The San Francisco City Attorney’s Office today announced that it has secured a stipulated judgement to require GigSmart to reclassify its workers as employees, following a ruling in San Francisco Superior Court. This is the third time since February 2024 the City Attorney’s Office has legally compelled a gig company to reclassify its workforce.
GigSmart, a Denver-headquartered gig company that has been operating in San Francisco since at least September 2019, connects businesses with workers to fill empty shifts for roles, including catering, delivery, hospitality, senior care, and manufacturing, according to the City Attorney’s Office. The stipulated judgement requires GigSmart to pay a restitution of $703,000 to its California workers, and convert them from independent contractors to employees, ensuring full employee benefits and protections. The number of workers who will share this judgment is not disclosed.
With the newly formed Worker Protection Team, in February 2024, the San Francisco City Attorney’s Office secured the country’s first injunction to require a gig company, Qwick, to permanently reclassify its workers. Ten months later, the team reached a similar agreement with WorkWhile in December. GigSmart is the third.
GigSmart cooperated with the investigation, and agreed to the stipulated judgment upon being notified that it had misclassified its shift workers, according to the City Attorney’s Office. “We appreciate GigSmart’s willingness to come to the table early to find a solution that reclassifies these workers and provides them fair restitution,” said City Attorney David Chiu. Worker misclassification “is unfair to businesses that play by the rules. GigSmart ultimately made the right choice here, and we hope others follow suit.”
“We found the city of San Francisco very reasonable, in terms of helping us understand what the statutes and the regulations were in the city,” said Ted Catino, co-founder of GigSmart, in an interview.
Regarding the independent-contractor model, “there was really no way for us to know that it was going to run into such regulatory headwinds, because Uber had been out there for years,” he added. In June 2024, the California Supreme Court ruled that Uber can legally classify its drivers as independent contractors.
“The city of San Francisco is sincerely trying to create an even playing field for all of the companies,” said Catino. “It’s just that the playing field that they will create will be difficult for us to be competitive because we will now have to compete with all the mega staffing agencies that have been around for years.”
GigSmart is “a family business” that was started by Catino, his wife, and two sons in 2016, and is not backed by private equity, according to Catino.
The company has 30 employees aside from the gig workers, according to Catino.
“GigSmart ultimately made the right choice here,” Chiu said, “and we hope others follow suit.”
Interesting that Chiu didn’t crow about how many “employees” the settlement covered. Perhaps he realized the $133.33 to $285.71 settlement per worker for WorkWhile wasn’t the win he thought it was.
“there was really no way for us to know that it was going to run into such regulatory headwinds”
Translation: “We are well familiar with the law of the land, but figured there was likely no enforcement.”