WorkWhile Lawsuit Highlights Worker Misclassification in California’s Gig Economy

A recent lawsuit filed by San Francisco’s City Attorney centers on the ongoing issue of worker misclassification in the gig economy. WorkWhile, a staffing agency that connects gig workers with jobs across various industries, was accused of wrongfully classifying its workers as independent contractors rather than employees. The case has significant implications for thousands of workers who rely on the agency to earn a living, including delivery drivers, cleaning staff and inventory scanners, among others.

WorkWhile has positioned itself as a platform that provides flexible job opportunities in sectors like hospitality and food service, warehouse work and delivery services. The company is headquartered in San Francisco and has expanded to 27 states since launching in 2020.

Although WorkWhile claimed to offer its independent contractors benefits like next-day pay and virtual healthcare, San Francisco City Attorney David Chiu argued that the workers were more akin to employees under California law. The lawsuit alleged that by classifying shift workers as independent contractors, the company avoided having to provide traditional benefits such as overtime pay, unemployment insurance and paid family leave.

California’s Gig Economy Laws and Worker Classification

California has some of the country’s strongest worker protection laws, particularly regarding worker classification in the gig economy. The pivotal law governing this issue is Assembly Bill 5 (AB 5), enacted in January 2020 to prevent companies from exploiting the independent contractor classification to reduce labor costs. AB 5 introduced the ABC Test, which is used to decide if a worker qualifies as an employee or an independent contractor.

Workers can only be classified as independent contractors if they meet the criteria of the three-part test. For example, one element requires the worker to be free from the hiring entity’s control in carrying out their tasks. A company must classify its workers as employees if the conditions of the ABC Test are not satisfied.

WorkWhile’s business model allegedly does not meet the ABC Test’s criteria as its workers are under the company’s control. According to the lawsuit, the company hires, monitors and terminates workers while setting their job duties, pay rates and shift duration. Additionally, workers have no say in which client is offered to them. Chiu alleged that by misclassifying its shift workers as independent contractors, WorkWhile avoids compliance with numerous employment laws that protect workers and provide employee benefits.

Why Worker Classification Matters

For gig workers, being classified as an employee rather than an independent contractor can make a huge difference in their financial stability and job security. Independent contractors don’t receive overtime pay and don’t qualify for employee benefits like paid sick leave, unemployment insurance or workers’ compensation.

In the WorkWhile case, many workers earn low hourly wages for physically demanding jobs, and the lawsuit claims that misclassification denies them critical protections. Workers are even required to pay a “trust and safety fee” for substandard insurance coverage. By shifting these costs onto workers, WorkWhile allegedly maximizes its profits at the expense of worker wellbeing.

Chiu described worker misclassification as among “the most insidious types of worker exploitation,” pointing out that it has worsened with the growing use of app-based technology in recent years. As more companies adopt such staffing models, legal challenges like the WorkWhile lawsuit will likely increase. While tech has enabled new business models, California law remains clear it hasn’t changed the fundamental rights of workers.

Misclassification is a serious issue that can deprive workers of the benefits and protections they are entitled to receive. If you believe you have been misclassified as an independent contractor, seek the advice of a knowledgeable San Francisco employment lawyer.

At McCormack Law Firm, we help workers who have been wronged by their employers. While we are not involved with the WorkWhile lawsuit, our experienced legal team can guide you through the process of asserting your rights and holding employers accountable for unlawful practices. Contact us today for a free consultation to discuss your case.