From JDSupra, Richard Reibstein discussesa lawsuit by a workers’ rights organization in Ohio that alleges that staffing firms misclassified workers as independent contractors. Richard writes:
WORKERS’ RIGHTS ORGANIZATION FILES UNFAIR COMPETITION CLAIMS AGAINST GIG STAFFING COMPANIES CLASSIFYING WORKERS AS CONTRACTORS. A nonprofit workers’ rights organization, Fair Work Alliance, has sued a group of staffing companies claiming unfair competition and tortious interference with business and contractual relationships due to the staffing companies’ alleged misclassification of workers as ICs and not employees. According to the complaint, which was removed from state to federal court in Ohio, the Fair Work Alliance initiated this action “on behalf of a leading W2 [hospitality and light industrial] staffing platform that connects businesses with W2 employees.” Those workers are classified as employees by their hiring entity company which “bears the typical costs of being an employer, such as paying minimum wage and overtime and complying with other state and federal protections, maintaining workers’ compensation insurance, and paying significant payroll taxes, and bearing administrative payroll costs associated with collecting and maintaining employee tax forms.” The Fair Work Alliance claims that gig economy staffing platforms allegedly misclassify their workers as ICs and by doing so “have been able to save significantly on their labor costs, which in turn has allowed them to unlawfully undercut competitors, such as the plaintiff [hiring entity], who follow the law.” The complaint also alleges that “investors backing those staffing platforms have engaged in racketeering by encouraging them to profit from this misclassification,” that the companies exercise a high degree of control over the performance of work by the hospitality workers, and that the Fair Work Alliance’s client’s revenue has been significantly impacted. Fair Work Alliance v. Instawork, No. 25-cv-00551 (S.D. Ohio Aug. 6, 2025).