stephen Padilla requested an investigation by the state’s Labor and Workforce Development Agency, also based on the findings in Insider’s report.

In response to the allegations, a Deel spokesperson denied the claims, stating that the allegations were “wrong” and rooted in inaccurate reporting. The spokesperson emphasized that Deel’s mission is to properly educate and assist companies in correctly classifying their workers worldwide.

The outcome of this investigation could have far-reaching implications for both Deel and the gig economy as a whole. It raises questions about the platform’s compliance with employee classification laws and the impact of its services on the broader workforce and economy.

If you work at Deel or use its services as a customer and have information to share, please contact Insider reporter Rob Price via the encrypted messaging app Signal at +1 650-636-6268 or email at [email protected]. Your confidentiality will be respected, and it is recommended to use a non-work device to reach out.


Key Points:

  • A group of Democratic congresspeople, led by Adam Schiff, is calling for a federal investigation into HR startup Deel for misclassifying employees as independent contractors.
  • Insider’s investigation in March 2023 revealed that at least half of Deel’s workers were classified as contractors, with little distinction between their roles and those of full-time employees.
  • Deel’s workers in multiple countries are denied employment rights, including union membership, protection against unfair dismissal, pension contributions, health insurance, and severance pay.
  • Concerns have been raised regarding Deel’s promotional material, particularly Deel Shield, which allows other companies to hire independent contractors through the platform.
  • Similar investigations have been initiated at the state level, with California Senator Stephen Padilla calling for an investigation by the state’s Labor and Workforce Development Agency.
  • Deel has denied the allegations, stating that they are based on inaccurate reporting and that the company’s mission is to help companies properly classify their workers.