Last week, in a worker misclassification lawsuit involving the gig company Qwick, San Francisco City Attorney David Chiu announced in a statement that Qwick had signed a “groundbreaking agreement” that would require the company to reclassify the workers as employees, pay them $1,850,000 in restitution and accrued sick leave, and pay the city a civil fine of $250,000.
Qwick is an app-based job platform that provides on-demand hotel and restaurant workers to the hospitality industry. The city and county of San Francisco sued the company last year for allegedly depriving California workers of critical employment protections by misclassifying them as independent contractors instead of employees. According to Chiu, if the court approves the settlement it will be “the first injunction in California requiring a gig economy staffing company to permanently reclassify thousands of employees.”
In his statement, Chiu said, “This proposed judgment puts money back in the pockets of workers and ensures that they will have the full complement of employee rights and benefits moving forward. It also ensures that law-abiding staffing companies will no longer be at a competitive disadvantage.”
After the lawsuit was filed, Chiu’s office contacted ASA to ask whether the association could help support the city’s contention that Qwick’s classification of its workers as independent contractors was inconsistent with the staffing industry’s usual and customary practice. In response, ASA provided a declaration to the court attesting that classification of temporary workers as employees, not independent contractors, has long been the standard practice in the industry.
In its declaration, ASA said, “From the staffing industry’s inception, staffing agencies’ classification of temporary workers as W-2 employees has not only been a matter of legal compliance but also has had a vitally important business purpose. Apart from providing clients with the economic advantages of obtaining flexible, just-in-time labor, staffing agencies’ assumption of responsibility as the W-2 employer, with the primary legal obligation to pay the workers’ wages and benefits, withhold payroll taxes, and provide workers’ compensation and other employee protections, has always been a significant client value proposition.”
Following the settlement, San Franciso counsel thanked ASA for its support, saying, “We have no doubt that this was valuable in reaching this resolution and that this resolution will help to protect all compliant staffing agencies.”
The final judgment and injunction submitted to the court for approval are published at sfcityattorney.org. To read the case, see City and County of San Francisco and the People of the State of California v. Qwick Inc. (San Francisco Superior Court, Case No. CGC-23-608756).
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