Rover is a popular platform for pet sitting and dog walking. They agreed to settle the misclassification lawsuit for $18 million, providing compensation to affected workers and potentially revising its classification policies. The rover lawsuit claimed dog walkers were misclassified as independent contractors.
Now, we’ll dive deep into the details of the lawsuit, the settlement, and its broader implications.
Background of Rover
Rover is a popular platform that connects pet owners with pet sitters and dog walkers. The company was founded in 2011 and has grown rapidly. Rover provides a convenient solution for pet owners needing reliable care for their pets, matching service providers with clients.
What is the Rover Lawsuit All About?
The Rover lawsuit alleged that the company misclassified its workers. It claimed workers were labeled as independent contractors instead of employees. This Rover class action lawsuit alleges that they were denied essential benefits due to misclassification.
It also denied them protections under labor laws. Melanie Sportsman filed this lawsuit initially. She was represented by The Tidrick Law Firm LLP and Ariel Stiller-Shulman of the Stiller Law Firm.
Overview of Rover Settlement Misclassification Case 18 Million
The Company (“Rover”) agreed to pay $18 million on February 8, 2023. This payment was to resolve allegations against the Company. The allegations claimed Rover unlawfully misclassified its hourly workers. They play out smart to avoid certain minimum wage and benefit laws.
California law presumes workers are employees unless they operate independent businesses in a distinct line of work and are free from outside control. However, Referral agencies are not subject to the ABC test but estimates on an 11-factor test.
Sportsman argued that Rover’s 20% commission indicated more involvement. She claimed the company was not just a referral service. Workers should be classified as employees. The Northern District of California ruled in favor of Rover.
The court stated that Rover acted merely as an intermediary. Thus, the workers were appropriately classified as independent contractors.
During an appeal to the Ninth Circuit, the judges questioned the district court’s decision. Rover’s practice of screening dog walkers and pet sitters before hiring them may indicate a level of control. The judges noted that the app’s payment structure could suggest control similar to that in other gig economy platforms like Uber.
Sportsman informed the Ninth Circuit that a settlement had been reached, and requested that the case be sent back to the lower court for approval. Rover agreed to modify its fee structure, eliminating 20% commission for service providers. This change ensures that Rover will be classified as a referral agency and exempt from the ABC employment test.
Misclassification of employees is a way employers avoid paying overtime under the Fair Labor Standards Act. According to a study by researchers from Harvard Business School and the University of Texas at Dallas between 2010 and 2018, employers saved $4 billion.
Case Number is 19-cv-03053-WHO
They did it by improperly classifying 73,000 workers. People call this tactic as title inflation. The case caption for this lawsuit is Sportsman v. A Place for Rover, Inc. The case number is 19-cv-03053-WHO. It was filed in the United States District Court for the Northern District of California.
Implications of the Rover Settlement
The $18 million settlement has far-reaching implications for Rover and the broader gig economy. Rover faces a substantial financial burden, and reclassifying workers could change its business model. This settlement serves as a warning that misclassification can have significant legal and financial repercussions.
Financial Impact on Rover
The $18 million settlement represents a significant financial hit for Rover. The company may also face increased operating expenses beyond the immediate cost.
A reclassification of workers as employees may be necessary. This could potentially affect the company’s profitability. It might also impact its business strategy.
Conclusion
The $18 million settlement in the Rover lawsuit underscores the importance of proper worker classification in the gig economy. This case highlights the potential legal and financial repercussions for companies that fail to classify their workers correctly.