San Francisco’s District Attorney is Suing DoorDash for Alleged Unfair Business Practices

San Francisco’s District Attorney’s office is typically known as the place criminal behavior — rape, murder, theft — is prosecuted, following an investigation and arrest by law enforcement. But according to DA Chesa Boudin, a new unit in his office will pursue alleged crimes against workers, and SF-based food delivery company DoorDash is its first target.

Just last April, the DA’s office launched its Economic Crimes Against Workers Unit. It’s one of the first such departments in the country, Boudin says, focused on matters like wage theft, labor trafficking, criminal immigration-related workplace retaliation, and enforcement of California’s Unfair Competition Laws.

The unit is led by Assistant District Attorney Scott Stillman, who said today that DoorDash — a seven-year-old food delivery company that purchased competitor Caviar for $410 million last year — has systematically misclassified its delivery drivers by claiming that they are gig workers when, in fact, they are employees of the company and are therefore deserving of worker protections like minimum wage, overtime pay, sick leave, and protection from discrimination.

At the crux of Boudin and Stillman’s argument is AB5, a controversial state law that went into effect on January 1, 2020. The law expands on a 2018 ruling by California’s Supreme Court commonly referred to as “Dynamex,” in which an 82-page decision ruled that workers in the state should be presumed to be employees, and that it was on companies like DoorDash to prove that they were instead independent contractors. AB5 made explicit that ruling, essentially saying that gig workers and other so-called permalancers are, under California law, employees — and that companies should not only treat them as such, but that they should pay local, state, and federal taxes reflective of that status.

It’s likely that at this point, a reader familiar with San Francisco’s robust gig economy is wondering why, out of all companies, it was DoorDash that attracted Boudin’s attention. When asked that, Boudin declined to answer, saying that he couldn’t given “the potential for ongoing and open investigations.” However, he said, “What I can tell you is that…we did not bring ADA Stillman on to file just one lawsuit.”

The civil lawsuit (you can read it in full below) seeks an injunction that would require DoorDash to classify its delivery workers as employees, restitution for workers, and civil penalties, Boudin says.

DoorDash, which has not responded to an Eater SF request for comment, is currently engaged in a $90 million fight against AB 5. Speaking at a Wall Street Journal panel in the fall of 2019, DoorDash CEO Tony Xu said that “It would have disastrous results if it’s implemented because it’s trying to impose an imperfect solution into a very big problem,” and argued that by classifying workers as employees, DoorDash — which was valued at $12.7 billion as of late 2019, and filed to go public in March of 2020 — would have to raise prices for customers to manage the expense.

Arguments like that might suggest that DoorDash’s business model is flawed, and Boudin seems to agree. Alleged misclassification like DoorDash’s “puts law-abiding companies in the position of competing against employers who gain unfair savings by illegally classifying their workers,” he says. In addition, it “deprives California of payroll taxes and contributions to unemployment and workers’ compensation funds,” money that, given the budget shortfall caused by the current pandemic, is more necessary than ever.

In the end, Boudin says, scofflaw companies are “cheating their employees and cheating the state,” adding, “If an employee stole from a company, they’d go to jail.” With his office’s new unit, the expectation is that San Francisco businesses that allegedly steal from their workers will soon face stiff penalties, as well.

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