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DC sues Shipt for misclassifying drivers as independent contractors

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DC Attorney General Karl Racine sued Shipt, a gig delivery company, on Thursday for misclassifying full-time workers as independent contractors in order to “cheat” them out of wages and avoid payroll taxes.

In Thursday’s complaint, accuses Racine Shipt of unlawfully denying full-time delivery drivers basic benefits and protections by falsely classifying them as contractors. In particular, the lawsuit alleges that Shipt is misrepresenting the nature of a delivery person’s job, suggesting that the employee is acting as his “own boss.” But in reality, drivers have to sign up for hourly shifts, and the amount of money they earn depends on the number of orders placed within that time frame. If orders are not placed, drivers will not make a profit and may even incur losses, Racine argued in the complaint, alleging Shipt’s business model violates DC’s minimum wage laws.

“Increasingly, we are seeing companies abusing hard-working district residents by fraudulently calling them independent contractors and, as a result, denying them wages and benefits they are legally owed,” Racine said in a statement Thursday. “At every step, Shipt cheats, putting profits on employees and violating the basic rights of his employees, just to make another dollar. We are using all of our authority to level the playing field and hold Shipt accountable for trying to cheat DC workers.”

“Shipt cheats, makes profits on employees and violates basic rights of his employees just to make another dollar”

The lawsuit comes as the Biden administration prepares to make it harder for gig companies like Uber and DoorDash to hire employees as independent contractors. Earlier this month, the Department of Labor proposed a new regulation that would force gig companies to classify employees as employees depending on the amount of time they’ve worked at the company, their specific role, and whether the individuals could work at a loss. on their own.

“While independent contractors play an important role in our economy, in many cases we have seen employers misclassify their employees as independent contractors, particularly among our country’s most vulnerable workers,” Labor Secretary Marty Walsh said in a statement this month. declaration. “Misclassification deprives employees of their federal employment protections, including their right to receive their full, legally earned wages.”

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