San Francisco Sues DoorDash for Misclassifying Employees
The true nature of the "gig economy" has become a standing subject of discussion. In theory, these "gigs" are a self-employment opportunity to pick up some extra cash; but in practice, many of these freelancers are acting as employees, and the companies themselves are the ones reaping the benefits of this "gig" classification by circumventing legal protections for workers. Now, that debate is coming to a head in San Francisco: On Tuesday, the city's district attorney, Chesa Boudin, filed a lawsuit against America's largest online restaurant delivery platform, DoorDash, alleging the company "continues to illegally misclassify its delivery workers as independent contractors when, in fact, they are employees."
Specifically, the lawsuit claims that DoorDash is in violation of California Assembly Bill 5 (or AB 5), which took effect on January 1, 2020, and placed the burden of proof on companies themselves to demonstrate that workers are contractors and not employees. Beyond requiring DoorDash to reclassify its delivery workers as employees, the suit is seeking restitution for these workers and civil penalties against the company.
"Misclassifying workers deprives them of the labor law safeguards to which they are entitled, denying workers minimum wage and overtime pay, unemployment insurance and protection from discrimination, among other things," Boudin said in the announcement. "Misclassifying employees also harms the public good in two important ways. First, it puts law-abiding companies in the position of competing against employers who gain unfair savings by illegally classifying their workers. Second, misclassification deprives California of payroll taxes and contributions to unemployment and workers' compensation funds. Now, more than ever, with the COVID pandemic, we must protect our workers, especially those essential workers who are delivering food to us each and every day."
In response, Max Rettig, DoorDash's global head of public policy, also touched on COVID-19, but with a different perspective. "Throughout the pandemic, DoorDash has supported Dashers on and off the road with free safety equipment, telemedicine, earnings replacement, and more," he said in a statement. "Today's action seeks to disrupt the essential services Dashers provide, stripping hundreds of thousands of students, teachers, parents, retirees and other Californians of valuable work opportunities, depriving local restaurants of desperately needed revenue, and making it more difficult for consumers to receive prepared food, groceries, and other essentials safely and reliably. We will fight to continue providing Dashers the flexible earning opportunities they say they want in these challenging times."
However, in a statement that seemed to predict DoorDash's response, Rudy Gonzalez—executive director of the San Francisco Labor Council—said, if anything, the pandemic proves the city needed to move quickly. "It is time to call out the gig companies for cheating workers out of wages and safety protections while also making it harder for law-abiding businesses to compete," he said. "The COVID-19 global pandemic has reminded us that good government must stand up to protect workers not corporate cheats who try to exempt themselves from the law."
Meanwhile, Eater SF points out that the lawsuit is noteworthy for another reason. It's reportedly one of the first actions taken by San Francisco's new Economic Crimes Against Workers Unit—which itself is apparently one of the first of its kind in the country. Accoring to Boudin, the unit, which was announced on April 21, was established to "safeguard the rights of some of the most vulnerable people in our society: workers who are being exploited by their employers."