San Francisco files Misclassification Lawsuit Against Qwick Hospitality Staffing Company

San Francisco, CAThe City of San Francisco at the end of August filed a lawsuit against Qwick Inc., accusing the hospitality staffing company of misclassifying their workers as independent contractors to deny them guaranteed wages and benefits. Qwick workers are unable to receive overtime, meals and rest breaks, health care or paid leave, and San Francisco city attorney David Chiu says Qwick has an "unfair business advantage" over businesses abiding by the California labor and employment laws.

“Qwick is inequality disguised as innovation, a staffing company with an app that is in flagrant violation of labor and employment laws,” says city attorney Chiu. “It uses convenience and flexibility to mask its decision to deny workers their rights. If this illegal business model is allowed to take hold, hundreds of thousands of positions in the food and beverage industry risk illegal misclassification, and hospitality workers will be pushed into poverty.” Qwick’s workers are employed side-by-side with their peers employed at hotels and restaurants who receive benefits – they perform the same duties. Temporary staffing agencies, however, lawfully designate their workers as employees, so why can’t Qwick?

Qwick Business Model

Qwick’s restaurant and event staff are on-demand workers, like Uber’s drivers. A restaurant posts a shift it needs to fill and an “independent contractor” from Qwick’s network can accept it within seconds. The restaurant sets hourly pay and pays Qwick 40% of that in exchange for making the connection. “Staffing-as-a-service is the future of work in the hospitality industry,” said Qwick co-Founder and CEO Jamie Baxter in a press release, adding that the Arizona-based company has a “mission to end understaffing.” And that statement has Lorena Gonzalez Fletcher, leader of the California Labor Federation concerned, to say the least. She wrote state Assembly Bill 5 to stop worker misclassification. "Hotel and restaurant workers face widespread wage theft and safety violations and, in this case, were even classified as contractors to deny them the most basic protections,” Fletcher said in a statement.

According to Restaurant Business Online, the Phoenix-based company grew astronomically during the pandemic: Revenue is up more than 10,000% over the past three years. In 2022, Qwick expanded to 23 markets from 13, more than doubled its network of hospitality partners and grew its worker pool by nearly 70%. No wonder: U.S. restaurants have cut hours by an average of 6.5 hours per week since 2019, mostly due to staffing shortages.

The private equity firm Tritium Partners has invested in Qwick. Its managing partner said that,“Qwick’s impressive growth and history of achieving success through its innovative hospitality solution, even through an especially challenging few years for the industry, indicate that the company has truly changed the way people work.”

Independent Contractors v. Employees

Qwick refers to its workers as “freelancers” but according to California law, they are employees because under the ABC test a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• The worker performs work that is outside the usual course of the hiring entity’s business; and
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

The lawsuit seeks a court order to stop Qwick from engaging in unfair competition and to prevent the company from continuing to misclassify its hospitality workers as independent contractors. The case is People of the State of California and City and County Of San Francisco v. Qwick Inc., case number CGC-23-608756, in the Superior Court of the State of California, County of San Francisco.