These two staffing companies place workers in a range of hospitality positions, including as servers, bartenders, line and prep cooks and, yes, dishwashers. The citations assert that the companies misclassified the workers as independent contractors and in doing so, violated the city’s minimum wage ordinance and state law on paid sick leave.
Colorado’s labor law defines an employee as any person who performs labor or services for the benefit of an employer. Factors that go into making that determination include the degree of control an employer exercises over the person, and the degree to which the person’s work is the primary work of the employer. By contrast, an independent contractor is considered someone who works primarily free of control and direction and is “customarily engaged” in an independent trade or business related to the service performed.
The Denver cases may at first glance seem like small potatoes. But they are actually a very big deal. The cases demonstrate the spread of the exploitative gig business model far beyond Uber drivers and DoorDash food deliverers, to encompass a growing number of jobs that have long been performed by employees with legal protections. And the cases illustrate the urgent need for government intervention to safeguard core workplace rights.
Because workplace laws protect employees and not independent contractors, gig companies like Uber and Lyft save a bucket of money on both wages and taxes by avoiding the obligations that every other employer must follow: wage-related laws as well as unemployment, Social Security and Medicare taxes. As a result, gig workers can find themselves paid sub-minimum wages, for example, or left without workers’ compensation when injured or killed on the job. Another consequence is that law-abiding employers face unfair competition with businesses that don’t follow the rules, and critical safety-net programs like unemployment insurance lose badly needed funds.
The Denver cases make it clear that the gig business model isn’t just about drivers and food delivery workers anymore. Instawork, for example, also places warehouse, housekeeping, janitorial and retail workers, and Gigpro places workers at hotels. San Francisco’s city attorney, David Chiu, sued Qwick, a hospitality staffing company, last year, succinctly summing up the gig business model: “Qwick is inequality disguised as innovation, a staffing company with an app that is in flagrant violation of labor and employment laws.”