California State Senator Steve Padilla asked the California Labor and Workforce Development Agency to investigate claims that Deel misclassified workers.
SACRAMENTO – Last week, Senator Steve Padilla (D-San Diego) sent a letter to California Secretary of Labor, Stewart Knox, requesting the California Labor and Workforce Development Agency investigate the business practices of San Francisco-based Human Resources company, Deel.
California law generally accepts that the basic test to distinguish an employee from an independent contractor is whether the company has the right to control the manner and means by which an employee performs their work. Deel hired hundreds of employees, but classified them as independent contractors effectively denying them the full suite of employment and social safety net benefits and labor protections they are entitled to, including healthcare, retirement, unemployment insurance, worker’s compensation, collective bargaining, and overtime pay.
In addition, Deel also appears to be advising its clients to misclassify their own employees and evade taxes in California – the CEO encouraging companies to leverage “the different ways of employing someone or assigning them as an independent contractor…and therefore don’t put as much tax liability into your company.”
“No company is above the law. Deel has been openly flaunting their violation of California labor laws, intentionally misclassifying their employees as independent contractors and denying them critical benefits,” said Senator Padilla. “California is clear on this issue; employees are entitled to benefits and protections. Corporations engaging in malicious employment schemes like this need to be held accountable and these employees need to see their rights restored.”
Labor leaders in the Senate also joined Senator Padilla in condemning Deel’s skirting of California employment protections.
“An independent contractor is a specific designation for self-employed people or businesses engaged in contract work. It’s not a gimmick for organizations to avoid paying for employee healthcare and other benefits or reducing their tax liability,” said Senator Dave Cortese (D-San Jose), Chair of the Senate Labor, Public Employment and Retirement Committee. “Any company found breaking the law will be brought to justice, and they would certainly have no business advising other companies on labor law.”
“As a labor leader, I have made it my life’s work to fight for worker’s rights, healthcare for all and good wages,” said Senator María Elena Durazo (D-Los Angeles), member of the Senate Committee on Labor, Public Employment and Retirement. “Many companies skirt offering benefits to make profits by employing workers as independent contractors, thereby denying them of basic workers’ rights. In this gig economy, we’ve seen this playout in different fields. If Deel advises clients to do the same as they do, which is employ workers as independent contractors, it only perpetuates a cycle of denying workers basic protections like healthcare, unemployment insurance, workers comp, retirement and overtime.”