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Fresh Air! Speed! Poverty! Servitude!
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The founders of Chicago's
first bike messenger collective think there's gotta be a better way.
By Scott Eden
Chicago Reader, June 23, 2006
Rene Cudal was the last to quit. The Friday after Labor Day 2005 was
the day he'd marked in his calendar, but he procrastinated all morning
and afternoon, dreading the moment his boss would put two and two
together. Finally the boss went home. Cudal called him that evening and
gave him two weeks' notice.
A bike messenger quitting isn't so unusual-messengers will tell you
they all develop a strategy to extract themselves from the job, which
is defined by a high risk of bodily harm, low wages, and few or no
benefits. Michael Carey, Cudal's boss at On Time Courier, was a former
messenger himself. But Carey, a big, block-shouldered man with a
reputation as both a polished salesman and a hard-line intimidator,
didn't take Cudal's news well. "What's happening?" Cudal remembers him
saying. "What are you doing? Starting your own messenger company?"
Jon RandolphCudal was in agony. "Well," he said, "yes."
One by one over the past three weeks, Cudal's partners Jack McLaughlin,
Josh Korby, and Mike Morell had resigned from On Time to get to work on
their own company, 4 Star Courier Collective. There are more than half
a dozen courier companies in Chicago run by former messengers, but 4
Star would be different: it would be worker-owned and -operated, the
first messenger coop in Chicago and only the third in the U.S.
In an act of bravado Carey apparently hadn't noticed, in August, before
any of them had quit their old jobs, the 4 Star couriers sent out a
press release explaining that they were striking out on their own
because they were "fed up with the exploitative nature of most courier
companies in Chicago." They announced the "first annual" 4 Star bike
messenger prom, preceded by a pedaling parade that offered tattooed
young women in prom dresses and held in a building where the super was
a former messenger. Around 200 people showed up, the party netted $700,
and because almost everyone there was a courier the collective
interpreted it as a vote of confidence from the "community." Korby, a
28-year-old with a BFA from the Art Institute, anonymously told the
Tribune, "We want to bring a personal side to the messenger industry.
We'll be the owners. We'll care."
The company name alludes to the four stars on the Chicago city flag.
There were actually five founders, the fifth and youngest being Jen
Greenberg, a 19-year-old college dropout and occasional velodrome racer
who'd been a messenger only a year and a half. She rode for Arrow
Messenger and wouldn't have enough money saved to quit until later in
the fall. The five of them figured they needed a couple thousand
dollars in the bank apiece to cover costs while they were getting
started.
Friends and colleagues admired their chutzpah and questioned their
wisdom. For a decade and a half the industry had been in decline, as
faxes and e-mail ate into its market. About 70 messenger companies did
business in Chicago in 2001. Four years later there were half that
many. "The way this business is now, you'd be foolish to start a new
messenger company," said a veteran messenger. "The industry is
cutthroat. These companies will do anything to squash a competitor."
A senior at Northwestern University's journalism school, Mike Morell
published a story about bike messengers in the student newspaper. It
was March 2001, and he'd returned to school the previous fall after
dropping out for six months, soured on journalism by an internship at a
small California daily. They'd put him through the usual paces, made
him telephone the family of a politician who'd just died in a car
accident. He never got over feeling that he'd invaded their privacy.
During his break from school he needed money. He'd answered a Reader ad
placed by Standard Courier, an operation that used about 15 bike
messengers, and was delivering packages the next day. "They just gave
me a postcard- size map of the Loop, asked if I had a helmet, and sent
me out," he says. "I was as green as you could get." Born and raised in
San Diego, he knew little about Chicago geography. Messenger culture
was new and strange to him, and he expected his time in it to be brief.
But soon enough Morell learned the ins and outs of the Loop grid. He
learned how to transport boxes nearly his own size by balancing them on
his handlebars. He learned how to ride a fixed-gear bike, the de
rigueur rig for most messengers- no derailleurs, no freewheel, no
brakes. He learned how to balance on his bike at stoplights-back a
quarter crank, forward a quarter crank, the front wheel at an angle
just so. At five-seven and 130 pounds, he rode lightly in the saddle,
like a jockey. When he went back to school, he kept the job. In his
piece for the Daily Northwestern he put it like this:
"Being a messenger means more than a paycheck. It means fresh air and
sunshine, wind and snow. It means muscle and endurance, stink and
sweat. It means camaraderie and it means being ostracized. Whether it's
freedom from four walls, from corporate culture or from a life on the
streets, the bike messenger values independence." It was the last story
Morell wrote.
After graduation he went fulltime at Standard. He'd come home at night
with aching joints and wake up in the morning with a swollen knee.
There were days he could barely walk. His rookie season he made only
about $300 a week, but he lived frugally-to date he's never paid more
than $450 a month in rent, and he hasn't owned a car since becoming a
messenger. "As far as expenses go," he says, "it's rent, food, and
beer." And bicycles. Morell estimates that he's spent about $5,000 on
gear since becoming a messenger; including two $1,200 bikes he calls
"my only luxuries."
Standard paid him the industry standard-a 50 percent commission on each
delivery run, or "tag" in messenger parlance. Companies charge about $6
a tag, give or take a few quarters depending on the length of the run,
the weight of the cargo, and the urgency of getting it to where it's
going. Morell put in nine-hour days, and as often as not lunch meant a
sandwich in one hand and a handlebar in the other. Caught up now in the
culture of the messenger, he had bicycle gears tattooed on both wrists.
Toward the end of his time there Morell achieved about the closest
thing to a sinecure that a messenger can get. Standard assigned him a
single client, a big downtown company that sent out 40 packages a day,
all to other nearby offices. This gave him time to "work the board,"
taking whatever other jobs the dispatcher had coming in. He was making
about $600 a week after taxes, $24,000 a year. Morell had reached the
top of his field. But he was increasingly dissatisfied.
One afternoon about a year into the job, Morell took a corner too fast
and tight. His bike slid out and he hit the ground chin first. He
finished his run anyway, then pedaled to the emergency room, where he
got eight stitches. He says his manager at Standard "strongly
encouraged" him to use his Northwestern student insurance to protect
the company's worker's comp premiums.
A few months earlier Morell had done his first taxes as a bike
messenger. Because he was classified as an independent contractor, no
taxes were withheld from his pay and there was no employer to pay half
his social security contribution. He owed about $4,000. "It cleaned me
out," he says.
He got no paid sick days, no overtime, no paid vacations or holidays,
no health insurance, no disability, no unemployment benefits should he
lose his job. He engaged his bosses in "ongoing debate," and their
logic was the logic of the rock and the hard place. Standard could
either give its couriers benefits or give them work.
Morell thought it might be fine to be an independent contractor if the
company would treat him like one. But he says he was told to buy and
wear a $30 vest or face a $50 fine, to buy five T-shirts with the
Standard Courier logo at $5 apiece, and to rent a two-way radio from
Standard for $40 a week. The vest was black and heavy; in the summer
sweat poured off him. He stopped wearing it, got caught, was warned,
got caught again. The third time, his pay was docked $50.
After that Morell began looking for another job. He wanted a company
that either classified its couriers as employees or gave them more
actual independence. On Time did both. Pay was on commission and there
was no health insurance, but his taxes would be withheld and the
company even offered a 401(k) plan- unheard-of in the industry. And On
Time seemed less hung up on rules and regulations. "They didn't
micromanage," he says. "They pretty much said, 'Go ride, work hard,
make some money,' and that's what I was looking for." When On Time
hired him he quit Standard on the spot.
"But if I'd been an employee," he says, "I would have given them two
weeks' notice."
The Chicago Messenger Service is the oldest and largest courier
company in the city. Founded in 1964 by Hymen Factor, it has about 100
bike messengers and 480 drivers on its roster. The company made them
all independent contractors about 25 years ago, the first courier
company in Chicago to do so. "It's a win-win-win," says president
William Factor, son of the founder. "It's a win for the company and for
our customers because we don't have any unproductive help, as opposed
to an hourly guy who has no incentive to rush, and who'll sit in a
diner all day and read the newspaper and have a cup of coffee. And it's
a win for the couriers. Most are like businesspeople-it's like they own
their own businesses."
Regulators have estimated that this model can reduce payroll costs by
up to 40 percent, and today 70 percent of the nation's couriers are
treated as independent contractors. The U.S. Revenue Act of 1978 allows
employers to classify workers as they see fit provided there's a
"reasonable basis" for it. Reasonableness turns on the question of who
controls the work. Who decides length and place of employment? Who
reserves the power to hire and fire? In 1992 the Illinois Department of
Employment Security ruled that Chicago Messenger Service controlled the
work. This meant that its couriers were employees, not contractors, and
that the company owed the state some $125,000 plus interest for two
year's worth of unpaid employment insurance contributions. Appeal
followed appeal, but last year the Illinois Appellate Court upheld IDES
and the Illinois Supreme Court denied the company a hearing.
It was a defeat that apparently had no immediate effect on any other
company, and one that CMS doesn't accept. "We wholeheartedly believe
that they're independent contractors, and we'll continue to fight the
issue, along with 70 percent of the industry," says Factor. "We have
lobbyists. We have lawyers. We'll continue to litigate it."
Around the time Morell left Standard, he helped resuscitate a group
called the Windy City Bike Messenger Association, which, in his words,
"was about building community, getting organized, and helping each
other out." Windy City started up in the mid- 90s, but when its
founders quit the biz it went into hibernation. For a year overlapping
2003 and 2004, Morell was Windy City's chairman. As many as 40 couriers
showed up for meetings at the Handlebar in Wicker Park every other
Monday. There were picnics, bicycle polo matches in Humboldt Park,
messenger races, and benefit parties for bikers injured on the job. "It
wasn't an inherently political body," Morell says. This was to change.
At the meetings complaints about the workplace inevitably arose, and
other couriers' experiences made Morell's troubles at Standard seem
trivial. He heard reports of couriers saddled with thousands of dollars
in medical bills-a man in a coma, a man with a fractured elbow, a woman
with nerve damage after a truck ran over her arm. Though under state
law and city statutes all messenger companies must provide workers'
comp whether or not they use independent contractors, disability
payments for injured bikers were sometimes delayed and sometimes
nonexistent. The Windy City BMA formed a grievance committee, and in
the summer of 2003 it began looking for ways to organize a labor union.
After flirting with the AFL-CIO, it became affiliated with the
International Workers of the World, the Wobblies, already active with
messengers in Portland, Oregon. A Chicago Couriers Union was formed,
and the Windy City BMA faded away.
The union has pursued individual messengers' cases. It retains a lawyer
who's litigating workers' comp cases for five injured bikers at the
moment. In 2004 it filed an unemployment claim on behalf of a Standard
bike messenger, and the Illinois Department of Employment Security
ruled that the messenger was an employee. In the winter of 2005 members
of the CCU organized a two-hour "radio silence strike" at Arrow,
winning a 25-cent-per-tag increase for couriers who'd been on the job
longer than two years. But there are no union shops, and there's been
no collective bargaining on any significant scale.
In 2003 Chicago Messenger Service became the first courier service in
Chicago to hire a Massachusetts company called the National Independent
Contractors Association, or NICA, to administer its payroll and provide
couriers with accident and liability insurance in lieu of workers'
comp. NICA serves some 400 companies with 16,000 couriers in 42 states,
not least by going before regulatory agencies to argue that the
couriers are independent contractors. Bikers despise the "membership
fee" that NICA collects- about $80 for cyclists and $100 for drivers-by
deducting it from the paychecks it issues.
Not long after CMS hired NICA, so did another big courier service,
Dynamex (though only for its drivers), then three others in quick
succession. The Chicago Couriers Union began a Stop NICA campaign in
the summer of 2004. On payday, union members assembled outside the
headquarters of Quicksilver and Standard and distributed flyers urging
the couriers there to resist. But both companies eventually became NICA
shops.
Couriers aren't the only ones who have trouble buying the idea that
NICA genuinely represents them. In May NICA founder and president
Thomas McGrath was indicted by the state of California-where his firm
does about a third of its business-on 50 counts of conspiracy and
fraud. In California's view, workers' comp claims NICA had filed on
behalf of injured couriers were illegitimate because the couriers
didn't work for NICA. McGrath had already done time after pleading
guilty in 1996 to similar fraud charges in a federal court in Boston.
The couriers union in Chicago is watching California closely, but the
union doesn't present company owners with much to worry about. It has
only about 35 members, and it's met almost total failure in recruiting
drivers, who outnumber bike messengers in the Chicago workforce by more
than two to one. The bikers describe themselves as individualists in
their 20s who live in the moment, the drivers as older family people
reluctant to stir up trouble.
"Part of the problem is the industry itself," says veteran courier
Augie Montes, a CCU leader. "There's a lot of turnover; it's very
transient. We've got folks who don't really believe things can change.
It's so hard to think of being involved in this industry over the long
term. You get to a point that you start feeling you're never going to
get a fair shake."
In July 2003 a messenger rally had Mike Morell biking from San
Francisco to Portland to Seattle. He came back to Chicago exhausted but
with a plan. In Portland he'd crashed with the members of the Magpie
Messenger Collective, founded in 2002 by Meghan Mack. A Portland
native, she'd spent a decade in San Francisco, where she'd founded the
Cupid Courier Collective, the first group of its kind in the country.
"You're the one who has the relationship with the clients, in their
offices every day," she reasons. "You're the one who has to keep the
customer happy. It's not that hard of a business to run. So why not run
one yourself?"
Morell had left Portland asking himself the same question. By then he'd
been at On Time for about six months, and even though it classified him
as an employee, he was annoyed that he couldn't get a weekly commission
report. "I had no idea how many runs I did, how much I made for each
run. I had no way of checking up on them," he says. "That doesn't mean
they were trying anything shady. But various bikers at various times
had asked for commission reports, and they basically said, 'Well, you
should find a new job at a service that has commission reports.'
"In San Francisco and Portland, even some of the non-collectives were
owned by former couriers who still had their interests in mind. There
wasn't anything like that that I could point to in Chicago." Compared
to messengers out west, Morell felt powerless.
He didn't want to leave messengering. But he'd invested a couple of
years in "building community" and, to his mind, had largely failed. So
instead of trying to help every messenger in Chicago, he decided to
focus on helping himself. His solution was the collective: "Here was a
way to immediately make this job the way I wanted it to be." Morell has
since distanced himself from the couriers union. "When I started
working on the co-op-that became my new union of five people."
All five members had been involved to some degree with the Windy City
BMA and the Chicago Couriers Union. Cudal and Greenberg ate brunch
together every Sunday and talked about starting a business, and soon
Morell was part of the conversation. Korby and McLaughlin were
recruited: "They're both dedicated couriers," Morell said. "We didn't
have to worry about them not pulling their own weight."
Everyone put up $400 and they opened a bank account. They got an
attorney through the Small Business Opportunity Center of Northwestern
University, which provides cheap or free legal counsel to promising
start-ups and nonprofits. They spent $500 to incorporate as a limited
liability corporation and $200 on brochures. They got a hand-me-down
desktop from someone's dad. They bought liability insurance with a
$1,200 down payment, and they applied for licenses. They sent out
feelers to potential clients.
And one by one, they quit their jobs.
"It's a scary thing," Cudal said at the time, "because there are people
who've said to us, 'Oh, that sounds great.' But when the time comes,
they might say, 'Nah, we're all right with the messenger service we've
got.'"
"Unrivaled messenger services . . . competitive prices . . . over two
decades of experience," said the 4 Star brochure. "Most courier
companies pit messengers against each other. . . . As a result, [they]
are forced to concentrate on the quantity of their deliveries at the
expense of the quality of their service. . . .When you messenger a
package through 4 Star, you know it will be delivered by a courteous
and capable courier who loves their job."
The first company the collective pitched was the one that produced the
brochure. Mid- American Printing Systems was good for up to 20 tags per
day, enough to put 4 Star on its feet financially if not quite into the
black. The five friends thought they had this one in the bag.
Secretaries and receptionists and office managers are the people
messengers interact with. Sometimes they even decide whether to hire or
fire a courier service. McLaughlin and Korby had delivered countless
packages to the receptionist at Mid- American Printing for On Time.
They knew her and felt that they'd clicked with her.
On Time's Michael Carey points to the raid on Mid- American Printing as
evidence of his former couriers' perfidy-he says Cudal had promised him
that 4 Star wouldn't go after his clients. Cudal says there was no such
pledge; how else would they attract business but by approaching other
services' customers? Even so . . . "There is a tinge of guilt," Morell
says. "I worked with Mike for three years. We were all kind of
friends." He adds after a moment of thought, "He got his start the same
way."
The Mid-American campaign turned out to be what Morell would call a
"learning experience." Korby and McLaughlin were the pitchmen. They put
on shirts with buttons, ordered their hair, and prepared a set of
talking points-happy workers, better service. They made their pitch to
the owner, the shipping manager, and the plant manager- no
receptionist. "We'll get back to you," said the Mid- American brass
when the meeting was over. They didn't.
Mid-American is solicited so often by courier companies that plant
manager John Pedersen has trouble keeping them all straight. But he
remembers the two 4 Star couriers going on about the idea of a
collective. "I thought it was a good idea," Pedersen says. "I got
nothing against entrepreneurship." But he wasn't swayed. "The swaying
part comes with service and price. It don't matter how they run it." 4
Star was offering rates "comparable" to its competitors', and that
wasn't enough. "We're happy with On Time. If you give good service and
if you're consistent, you got no problem with us. . . . Someone would
really have to screw up for us to want to make a switch."
Morell and the others realized that they'd failed with Mid- American
because they pitched their big ideas over the bottom line. They needed
to go into future meetings armed with spreadsheets demonstrating how
much money a shift to 4 Star could save the client. But this was an
idea they still found distasteful. Undercutting competitors might
incite a price war and diminish the commission-based livelihoods of old
comrades in arms. As Korby put it, "We want our customers to want us
for our service, not our price."
But if the collective structure had one thing going for it, it was low
overhead. They paid $200 a month to rent office space in the living
room of McLaughlin's apartment in Pilsen. (After several months they
moved into the front room of the downstairs neighbors' apartment. These
tenants were bike couriers.) They paid $300 a month for insurance. They
paid $300 to Nextel for five two-way cell phones. They paid AT&T
for a landline. Aside from office supplies and bike maintenance, their
operating expenses were almost all fixed costs. They had, in other
words, room to move.
They figured they'd need 80 tags a day to pay the bills and give each
member of the collective $500 a week. But during the first few weeks
and months of operation, 20 tags a rider might as well have been the
moon. Their squeamishness about price wars began to evaporate. Wasn't
their concern a bit abstract anyway? "If I really thought that this was
going happen-that we would drive rates down for the rest of the
industry-I'd think again about doing it," Morell said. "But we're not
going after that many clients, so I'm not sure it would make any
difference industry-wide." They began debriefing their courier friends.
"That way," Morell said, "we have a general idea what the competition
is charging, and we can offer a little less."
How much less? "As little less as possible. I think we could undercut
far more than we do. But we have amounts we won't go below.
Philosophically, we don't believe that it's right to charge below a
certain line. At some point you say, 'No good biker would deliver a
package for that amount of money.'"
He didn't want to say much about 4 Star's pricing-which, like any other
courier service's, varies from customer to customer- but he estimated
that a company putting out 15 tags a day might save $1,000 a year.
"It's a pretty impressive number," Morell said. "At least to me it is."
In late September, 4 Star made its first sale. When the call came in
from Post Effects, a company that makes marketing videos and audio
recordings for ad agencies and other corporate clients, the partners
cheered and high-fived. As with Mid-American, this had been an On Time
client and friendships were involved, but this time the sales pitch
focused on price. Josh Korby received the honor of handling the first
tag, and he sprinted down Michigan Avenue. "I couldn't stop smiling. I
passed the dude who took my place at On Time and I dusted his ass. He
looked lost out there. It must have been his first day."
"They offered us the better deal," says Michelle Piccolo, the office
manager. "It wasn't super-cheap, it wasn't dirty cheap, but it was
significant enough to make a difference to us."
The victory was largely symbolic- Post Effects puts out at most four
tags a day. More than a month passed before Michael Carey even realized
that 4 Star had poached an On Time client. But when he did, On Time
mounted a counter campaign that included a cake delivered to the Post
Effects office. "Which we appreciated," Piccolo says. She says On Time
asked her to name her price. 4 Star then decided collectively on a
counteroffer, so low that their victory was not only symbolic but
Pyrrhic. "It was our Vietnam," says McLaughlin.
Piccolo says that so far she's been impressed. "We're very happy with 4
Star. At first I was concerned. There's only five of them-would that be
a problem? As it turns out, it's not a problem at all. We get
approached by courier services all the time- CMS, Velocity. We have no
desire to change."
By mid-October 4 Star had six clients. They were doing four or five
runs and bringing in about $25 a day. They drained their collective and
personal bank accounts. McLaughlin got a job baking bread at Bleeding
Heart Bakery. Josh Korby deferred his student loans and took a weekend
job at Upgrade Cycle Works, in the same building as On Time. Jen
Greenberg took a night job at Starbucks. Cudal and Morell, with their
highly developed sense of thrift, weren't moonlighting yet but they'd
started to think about it. "We all had that 'what have we done?' sort
of shock," says Morell.
They solicited nearly a hundred prospects and slowly, incrementally,
business increased-a small law firm, another printing company, a member
of an architectural co-op attracted to 4 Star's collective model. They
networked: a friend's uncle, an owner of Fox & Obel, referred them
to a law firm he'd worked with, Schwartz Cooper. The LaSalle Street
firm, with 90 attorneys on four floors, was a faithful Arrow customer
but agreed to give 4 Star its overflow.
Toward the end of October the collective passed out 4 Star brochures to
around 600 cyclists assembling in Daley Plaza for a Critical Mass ride.
T.C. O'Rourke, circulation manager of Time Out Chicago, happened to be
there too, looking for couriers to deliver copies downtown; a few days
later a deal was struck over beers. Now Korby spends every Wednesday
morning and afternoon hauling 900 magazines on a five-and-a-half-
foot-long trailer hitched to his bike. By itself the Time Out business
covered 4 Star's costs, lifting their revenue to $70 a day.
Around Thanksgiving they got another big break. An ex-messenger pal
working at a law firm had heard that a printing company the firm used,
Award/Vision Integrated Graphics, was looking for a courier service.
With 20 to 30 tags per day, Award/Vision immediately became 4 Star's
biggest customer, accounting for 90 percent of its business. "The hole
we dug for ourselves is all of a sudden a lot shallower," Morell said.
The collective continued to build its client base, and by spring its
weekly revenue was over $2,000, about half from Award/Vision. The
members were paying themselves $250 at the end of each week. They were
halfway to their goal.
One day in November McLaughlin, working alone in his apartment as
dispatcher, took a phone call. The caller said he was a city inspector,
and that he was calling him on a cell phone from the street below. He
didn't ask McLaughlin to come down, and he didn't ask to be invited up.
He said the city had received four complaints, though he wouldn't say
from whom and he wouldn't describe their nature. He asked a single
question: "Are there a lot of people coming in and out of the
apartment?"
"No."
The inspector said that if 4 Star continued operating without a
home-occupation license, it should expect to receive a citation.
The collective members couldn't figure it out: the business was just
one person answering phone calls, and most of the "work" took place
downtown, so why would anyone complain? They asked the neighbors.
Downstairs, upstairs, across the street, and next door, the neighbors
proclaimed their innocence.
"This is complete conjecture," Morell said, "but we think someone who
didn't want us in business called the city multiple times-another
messenger service whose clients we were soliciting."
The next day McLaughlin went down to City Hall to find out what a
home-occupation license was. According to the city code, if a business
operates out of a residence it can employ only one person in addition
to the owner, and it needs a special license. McLaughlin attempted to
explain the concept of the collective-4 Star had no employees, and only
one person, not two, worked in the apartment at any given time.
So how many people work for your business? the clerk asked.
McLaughlin filed an application, and for four months 4 Star heard no
more about it.
But other regulatory quandaries were developing. A courier service in
Chicago needs at least two separate licenses to operate, and in the
collective's case it was three, the home-occupation license being the
third. Since its inception, 4 Star had had a straight-up business
license. But it didn't have its bicycle messenger service license,
which required a good deal more than an annual $70 fee. It required
liability insurance, which 4 Star had, and workers' compensation
insurance, which it didn't.
A week before opening for business, the collective had submitted a bike
messenger license application sans proof of workers' comp coverage.
"Not applicable," they wrote on the line asking for it. They'd priced
plans, which for a five-person outfit would run $20,000 to $30,000 a
year, but reasoned that because the five partners did all the work with
no hired help, they could ignore the requirement.
There were ironies here. The collective model offered the same
competitive advantage as reclassifying workers as independent
contractors and hiring NICA to take over payroll: it reduced overhead.
"The collective thing is probably a slick way to beat workers' comp,"
says the owner of another courier service. "Normally, workers' comp is
a humongous cost hurdle to overcome in starting a business. Ours just
shot up 25 percent this year. It costs over 10 percent of our gross
sales, easily."
A series of city clerks refused to accept 4 Star's application. They
reasoned that if messenger companies need workers' comp insurance and 4
Star was a messenger company, 4 Star needed workers' comp insurance.
The collective's attorney cited state law-sole proprietors and partners
and LLC members need not be covered by workers' comp. The clerks passed
the matter up to a midlevel official in the Department of Consumer
Services. Weeks passed. Phone calls to the official were not returned.
Survival pushed the issue to the back burner.
IN LATE APRIL a start-up design shop in need of a courier service left
a handwritten note on the gate to the collective's building. That
seemed strange. Stranger still, the shop gave Bank One Plaza as its
address.
When two of the designers showed up at 4 Star's headquarters, Morell
was on duty as dispatcher. Between phone calls he gave them his spiel.
One asked, "Are you fully insured?" Morel rummaged through a filing
cabinet and handed over 4 Star's liability policy.
"Do you guys have a license?" Morell rummaged some more and presented 4
Star's articles of incorporation and its basic business license.
"But what about a messenger license?"
Morell looked up from his two-way. He hedged. "We filed the application
with the city. The ball's in their court. We're on the right side of
the law."
The designers, who were in fact city inspectors, flashed their badges
and scribbled out three tickets: one for operating without a messenger
license, another for operating without a home-occupation license, a
third for having no proof of insurance on file with the city. Then one
said, "We also have to give you cease-and-desist orders."
Morell's thoughts were racing: "Like, this is done. What now? Apply to
grad school?" He called McLaughlin, who headed to Pilsen. They called
their lawyer, assembled their paperwork, and went to City Hall, where
they refiled their applications for their home-occupation and messenger
licenses.
The first one turned out to be easy. As for the messenger license, that
old bugaboo, they heard the same circular logic. They worked their way
up the chain of command of the Department of Consumer Services, and
after six or seven phone calls reached Rosemary Krimbel, the deputy
commissioner and general counsel.
On the phone, Morell presented the usual argument-this is a partnership
without employees. And Krimbel said, "Wait. You don't have any
employees?"
It was the first time 4 Star had sensed that spark of recognition from
a city official. Krimbel asked them to re-reapply and to be sure to
include a statement, reviewed by their lawyer, that explained the legal
basis for their worker's-comp opt-out.
Krimbel says 4 Star was in the right but adds that "they have to
understand what their liabilities are. The state law doesn't require
workers' comp if you don't have employees. That doesn't mean, however,
that they can't be sued for workers' comp by one of their partners."
Three days after the sting operation, 4 Star finally had its messenger
license.
The collective still had to deal with the three tickets. On May 8,
Morell put on a shirt and tie and went to an administrative hearing. He
settled with the city on penalties totaling $525. The alternative was
to fight the violations in court, on the premise that the collective
had been legal from the start and that if the city would've returned
its phone calls the matter could've been resolved in September. But to
fight would be to risk losing, and to lose would mean paying fines in
excess of $10,000. Morell took out his checkbook.
May brought other bad news. Jack McLaughlin decided to leave the
collective. "More or less I just burned myself out physically and
mentally," he says. "I felt it every day when I got home. I was
completely beat. I just couldn't handle it anymore." He turned 32
Wednesday. "It has nothing to do with the collective. I want them to
succeed, which I know it will, and I can see it is. I just don't want
to bring it down because I'm not giving 100 percent." For now he's
working at the bakery and doing mixed-media art. He hasn't figured out
what's next.
For the time being, 4 Star is operating with three riders and a
dispatcher in Pilsen. Greenberg no longer works at Starbucks. The
collective is now handling about 50 tags per day and continues to add
business, though they sometimes worry that they're not looking for it
hard enough-Morell thinks they should approach Mid- American again and
try to tempt Schwartz Cooper into giving them more lucrative runs. In a
couple months they might need to replace McLaughlin-and if they decide
to, they might find themselves with a fairly wide pool of applicants.
One April evening the collective gathered after work at the Handlebar.
McLaughlin said he'd gotten a call from a courier friend who asked him,
with some frustration, "Aren't you guys hiring yet?" Greenberg said she
was approached by a messenger who'd seen Korby racing down the street,
a package in his bag. "Josh looked pretty stressed out there today,"
the messenger said. "If you guys need any help, I'm here."
Greenberg, still involved in the couriers union, said she'd picked up
on a common theme at the meetings: "It's almost become a joke," she
said. "If someone's having a bad day or having problems with their
boss, they're like, 'The hell with it. I'm going to 4 Star.'"
Korby set down his beer and laughed. "Get your own company," he said.
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