Gig Economy Company Settles Wage Theft Lawsuit for $2.1 Million

San Francisco, CAQwick, a gig economy online staffing company for hotel and restaurant workers, is required to pay its misclassified California workers $1.5 million in restitution and convert all workers to employees. This agreement settles a misclassification lawsuit brought by the City Attorney of San Francisco and it significantly reclassifies thousands of workers – permanently. Misclassified as independent contractors, workers will now be entitled to employee rights and benefits.

San Francisco City Attorney David Chiu sued the online shift-booking platform in September 2023 for wage theft by depriving workers of critical employment protections by misclassifying them as independent contractors instead of employees. As well, the City claimed that Qwick violated California’s Unfair Competition Law by gaining an unfair business advantage over other law-abiding businesses.

Qwick classified workers – from waiters to dishwashers to cooks-- as independent contractors, which means that every worker operated an independent business as a sole proprietor. As a result of this misclassification, Qwick’s workers were denied state and local employee rights, including overtime pay, paid sick leave, heath care expenditures, and paid family leave.

Regarding the settlement, Chiu said that, “Hospitality work is grueling, and our hotel and restaurant workers deserve to be treated fairly…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... It also ensures that law-abiding staffing companies will no longer be at a competitive disadvantage. We are sending a clear message: we will not allow this illegal business model to take root in the hospitality industry.”

Once the settlement is approved, Qwick is required to pay its California workers $1.5 million in restitution and provide workers that stay on as employees a bank of accrued sick leave hours valued at up to $350,000. Qwick will also pay $250,000 to the City in civil penalties. As of July 1, 2024 and under the proposed settlement, Qwick will shift its California workers to W-2 employees from independent contractors who file IRS Form 1099 on earnings. All California hospitality workers who use the Qwick app will be be classified and treated as employees and the company will pay into San Francisco workers’ sick leave bank, according to the City Attorney’s announcement.

The SF Examiner reported that, Qwick's chief people officer Dana Barbeau said in a statement that, "Our freelancers are at the heart of everything we do. We value their contributions and are dedicated to providing fair, supportive and safe working environments… We believe in the gig economy's potential to offer flexible and meaningful opportunities and it is crucial to ensure our freelancers receive the benefits and protections they deserve.”

Qwick is an Arizona-based hospitality staffing company that has been operating in California since 2019. It has active markets in the Bay Area, Los Angeles, and San Diego. Through its mobile app, Qwick provides restaurants, caterers, and event production companies with on-demand workers to fill empty shifts – including servers, bussers, bartenders, baristas, dishwashers, cooks, barbacks, event staff, and concession workers. The company's business model is centered around matching on-demand, experienced food and beverage workers with shifts at restaurants and event production companies. In other words, when Qwick workers fill a shift, they work alongside and perform the same functions as hotel and restaurant employees who receive benefits.

The Final Judgment and Injunction submitted to the Court for approval is here. The case is 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.

If the settlement is approved, City Attorney Chiu will have secured the first injunction in California requiring a gig economy staffing company to permanently reclassify thousands of workers. What is next for City Attorney Chiu – could it be Uber?