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California DAs to Seek Order Against Handy in Gig Work Case (1)

May 17, 2021, 10:06 PM; Updated: May 17, 2021, 10:29 PM

Handy Technologies Inc. should immediately be forced to treat its workers as employees, San Francisco and Los Angeles district attorneys said Monday, announcing plans to file a motion to attempt to halt the gig company’s business practices.

The prosecutors said they’ll file a motion for preliminary injunction in an ongoing lawsuit in San Francisco Superior Court alleging Handy is violating California law by classifying its workforce of handymen and cleaners as independent contractors rather than employees. The lawsuit was filed in March.

“We are seeking an immediate end to Handy’s illegal behavior of failing to provide its workers with basic workplace protections,” San Francisco District Attorney Chesa Boudin said in a statement. “All three branches of California’s government have already made clear that these workers are employees under California law and entitled to these important safeguards. The failure to provide these vulnerable workers basic protections puts them at risk, particularly during the COVID pandemic.”

The company said in a statement that the action from the district attorneys is “categorically wrong and demonstrates a fundamental misunderstanding of Handy’s business.”

“Handy has expanded economic opportunities and enhanced economic security for handymen, house cleaners, plumbers, electricians and countless others who have traditionally found work through word-of-mouth and can now supplement those opportunities with Handy’s robust online marketplace,” the statement said. “These entrepreneurial Californians who have fought hard to get by during the pandemic would be surprised to hear themselves described as Handy employees. We will aggressively fight this misguided action and are proud to support pros across the state.”

The California Attorney General’s office previously secured a preliminary injunction against Uber Technologies Inc. and Lyft Inc. under the same strict worker classification standard. But the state’s voters subsequently approved Proposition 22, which carves out an exception to that standard for app-based delivery drivers and rideshare drivers.

That ballot initiative, backed by companies included Uber, Lyft, and DoorDash, didn’t include service-based gig companies, including on-demand handymen, dog walkers, and car mechanics, which have continued to see lawsuits filed against them.

Prior Litigation

Taskrabbit Inc., Rover Inc., and Lime scooters have also faced lawsuits seeking to force them to convert their contractors to employees. Handy is also facing a misclassification lawsuit filed by a workers in Los Angeles, and a state court denied the company’s motion to compel arbitration.

More than two dozen misclassification lawsuits have been filed against gig companies in California since it passed Assembly Bill 5, according to a Bloomberg Law review of federal and state court dockets from September 2019 to present. The majority targeted rideshare and delivery companies, but other service-based gig companies comprised about 21 percent of those cases.

A.B. 5 codifies the so-called ABC test, which makes it difficult —outside of Proposition 22— to defend the business models that rely on contractors rather than employees, who are entitled to minimum wage, overtime, and other job benefits.

“This illegal and shameful practice must end,” Los Angeles District Attorney George Gascón said in a statement. “Employees deserve healthcare and workplace safety protections, especially during these precarious pandemic times. Additionally, competing businesses who follow the law deserve an even playing field.”

Boudin last June became the first California district attorney to sue a company for misclassifying workers, with a lawsuit against DoorDash.

Boudin and Gascón are part of a progressive prosecutors’ group formed last fall as an alternative to the California District Attorneys Association to advocate for overhauling law enforcement practices and police reform.

Handy is represented by Munger, Tolles & Olson LLP. Neither attorneys for the company, nor its representatives, immediately responded to requests for comment.

The case is California v. Handy Technologies, Cal. Super. Ct., No. CGC21590442.

—With assistance from Joyce Cutler and Maeve Allsup

(Updated to add a statement from Handy beginning in the fourth paragraph.)

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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