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SFDA Chesa Boudin Announces Employee Protection and Unfair Business Practices Action Against Doordash for Illegally Misclassifying Its Delivery Workers

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Alex Bastian / (415) 314-4848 / Alex.Bastian@sfgov.org

San Francisco — Today, San Francisco District Attorney Chesa Boudin announced the filing of an employee protection action against DoorDash alleging the company has and continues to illegally misclassify its delivery workers as independent contractors when, in fact, they are employees.  The action seeks restitution for workers, an injunction requiring DoorDash to properly classify its delivery workers as employees, and civil penalties.

“Misclassifying workers deprives them of the labor law safeguards to which they are entitled, denying workers minimum wage and overtime pay, unemployment insurance and protection from discrimination, among other things,” said District Attorney Chesa Boudin. “Misclassifying employees also harms the public good in two important ways. First, it puts law-abiding companies in the position of competing against employers who gain unfair savings by illegally classifying their workers. Second, misclassification deprives California of payroll taxes and contributions to unemployment and workers’ compensation funds. Now, more than ever, with the COVID pandemic, we must protect our workers, especially those essential workers who are delivering food to us each and every day.”

“No billion-dollar corporation should be exempt from providing their workers basic protections like minimum wage, paid sick leave and Social Security,” said California Assemblywoman Lorena Gonzalez. “Companies like DoorDash refuse to abide by the same laws all other businesses in the state are required to follow, while their drivers continue to risk their health everyday with zero protections on the job. This is just wrong. I’m glad to see District Attorney Chesa Boudin stepping in to put a stop to these exploitative practices and pursue justice for these workers.”

“It is time to call out the gig companies for cheating workers out of wages and safety protections while also making it harder for law-abiding businesses to compete,” said Rudy Gonzalez, Executive Director, San Francisco Labor Council, AFL-CIO. The covid-19 global pandemic has reminded us that good government must stand up to protect workers not corporate cheats who try to exempt themselves from the law.”

DoorDash is a business that delivers food, beverages and other items from local restaurants and stores to nearby customers. It refers to its delivery workers as “Dashers” and employs them to pick up orders from merchants and deliver them to customers. DoorDash is headquartered in San Francisco.

According to the filed complaint, misclassification is a major issue negatively impacting California workers. The California Supreme Court has discussed that misclassification is a “very serious problem” that was depriving “millions of workers of the labor law protections to which they are entitled.” The California Legislature has stated that misclassification contributes to the rise in income inequality and the shrinking of the middle class. Additionally, the San Francisco Board of Supervisors recently adopted a Resolution urging “City Attorney Dennis Herrera and District Attorney Chesa Boudin to seek immediate injunctive relief to prevent the misclassification of San Francisco workers as they seek to access basic workplace rights like paid sick leave, unemployment insurance, and benefits provided under the San Francisco Health Care Security Ordinance.”

Under California’s protective labor laws, workers are presumed to be employees and it is the employer’s burden to justify classifying workers as independent contractors. The distinction between workers being classified as employees instead of independent contractors is significant because California law affords employees rights that independent contractors do not enjoy, like paid sick leave, family leave, reimbursement for business expenses, and access to wage replacement programs like disability insurance and unemployment insurance.  Additionally, misclassified workers are not protected by most anti-discrimination laws and do not have nearly as robust legal rights to unionize and to bargain collectively.

Misclassification also hurts the public at large. Employers who properly classify their workers must unfairly compete with employers like DoorDash who illegally misclassify.  These law-abiding employers suffer from an unlevel playing field, such as paying inflated unemployment insurance and workers’ compensation costs because “free-riding” employers that misclassify workers shift costs to employers that play by the rules. Further, California is harmed when companies who misclassify do not contribute to the unemployment trust fund, the workers’ compensation fund, or make any payroll taxes whatsoever for their workers, which deprives the State of tax revenues and put more strain on state and local budgets.

From the California Supreme Court’s 2018 decision in Dynamex to the Legislature’s passing of AB 5 to the Governor’s execution of the bill in 2019, all three branches of California government have made clear that businesses need to follow the rules around classifying employees properly. Yet, DoorDash has continued to misclassify its Dashers.

Properly classifying employees is especially important during the ongoing COVID-19 pandemic. Dashers were already performing dangerous work, forced to navigate traffic conditions as quickly as possible to make their deliveries or risk being suspended or terminated by DoorDash. The job of a Dasher became substantially more perilous during this pandemic. Dashers have been deemed essential workers yet DoorDash does not even provide them with workers’ compensation insurance and prevents them from having access to paid sick and disability leave under state laws.

Under California law, workers performing labor or services for remuneration shall be considered employees.  (Cal. Lab. Code § 2750.3(a)(1).)  The burden rests with employers like DoorDash to establish that the workers they classify as independent contractors meet each element of the three-pronged ABC test.  Failure to meet any single prong of the test means an employer cannot classify the worker as an independent contractor, but instead must fulfill the legal obligations that come with hiring employees. Under the ABC test, a worker can be classified as an independent contractor only if the hiring entity establishes each of the following elements: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

For more information, please see the complaint.