Responsible Contracting in Action with LunarLab: A Case Study

Many early-stage startups may consider implementing responsible contracting as a later stage, growing pains, or compliance issue—something far afield from the issues facing a company just getting off the ground. We’re here to dispel this myth—we believe that when companies contract responsibly, they enjoy less legal, financial, and reputational liability; better retention and work products; and more pathways to hiring diverse talent. LunarLab, a digital design company, is a testament to companies that walk the walk with responsible contracting.

WHO

LunarLab is a nimble design studio that “involves real humans in our design process for web and mobile app interfaces.” We interviewed one of the co-founders of LunarLab, Elizabeth Anderson about her responsible contracting journey. 

Elizabeth knew firsthand the good, the bad, and the ugly of being a contract worker in tech. Within her industry, she has witnessed “diversity theater” play out, which often involves hiring people of color into leadership roles as a substitute for addressing issues of inclusion and belonging that plague a company’s internal operation. Hiring people of color and failing to equip them with resources, support, and agency to make structural changes results in a surface-level panacea that avoids addressing deep-seated inequities within company culture and operations. Time and time again, organizations have trouble enacting systemic change when a single individual or a small group of individuals bear the brunt of responsibility. 

When Elizabeth Anderson founded LunarLab, she knew she wanted to break the mold for design agencies working with tech company clients. This required combatting the status quo of high contract worker turnover and razor-thin margins by incorporating a culture of fair pay, transparency, and respect for all workers. 

“Passing the Pay Transparency for Pay Equity Act was a crucial step to closing the wage gap for women, people of color, and contract workers everywhere in California. TechEquity’s research was instrumental in shedding light on these disparities; I’m so grateful for our partnership in this campaign.”

CA State Senator Monique Limón, Author of SB 1162

Read on to learn how Elizabeth intentionally implemented responsible contracting standards and made corporate practice changes at LunarLab by first hiring contract workers, developing their professional portfolio, and converting them to full-time employees as her 4-person full-time team continues to grow.

WHY

Beyond “doing the right thing” as an inherent business value, responsible contracting is an investment that attracts and cultivates talent, generates returns, and distinguishes your service and product offerings. While there are upfront investments involved, responsible contracting helps companies actualize commitments to inclusion, and reap the benefits.

Create a strong value proposition for internal and external stakeholders—help internal teams meet rapid shifts in capacity while maintaining morale, and good working conditions, which leads to a high quality of deliverables and service to customers)

Build a pipeline of talent that is trained and familiar with your business—support contractors who are working with your company and/or your clients, develop their skills, and as your business grows you have an existing pool of talent that you be converted to in-house roles as they become available.

Reduce turnover and inconsistency—better pay, working conditions, and transparency are all important inputs to lower employee turnover which allows for consistent delivery of deliverables and lowers costs to recruit and train new workers on a project.

LunarLab wanted to ensure that anyone working on projects can expect to be paid competitively, treated respectfully, be able to escalate issues without fear of repercussion, and feel a sense of ownership and belonging.

HOW

Elizabeth and her team set out to actualize a meaningful commitment to inclusion, and build a diverse team from the ground up. In search of resources, Elizabeth came across TechEquity Collaborative’s Contract Worker Disparity Project, which shines a light on the disparities between contract workers and full-time employees. Our original research about the power imbalances between full-time employees and contract workers piqued Elizabeth’s interest. TechEquity’s Responsible Contracting Standard served as a blueprint for Elizabeth to codify her existing principles on contracting and to equitably scale her business.

Here’s how Elizabeth implemented responsible contracting at LunarLab (and how you can too): 

• Use tools to de-bias job descriptions: Elizabeth uses the tool Gender Decoder to evaluate whether a given job description is inherently biased towards men based on research that shows women are less likely to apply for jobs coded for men. 

• Fold contract workers into the organization: Elizabeth ensures that her contract workers feel integrated into the company and are able to easily cross-coordinate with full-time employees. For example, LunarLab created a Slack help channel with resource guides for succeeding on the job. 

• Let contractors list their experience and deliverables on their resumes: Elizabeth hired an attorney to draft job descriptions and contracts that includes specific language allowing their contract workers to include LunarLab projects in their personal portfolios, unless under NDA. 

• Overcome the pipeline bottleneck problem: Elizabeth seeks out founders and organizations of color to source contracts, projects, and contract workers. She has partnered with organizations such as:
  • Bronze Valley: Accelerator program for those with nontraditional backgrounds 
  • Innovation Depot: Mentorship and programming to incubate emerging talent in Birmingham, AL 
  • Prosper: Resources for founders of color in Birmingham, AL

• Pay workers fair wages:  Elizabeth believes that no matter how small the company, it’s still possible to address structural issues, such as the racial and gender wage gap. Over the years, she’s witnessed contract workers (often people of color) make less than their peers, despite exceptional work products. Elizabeth will adjust the hourly rate to meet the going rate in metropolitan Birmingham. For example, if an applicant lists a $25/hour, Elizabeth will pay the going rate of $40/hr. She’s of the mindset that if you can’t afford to pay workers fairly, your company isn’t ready to take on the additional capacity. 

• Protect contract workers in client interactions: LunarLab lists in each contract they sign that there is zero tolerance for bullying or harassment and will not begin a project unless the client signs a pledge. Elizabeth wants to ensure that no Lunarlab worker should fear penalty or retaliation for reporting harassment or abuse by clients or the Lunarlab team. 

• Create a way for employees to report and address workplace conflicts: As a temporary solution, Elizabeth handles all contract worker reports of harassment or misconduct because she is not directly involved in day-to-day people management. Within the next year, she will bring in a PEO, a professional employer organization, to manage benefits and handle disputes.

• Provide benefits through a third party: Elizabeth spoke with multiple benefits providers to compare pricing and recommended the most affordable plan to LunarLab contract workers.

• Invest early in implementing intentional and fair practices: Hiring lawyers to draft responsible contracting language is pricey and complicated when starting from scratch. That’s why the specific language in TechEquity’s Responsible Contracting Standard helps small businesses avoid drafting responsible contracting language from scratch.

“I had not actually seen the [contracting] data collected anywhere else before coming across the Responsible Contracting Standard. It was very eye opening. It was super helpful to have action steps. It wasn’t just, ‘here’s this information,’ it was telling me what I can do about this information.  It wasn’t just, hey there’s this inequality, it’s about having a roadmap to reduce the inequality… Having the actionable steps helps us make sure that contract workers are treated fairly. [The standard] always gives me something to refer to or go back to. It keeps me accountable whenever I have questions. I’ve got it bookmarked.”

Elizabeth Anderson, Co-Founder of LunarLab

TAKEAWAYS

Beyond being the right thing to do, responsible contracting is good for business. If contractors are folded into the team, they speak up, take creative risks, and engage in a way that enhances the quality of your deliverables. On the hiring side, you spend less time finding quality talent, and you create a pipeline of candidates for when you’re ready to hire for permanent roles. 

Responsible contracting isn’t just the right thing to do, it’s becoming a business requirement and a standard practice. In addition to requiring mandatory climate risk disclosures, the SEC is considering human capital disclosures. Shareholders now expect reporting on companies’ social footprint and many companies are following suit issuing lengthy and detailed reports on their social impact efforts. Rather than seeing responsible contracting or responsible corporate behavior as a voluntary, nice to have, it’s becoming increasingly clear that it is a good business decision and one that is increasing in attention from shareholders, regulators, and consumers. 

WHERE DO I START?

Do you want to join the ranks of equitable employers with responsible contracting practices? TechEquity Collaborative is committed to building a tech industry that treats all workers equitably. We can help you understand, apply, and educate your company on responsible contracting standards. Email partnership@techequitycollaborative.org to get started.