Chiu secures $2.1 million deal requiring gig economy company to reclassify workers as employees

First-of-its-kind agreement combats the trend of employee misclassification in the hospitality industry and provides significant restitution for workers

SAN FRANCISCO (February 22, 2024) — San Francisco City Attorney David Chiu announced today that he has reached a groundbreaking agreement with Qwick that requires the company to convert all of its misclassified California workers to employees, ensuring they are eligible for the full range of employee benefits and protections. In 2023, Chiu sued Qwick, a gig economy company that provides on-demand staffing to the hospitality industry, for depriving workers of critical employment protections by misclassifying them as independent contractors instead of employees.

City Attorney David Chiu speaks at a press conference in June 2022.

Under the proposed Final Judgment and Injunction, submitted to the San Francisco Superior Court yesterday for approval, Qwick must pay its California workers $1.5 million in restitution and provide workers that stay on as employees a bank of accrued sick leave hours valued at up to $350,000. Qwick will also pay $250,000 to the City in civil penalties. If the settlement is approved, City Attorney Chiu will have secured the first injunction in California requiring a gig economy staffing company to permanently reclassify thousands of workers.

“Hospitality work is grueling, and our hotel and restaurant workers deserve to be treated fairly,” said City Attorney Chiu. “This proposed judgment puts money back in the pockets of workers, and ensures that they will have the full complement of employee rights and benefits moving forward. It also ensures that law-abiding staffing companies will no longer be at a competitive disadvantage. We are sending a clear message: we will not allow this illegal business model to take root in the hospitality industry.”

“For too long, corporations have gotten away with misclassifying workers as independent contractors to cheat them out of wages and basic rights,” said Lorena Gonzalez, Principal Officer of the CA Labor Federation. “Today’s settlement with Qwick embodies everything we want to see in enforcement efforts: a permanent injunction to reclassify workers as employees, restitution of wages to the workers, and penalties to reimburse the costs of enforcement. We are grateful to City Attorney Chiu and the staff of his Worker Protection Team for leading the way on enforcement— protecting workers and responsible businesses.”

“This settlement is a huge victory for Qwick workers who are entitled to the same protections, wages, and benefits as their peers employed at hotels and restaurants,” said Anand Singh, President of UNITE HERE Local 2. “We appreciate the work of the City Attorney’s Office to enforce the law in San Francisco. Employers should be on notice that they can’t get away with worker misclassification here in our city.”

Qwick is an Arizona-based hospitality staffing company that has been operating in California since 2019. It has active markets in the Bay Area, Los Angeles, and San Diego. Through its mobile app, Qwick provides restaurants, caterers, and event production companies with on-demand workers to fill empty shifts. Qwick workers fill many different front-of-house and back-of-house roles, including shifts for servers, bussers, bartenders, baristas, dishwashers, cooks, barbacks, event staff, and concession workers. When Qwick workers fill a shift, they work alongside and perform the same functions as hotel and restaurant employees.

In violation of California law, Qwick classified these workers as independent contractors, as though each waiter and dishwasher operated an independent business as a sole proprietor. As a result of this misclassification, Qwick’s workers were denied a wide range of state and local employee rights, including overtime pay, paid sick leave, heath care expenditures, and paid family leave.

In August 2023, the City Attorney’s Office’s Worker Protection Team filed a lawsuit to stop to these practices and recover civil penalties and restitution for workers who have been harmed. The lawsuit alleged that the misclassification of Qwick’s workforce violated a host of state and local labor laws and denied workers the protections, wages, and benefits guaranteed under law. In doing so, the City alleged Qwick gained an unfair business advantage over other law-abiding businesses, constituting a violation of California’s Unfair Competition Law.

Under the proposed judgment, Qwick must treat all of its existing and future California hospitality workers as employees, rather than independent contractors. Qwick will pay $1.5 million in restitution to thousands of hospitality workers who worked shifts for the company between 2019 and 2024. Additionally, Qwick is required to provide each converted employee a sick leave bank to be calculated based on the hours worked for Qwick between 2019 and the present day. Qwick must pay the City $250,000 in civil penalties to be used for the enforcement of consumer and worker protection laws. The judgment provides that the City Attorney’s Office will actively monitor Qwick’s compliance with the agreement through August 1, 2026, and the Court will retain permanent jurisdiction over Qwick’s obligation to treat its hospitality workers as employees. Qwick stipulated to this judgment after the City filed a motion requesting that the court issue a preliminary injunction against the company.

This case was staffed and prosecuted by Ian Eliasoph, Hannah Giorgi, Kathleen Hill, and Matt Goldberg, all members of the Office’s Worker Protection Team, established by City Attorney Chiu in 2022. The Team’s mission is to protect the rights of workers in San Francisco and California with an emphasis on combatting systemic business practices that exploit marginalized workers. Building on the Office’s longstanding leadership in affirmative litigation, the Team investigates and litigates instances of wage theft, employee misclassification, and other abusive workplace practices.

The Final Judgment and Injunction submitted to the Court for approval can be found here. The case is City and County of San Francisco and the People of the State of California v. Qwick Inc, San Francisco Superior Court, Case No. CGC-23-608756.