Making pie isn’t like operating an app-based business in San Francisco. There are rules.
If you don’t follow the rules, you don’t make good pie.
Karen Heisler follows the rules. Karen Heisler makes good pie.
Before co-founding Mission Pie a dozen years ago, Heisler spent 15 years working for a regulatory outfit you may have heard of: the Environmental Protection Agency. She specialized in agricultural and pesticide regulation. “I believe in the law,” she says.
It’s easy to see why. When you work in pesticide regulation and rogues don’t follow the law, people get hurt — and things wither and die. It’s just so much better when the government concerns itself with ensuring society gets what it desires from corporations rather than ensuring corporations get what they desire from society.
But that all seems like long ago. Because it was.
Inside Heisler’s restaurant, everyone is eating pie and drinking coffee. Some manner of knitting klatch is meeting around the large main table. Outside, the 14 and 49 buses rumble by on Mission. On their sides, high-contrast photos of delicious food entice would-be customers to stay in and have dinner delivered to their homes tonight.
But if you want to eat Mission Pie, you’re probably going to have to put on your socks and your shoes and head down here.
Heisler is unwilling to submit to the 25 to 30-percent commission these delivery services demand from brick-and-mortar establishments — a rate she says far outstrips her profit margin. Contracts she’s been shown, furthermore, wouldn’t allow her to recoup her costs by charging higher rates for delivery customers.
The natural solution would be to raise prices on everyone, forcing the knitting klatch here to subsidize the folks at home enjoying Netflix and pie (She could also open up a remote ghost kitchen for delivery purposes only, and price everything there that much higher).
But that’s not how Heisler rolls. To hell with all that.
Her frustration isn’t that the “shut-in economy” has advanced to the point that contracting with a third party to have pies sent to your home is the epitome of San Francisco normal. If people desire delivery, let the people have what they want. It’s deeper than that. Heisler’s workforce is all employees. They have health insurance. She hands over payroll taxes and, additionally, with more than 20 employees, she and her co-owner Krystin Rubin are subject to any number of “employer mandates” this city has chosen to impose on its resident businesses.
Well, some of those businesses: The app-based food delivery outfits do not tend to categorize their workers as employees. They do not tend to offer workers healthcare. They do not tend to pay the requisite employment taxes. They do not deem themselves subject to employer mandates. And yet they claim their pound of flesh from brick-and-mortar establishments that pay all these taxes and do all these things.
“If this was a fair competition, I would be willing to accept it if the consumers didn’t want what I had to offer,” Heisler says. “But I am not willing to accept being outcompeted by virtue of another sector being given a pass when it comes to compliance with the law.”
“We will not participate. We will not be extorted from.”
In April, the news broke that DoorDash — one of the many food delivery services of the sort Heisler will not do business with — was applying tips given to its delivery workers to their base wages instead of treating them as what they are: a gratuity. For a company capitalized to the tune of billions of dollars, this was a profoundly petty move. And, of course, it would also appear to constitute wage theft: Supervisor Aaron Peskin took it upon himself to personally file a complaint with the city’s Office of Labor Standards Enforcement.
Heisler noticed this. And she subsequently reached out to Peskin with an intriguing message: Think bigger.
Rather than just reacting to one particularly odious move by one particularly callous company, why not focus on the fundamental issue: that food delivery outfits’ practice of classifying their workers as contractors — and not employees — all but certainly contravenes state law. Their business model would appear to be expressly illegal — and, in fact, is designed to be that way, thereby avoiding regulation and ensuring that a competitive advantage is, pun intended, baked in.
This is not just the opinion of a put-upon pie-maker watching scofflaws slice into her profits and viability, but of legal experts.
Last year, the state Supreme Court handed down what is now known as the “Dynamex” decision. The takeaway from that 82-page ruling: We start with the presumption that workers are employees, not contractors — a presumption akin to “innocent until proven guilty.” On top of that, the onus is on the employer to establish that workers are, indeed, contractors and not employees. This is done through a three-pronged “ABC” test, each category of which must be met:
(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
This is arcane and complex and grows ever more so when we tumble down the rabbit hole of billion-dollar-app-based services’ surreal claims that their workers are, in reality, their customers — a claim that goes down easier after a few slugs of whiskey or a frying pan to the head. In actuality, these companies claim, they are not people- or food-delivery services but ethereal tech platforms. These are not the droids you’re looking for. Pay no attention to the man behind the curtain!
Let’s leave that madness aside and stress that, whether it’s Lyft/Uber drivers or food delivery workers, it’s nigh-impossible to conceive of a scenario in which the ABC test can be passed. Among many other stumbling blocks, these are some of the most controlled and directed workers in the history of mankind. These workers should all be employees.
“There is no doubt they will need to revamp their worker classifications in light of the Dynamex case,” says Golden Gate University labor law professor Hina Shah. Adds UC Hastings labor law professor Veena Dubal, “Under Dynamex, companies like DoorDash, GrubHub, and Postmates are misclassifying their workers.” And, adds Dubal’s Hastings colleague, Reuel Schiller, that’s nothing new. “This idea of getting competitive advantage through regulatory avoidance — it happens all the time.”
But there’s a difference between government and politics. In addition to spending heavily on (extremely creative) lawyers, app-based outfits lobby heavily, too. They also contribute mightily to individual politicians; Uber, for one, maxed out its givings to Gov. Gavin Newsom, always a friend in need for disruptive tech.
As such, Newsom’s message in the wake of the Dynamex ruling hasn’t been “enforce the law.” It’s been about collaboration and conciliation and creating a blue-ribbon panel to “expand worker opportunity.”
That’s fun. One could argue that the state Supreme Court’s ruling already did just that.
So, local enforcement agencies aren’t exactly incentivized to start kicking down doors and, ahem, enforce the law. Everyone is waiting to see what happens in Sacramento, how various bills clarifying Dynamex fare in the legislature, and how numerous lawsuits are decided.
Pat Mulligan, the head of the local Office of Labor Standards and Enforcement (OLSE), says he has several open cases regarding food delivery outfits. And, soon, he may have one more. Heisler has had conversations with the offices of Supervisors Hillary Ronen and Rafael Mandelman — and Peskin tells your humble narrator that, if he receives a favorable OLSE ruling in l’affaire Door Dash, he’d be amenable to filing a broader complaint of the sort Heisler envisions: “Oh, yes — in a hot second.”
Until then, everyone here at Mission Pie keeps knitting, and drinking coffee, and eating forkfuls of dessert for breakfast. And, outside, we’re in stasis, too: The workers for delivery services don’t benefit from wage or hour laws or have health insurance, and, in the event something goes dreadfully wrong, they’re subsidized by the social safety net (i.e. you).
Establishments like Heisler’s also pay taxes that enable this social safety net, yet find their business being syphoned away by outfits that, expressly, do not.
It’s not clear how tenable this is for the restaurants that make the food — without whom all of this would be impossible.
When you work in the pie business and rogues don’t follow the law, people get hurt. And things wither and die.
I heard very distressing news today on the FB and hope it has nothing to do with this heroic stance and terrific article. Also that it’s not true
Go Karen, Krystin, and Mission Pie!
So how does the Dynamex decision work with the Singer et al vs Pistmates decision also last year. They are polar opposite decisions.
Watch the progress of AB5 for the answer.
Mission Pie is one of those places where you feel like you are back in the San Francisco where people loved life and enjoyed each others company. It represents all the good things that are left in San Francisco and all the good things we have lost.
Nice one Mission pies! It takes a lot to make a stand. I tried to avoid the apps with my pizzeria, only to watch sales deteriorate. Had to sign up with the 3rd party delivery vendors in order to build sales, maintain high staff wages, and keep up profitability. Nearly all of our operational headaches are related to delivery. When problems arise, our phone number is widely published and we field most of the complaints. To top it off, all the sales are “discounted” by way of the commission that is paid to the delivery services.
In my 14 years of doing business in SF, it’s never been harder to staff a restaurant and keep it running profitably. If you like a restaurant, try to go eat there. Support the staff and put tip money in their pocket, not the likes of DoorDash or Postmates. These folks are your friends and neighbors, not the disruptors backed by billions in VC money.
To those of you reviewing the pies here. Take it somewhere else. Go Mission Pie.
I like the pie reviews, so I guess we cancel each other out…
Terrific article. Thanks!
I had a small business in San Francisco with over 20 employees (hair salon) for over 16 yrs . Trying like you to run a dream and teach young people a trade and we were constantly penalized by the city. Its not just delivery services as is in your case but healthcare etc. I have my healthcare through my partner who works corporate and its great . Why do corporations get the big breaks when they the ones making big buck and small business are being penalized. ? The lack of support for small businesses is now evident at the amount of empty retail spaces. I eventually gave it up and just work solo. I love mission pie and wish you well in your fight. You have my support . And thanks SF for fuckin up the small mans dream and good fuckin luck with filling those retail spaces
Love mission pie, but today the Labor Board said Uber drivers are indeed contractors.
Really well written article. Kudos.
For the likes of me I couldn’t find an address for
the establishment anywhere in the article of comments.
Feisty! *cat noises*
Mission Pie is good food and good people, every day. Thank you for sharing this story, may all of us who enjoy being part of the Mission Pie community be willing to lend our voices and votes to this issue.
Great article. Sorry to be this guy, but “scuttlebutt” means “rumor”, not “gist”.
Alas. You are right. I can fix this. Easy as pie.
Hurray Mission Pie for standing up, but their pies are not very good. Way too much sugar that you cant even taste the fruit. I prefer pies from Arizmendi, Bi-Rite or Three babes bakeshop.
Three babes is nowhere to be found (although I have had)
BiRite is expensive
.. and Arizmendy barely ever makes pie.
yeah OK good on her, maybe I’ll pick up some Mission Pie!
It is wild to me that they can charge that high of a commission on the back end while also charging the customer multiple delivery and service fees on the front end. On top of exploiting their workers!? They must be swimming in cash.
Thanks Joe and Mission Local for raising these issues, and thanks to Mission Pie for good baking and good values.
Just picked up two pies for a camping birthday celebration! Nothing better! Pear frangipane! Strawberry Apple! It’s all good!
But they will taste so much tastier after this article, a well written expose. More please!
Amazing that many are still hanging on here, story for the ages.
Yup, Uber, Lyft, Door Dash drivers should be classified as employees. They should unionize.
The prices we pay for food/people delivery services should be high enough to provide at least minimum wage for the workers. Now Amazon wants to set up some of their their current employees as independent contractors, to provide last mile delivery. Amazon can’t make money on last mile delivery, but surely you can. Arrgh!
I sure wish all the fake” independent contractors” would unionize.
Mission Pie is great. And they are super nice when we bring pesky grandchildren.
Kudos to Mission Pie. That’s a rational stand and your fairness to your employees is appreciable!
THANK YOU KAREN!!! Chile Lindo also refuses to be swept away by this insane apparatus that seems to think that in the food business you can afford to give up a 30%–yes 30%–commission charge. Insane!!! No way. Brick ‘n’ Mortar’s create community, neighborhoods, and give people a sense of belonging that is critical to our social fiber. And… by the way… walking into Mission Pie to get coffee and a walnut scone… makes my day. Then I have a second cup at Chile Lindo. Gracias.–Paula
Mission Pie has been in my regular rotation since day one. They also serve dinner and it’s all scrumptious. Thanks for being a vital part of the neighborhood!
Hooray Mission Pie! Sticking to the man.
*snap* *snap* *snap*
Kudos to Mission Pie/Karen!
Kudos to Supes Ronen, Mandelman, and Peskin!
Kudos to Joe, well written article!
I know what I’m getting for dinner tonight!
I am forever Team Mission Pie
First, delicious pies! Whats your favorite (rhubarb would be mine!)?
You all have been crushing it with the insightful, well researched and extremely local news coverage! Not only did I learn why I was never able to get mission pie delivered but I also learned what “ghost kitchens” are. Really interesting stuff.
My take away is that almost all of the time, being treated as a 1099 contractor vs a W2 employee is going to be terrible for you, something which i experienced first hand working in the software QA field. Always seems like you are getting the raw end of the deal that way.
Good for the mission pie owners to stick to their guns and in a very (old) SF move, great that they are fair to their employees and treat them with some respect. I have a movie date coming up at the alamo with a friend from oakland, I think i’ll have to take him to get some mission pies now.
For the life of me I can’t understand their appeal. I want to like their pie but it always tastes sub par to me. I think there are far better places in the city- Black Jet in Bernal for example.
What a good article! I avoid MP because I’m working on losing weight, but they are my go-to for parties, and I pick them up myself! Engaging high school people and inviting sponsors to work on the farm are but a few of the admirable things they do!
Hats off to Mission Pie! They’ve always been right on, reached out to at risk youth in the Mission, providing them valuable work opportunities, etc. I personally walk several blocks out of my way, just to support them, by buying coffee on a regular basis. And…their pie is awesome! Thank you on all fronts, Mission Pie! You are a model of what a business can and should be.