Cautionary Tales Episode 36: IS GIG UP FOR CAR WASH COMPANY?

First AB 5 Suit Challenging Independent Contractor Classification

The California Labor Commissioner has filed her “AB 5” first lawsuit — against Mobile Wash, Inc. of Bellflower, CA — for misclassifying more than 100 mobile car washers as independent contractors under the state’s “ABC” test. See, The Mystery of it All – Employed or Independent? California Offers AB5 Answers (February 7, 2020)

The June, 2020 complaint alleges that Mobile Wash should classify its workers as employees and thus among other things pay minimum wage for travel time, reimburse their expenses, and cease to extract a transaction fee for tips made by credit card.

If successful, the suit would likely be catastrophic for this gig-based business, with Mobile Wash liable for minimum wage back pay, doubled “liquidated damages,” overtime for six-day, 10-hour day workweeks, rest period premiums, sick leave violation penalties, business expenses, and underpaid tips back to April 2017.

Commissioner Lilia García-Brower stated: “Willful misclassification of workers harms not only workers but law-abiding employers and the public. Under the ABC test, these workers are clearly employees and were entitled to basic labor protections. My office is committed to combatting this unlawful practice as a business model.”

Underscoring that determination, the suit also names president and CEO as a defendant under Labor Code 558.1 for allegedly causing Mobile Wash to violate the minimum wage and other requirements of the Labor Code.

Commissioner Garcia-Brower credits the Community Labor Environmental Action Network (CLEAN), a non-profit advocacy group, for bringing Mobile Wash’s alleged practices to the state’s attention.

With AB 5’s tight restrictions as well as its multiple exceptions, it is more important than ever to obtain expert advice from a management-side employment attorney before deciding to engage workers – or to continue to engage them — as independent contractors.

See also:

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

July 31, 2020

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