The housecleaning app Handy has agreed to pay $6 million to settle a lawsuit alleging it misclassified workers and violated California labor laws, including Assembly Bill 5, the San Francisco and Los Angeles district attorneys announced today.
As part of the judgment, over 25,000 workers who perform cleaning and handyman services through the app will receive a total of $4.8 million in restitution from Handy in the coming months. The average payout is less than $200.
Handy will also pay a further $1.2 million in civil penalties.
“This is a really great example of how district attorneys can conceptualize their role in prosecuting the most rampant theft in the economy — that is, the theft of workers’ wages,” said Veena Dubal, an employment law professor at the University of California College of the Law, San Francisco.
“This settlement forces Handy to change their business model so that they appear more to be an intermediary, and not an employer. I’m hopeful this will give these workers some autonomy, instead of allowing the firm to have it both ways — to act as an employer and an intermediary.”
Zuhair, a driver with advocacy group Gig Workers Rising, said, “The misclassification of workers directly undermines the hard-fought labor laws established to protect workers’ rights, safety and prevent exploitation.”
Founded in 2012, New York-based Handy (formerly Handybook) connects users in the United States, United Kingdom, and Canada with cleaners, handymen and other household service providers who offer home cleaning, improvement, repair and maintenance services. In early 2023, Handy was bought by ANGI Homeservices.
AB 5, which has been in effect since January, 2020, limits the circumstances under which employers can classify workers as independent contractors, who are often denied benefits and protections granted to full-time employees, like paid time off and unemployment insurance.
As part of the settlement, Handy also agreed to changes to its workers’ control over the jobs they accept: Now those who provide services through the app, so-called “Pros,” can set their own hourly rate and contact customers directly to negotiate hours and pay, a change from before, when Handy required workers to abide by pre-set contracts.
The case was originally filed in San Francisco Superior Court in March, 2021, by then-San Francisco District Attorney Chesa Boudin and Los Angeles County District Attorney George Gascón. The latter described the settlement as “a long-awaited triumph for workers.”
“Handy is now compelled to make sweeping and specific changes to their business practices, granting workers greater autonomy and control over their work,” Gascón said. “We will not rest until justice is served for every worker who has been exploited or mistreated, and we will continue to hold companies accountable for their actions.”
In a statement, a Handy spokesperson called the settlement a “win for the tradespeople of California,” and said it will “continue to help enterprising small business owners and sole proprietors in California grow their businesses.”
San Francisco District Attorney Brooke Jenkins said the settlement with Handy is “also a warning to other companies that engage in similar unlawful behavior.”
Handy is not covered by Proposition 22, a controversial California ballot initiative which, in 2020, granted app-based transportation and delivery companies an exception to AB 5, classifying ride-hailing and food delivery drivers as independent contractors rather than employees.