Misclassification of workers is not tolerated under California law. Gig workers who are improperly classified as independent contractors are seeing increasing support, including from the Department of Industrial Relations’ Division of Labor Standards Enforcement, or the California Labor Commissioner’s Office. The Labor Commissioner’s Office combats wage theft and unfair competition by investigating allegations of illegal and unfair business practices.
What is a gig economy?
In a gig economy, temporary, flexible jobs are commonplace and companies, like Uber and Lyft, generally hire independent contractors and freelancers instead of full-time employees. While this set up comes with many benefits for the employer, a gig economy undermines the traditional economy of full-time workers who rarely change positions and instead focus on a lifetime career.
Labor Commissioner files first AB 5 lawsuit
In the first lawsuit of its kind, the California Labor Commissioner’s Office has set out to enforce AB5 and equal the playing field for California workers. The lawsuit is against Mobile Wash, Inc., a Los Angeles area gig-economy car wash company, for violating labor laws by misclassifying employees as independent contractors. According to the lawsuit, Mobile Wash misclassified at least 100 workers, “harming both the workers and law-abiding businesses in the car washing industry.”
The facts of the case are as follows. Mobile Wash used a phone app to offer car washing and detailing services to customers throughout Southern California and a few locations in Northern California. The company required its workers to use their own cars and buy their own uniforms, insurance, cleaning equipment, supplies and gas. Mobile Wash did not reimburse the workers for these business expenses or travel time in violation of the requirement to pay for all hours worked at no less than the minimum wage. It also unlawfully charged workers a $2 “transaction fee” for every tip left on a credit card
AB5 and the ABC test
As discussed in recent posts, Assembly Bill 5 is new California law that requires the application of the “ABC test” to determine if workers in California are employees or independent contractors. Under the ABC test, a worker is considered an employee unless:
· they are free from control from the hiring entity,
· perform work outside of the hiring entity’s usual business, and
· engage in an accepted independent trade or occupation.
All three elements must be met in order for a worker to be properly classified as an independent contractor.
What is wage theft
Wage theft happens if an employer doesn’t fully pay an employee for their labor. It takes many forms, such as paying less than the minimum wage, failing to pay overtime, requiring off-the-clock work, or taking illegal deductions. It can also include harder to detect examples, like automatically deducting time for meal breaks or not paying for remote work. Wage theft costs workers an estimated $50 billion a year.
If you believe you have been the victim of wage theft in your workplace, contact the experienced employment attorneys at LOEAB Law today.