dispute resolution


A major cleaning services company recently reached a settlement over worker classification in California courts. The case serve as a reminder of the various financial risks associated with the misclassification of workers. As part of the settlement, the company agreed to pay nearly $2 million to address the allegations that they improperly classified janitorial workers as independent contractors rather than employees. 

California Attorney General Rob Bonta commented that the misclassification of workers as independent contractors is a widespread issue; violations can and should have significant penalties. Improperly classifying workers can result in a frontline team that are denied fundamental protections and benefits otherwise guaranteed by state employment laws. This covers such basic rights as minimum and overtime wages, regular lunch and rest periods, and reimbursement for business expenses (such as cleaning supplies). 

The settlement, valued at $1.7 million in restitution and $150,000 in civil penalties, stipulates that the company work to make substantial changes to its franchising business model in California. The agreement also includes a three-year monitoring period to ensure compliance with the injunctive terms.

In California, the state has adopted an "ABC test", which classifies a worker and an employee unless the hiring company can prove three specific conditions: (A) the worker is free from the company's control and direction; (B) the work is outside the usual course of the company's business; and (C) the worker is engaged in an independently established trade or business.