More On-Demand Companies Face California Overtime Lawsuits

San Francisco, CAFrom car services to cleaning companies, the on-demand economy is surging. But California overtime laws may slow them down. Lawsuits filed in 2013 against Uber and Lyft are pending, and it comes as no surprise that more recent lawsuits have been filed against start-ups with similar business models: housecleaning company Homejoy and delivery service companies Postmates and Try Caviar.

Just one day after a class-action suit against grocery start-up Instacart was made public, the class-action complaints against Homejoy, Postmates and Try Caviar were filed in California’s Northern District Court.

This is how they work. Instacart customers order groceries from their store of choice through a smartphone app and have them delivered. Homejoy cleaners bring their own cleaning supplies in their own vehicles to jobs they obtain through Homejoy. Postmates and Try Caviar are basically food delivery services where you order food on your app from a restaurant that doesn’t deliver and orders are dispatched to couriers of the two companies who drive the orders, again in their own vehicles, to you. Every company takes a percentage of the proceeds in some form or another.

All the lawsuits claim that workers have been misclassified as independent contractors when they should be treated like employees and that these companies must adhere to California labor laws.

Two US judges last month were not convinced that Uber and Lyft are more than software platforms. Uber argued that it is a “technology company” and not a “transportation company,” but District Judge Edward Chen called their claim “fatally flawed” and a jury may consider the drivers employees. The Uber lawsuit is O’Connor et al v. Uber Technologies Inc, et al, No. C-13-3826. The Lyft lawsuit is Cotter v. Lyft Inc., et al, No. 13-4065, US District Court, Northern District of California (San Francisco).

Labor lawyer Shannon Liss-Riordan, who specializes in worker classification, is leading the charge for Uber plaintiffs: She told Time (March 18, 2015) that, “When companies have control over their workers, when they get to dictate how they should act, when they get to decide whether they can work or not work, those are employees. These are the workers carrying out the services that these companies provide. So these workers are entitled to the protections of the law, to get their expenses reimbursed, to be guaranteed overtime, to make [at least] minimum wage.”

Thousands and thousands of workers can be affected by these class actions. Instacart alone has about 1,000 people on its roster to shop and deliver groceries, and one attorney said the class could involve 10,000. The suit seeks to define the class as everyone who “performed grocery delivery service” for Instacart from Jan. 1, 2012 to the present. Instacart is valued at $2 billion.

According to the Recorder Legal Newspaper (March 18, 2015), two lawsuits have been filed against Homejoy. One lawsuit intends to become an employee class action and the other claims that Homejoy fails to pay its workers minimum wage, overtime and requires housecleaners to pay their own business-related expenses, among other things. The Recorder reported that the lawsuits argues “cleaners are an integral part of Homejoy’s business of providing cleaning services, among other services, to its customers.” Homejoy’s terms of service, however, says it “is not a cleaning service provider,” but a “venue” or a “platform” that connects consumers to cleaners in their area.

Attorney Byron Goldstein told the Reporter that, “In the case of Homejoy, we think the control they have over their workers is as significant as in Uber or Lyft, or more so.” The Homejoy class action seeks damages in the amount of unpaid overtime compensation, unpaid minimum wage compensation, unpaid reimbursed business expenses, one hour of additional pay for each workday completed without meal breaks and another hour of compensation for each workday without rest breaks - all with interest. The Private Attorneys General Act action seeks civil penalties and attorney fees.