On February 8, 2023, A Place for Rover, Inc. (“Rover” or the “Company”) agreed to pay $18 million to resolve allegations that the Company unlawfully misclassified its hourly workers as independent contractors in order to skirt certain minimum wage and benefit laws.
Rover is an app-based platform where users can connect with and book dog sitters or walkers. The Rover app includes dog boarding, dog walking, house sitting and doggy day care. To appear on the app, Rover pet-care providers must create a profile and be approved. Providers then accept requests in order to generate revenue. The Rover app operates similarly to apps like Uber, Doordash, and Lyft, companies which have also faced significant legal scrutiny over the appropriate legal classification of their workers.
The action was initiated on November 20, 2018, when Erika Miller (“Plaintiff”) filed a lawsuit under the California Labor Code Private Attorneys’ General Act of 2004 (“PAGA”) claiming Rover misclassified pet-care providers who offer services through the Rover app as independent contractors instead of hourly employees. Plaintiff claimed that in doing so, providers were stripped of certain employee protections under the California Labor Code, including minimum wage, overtime pay, meal and rest breaks, reimbursement expenses, timely paid wages, secure workers’ compensation, paid sick days, timely paid wages due upon separation, and regular wage statements. Rover denied these allegations and continuously denied any wrongdoing throughout the litigation.
On May 6, 2021, United States District Judge William H. Orrick of the Northern District of California granted summary judgment in favor of Rover, finding that Plaintiff was an independent contractor under both the ABC Test of California Labor Code § 2775 and the factor test of S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989), and holding, therefore, that Rover correctly classified its pet-care providers as independent contractors. In moving for summary judgment, Rover also argued it was exempt from paying employee benefits under the Referral Agency Exemption of California Labor Code § 2777. However, Judge Orrick concluded that, “while Rover meets most of the criteria for the referral agency exemption based on the evidence of record, it does not appear to meet criterion 10 because Rover deducts a service fee (20%) from the Pet Owner’s payment to Pet Care Providers…. Criterion 10 would have been satisfied if, instead, Rover made the Pet Owners client shoulder the 20% fee by charging them an extra $6.60 on top of the $33 set by the Pet Care Provider.”
On May 28, 2021, Plaintiff filed a notice of appeal of the decision to the United States Court of Appeals for the Ninth Circuit, arguing that Judge Orrick erred in finding that Rover properly classified its workers as independent contractors. In October 2022, before the Ninth Circuit could decide the issue, the parties reached a settlement and asked the appellate court to remand the case back to the district court for approval proceedings. The parties agreed to settle the action without admitting to or conceding any liabilities or claims in order to avoid further litigation and the risk associated with the appeal.
According to the settlement notice filed on February 7, 2023, Rover will pay a total gross settlement fund of $18 million. The fund will be distributed to class members, PAGA Group members, and the California Labor and Workforce Development Agency. In addition to the monetary relief, Rover agreed to change its fee structure and stop taking a 20% cut from its platform providers. As a result, Rover will be categorized as a referral agency and will be exempt from California’s ABC employment misclassification test.
The case caption for this lawsuit is Sportsman v. A Place for Rover, Inc., Case No. 19-cv-03053-WHO, filed in the United States District Court for the Northern District of California.
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