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California Labor Agency Files First A.B. 5 Enforcement Suit

July 13, 2020, 8:17 PM

A gig-economy car-wash company is the first to be sued by the California Labor Commissioner’s office for allegedly misclassifying its workers as independent contractors, the state agency said Monday.

Customers of Mobile Wash Inc., based in Bellflower, Calif., can use an app to order car washing and detailing services at a location of their choice. The company’s workers providing those services aren’t reimbursed for using their own cars or for buying uniforms, insurance, supplies, cleaning equipment, and gas, according to the lawsuit filed in California Superior Court for the County of Los Angeles, Central District. The company also charges its workers a $2 transaction fee for every tip left on a credit card, the suit said.

“From Mobile Wash’s startup in 2014 or 2015, defendants made a calculated business decision to misclassify their car washers as independent contractors rather than employees,” the state agency said in the lawsuit, filed July 1. “At all times since the inception of its business, defendants have continued to misclassify their car washers as a means of unlawfully depriving these workers of a host of statutory protections applicable to employees, in direct contravention of California law.”

The lawsuit is the first the agency has filed to enforce Assembly Bill 5, the 2019 state law that put into statute a 2018 California Supreme Court ruling setting a new three-factor test for determining worker classification. The so-called ABC test generally presumes a worker to have employee status unless the employer can prove all three criteria—that the person is free from control of the company that’s hiring them; that the service provided is outside the company’s usual course of business; and that the person is customarily engaged in an independent trade or occupation.

Causes of Action: Willful misclassification of employees as independent contractors; failure to register as a car wash employer; failure to pay minimum wage, overtime, missed rest periods; failure to indemnify employees for business expenses; unlawful taking of gratuities; failure to provide itemized wage statements; failure to comply with sick-leave requirements; failure to timely pay earned wages upon separation from employment; failure to timely pay earned wages during employment.

Relief: Injunctive relief to stop the practice, damages, and penalties

Response: Company owner couldn’t be reached for comment.

Attorneys: Miles Locker, Anel M. Flores, California Department of Industrial Relations.

The case is Garcia-Brower v. Mobile Wash, Inc., Cal. Super. Ct., No. 20STCV24800, filed 7/1/20.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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