📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Massachusetts fines delivery startup Gopuff $6.2 million in worker pay dispute

Published 03/30/2023, 12:49 PM
Updated 03/30/2023, 01:15 PM
© Reuters.

By Daniel Wiessner

(Reuters) - Delivery service Gopuff has been fined $6.2 million by the state of Massachusetts for improperly classifying nearly 1,000 drivers as independent contractors rather than employees, who are more costly for companies.

Massachusetts Attorney General Andrea Campbell, a Democrat, announced the fines on Thursday as Softbank (OTC:SFTBY) Group Corp-backed Gopuff prepares for a U.S. initial public offering.

Worker classification is a crucial issue for app-based services such as Uber (NYSE:UBER), Lyft (NASDAQ:LYFT) and Grubhub that rely on independent contractors to control costs. Hiring contractors can be 30% cheaper than having employees, who are entitled to an array of benefits and legal protections.

Philadelphia-based Gopuff operates in hundreds of U.S. cities and Britain. A Gopuff spokesperson said the company strongly disagrees with the fines and intends to appeal them.

“Gopuff is focused on giving people the chance to earn with us in whichever way makes the most sense for them," the spokesperson said.

Campbell's office said it began investigating Gopuff after receiving complaints against the company from former and current workers.

Massachusetts law imposes a high bar for proving that workers are independent contractors. That includes showing workers are not under a company's direct control, operate independent businesses and perform work outside of a company's normal course of business.

Campbell said that standard did not fit Gopuff drivers and the company failed to give drivers paystubs and provide them with paid sick leave that state law requires for employees.

“When employers misclassify their workers, they deprive them of basic employee protections and benefits, and create an unfair playing field for other law-abiding companies,” Campbell said in a statement.

Uber and subsidiary Postmates are currently challenging a California worker classification law similar to the one in Massachusetts, which they say is unconstitutional because it was targeted at app-based transportation services.

(This story has been refiled to add state's name in paragraph 1)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.