WorkWhile gig worker settlement ends contractor fight

San Francisco has closed its misclassification case against gig staffing company WorkWhile with a WorkWhile gig worker settlement announced on October 20, according to the City Attorney's office. The agreement requires the company to pay $2.3 million and to treat every California worker on its app as an employee rather than an independent contractor. The deal covers delivery drivers left out of two earlier agreements and ends litigation the city opened with a lawsuit over worker classification.

WorkWhile fills open shifts for client businesses in delivery, hospitality, event service and warehousing, matching workers to short-term jobs through an app. The city argued that the arrangement left drivers without protections tied to employment, even though the work was arranged and dispatched through a single platform. The company did not admit wrongdoing in the settlement, and it said it strongly disagreed with the city's allegations.

What the new agreement requires

Under the new agreement, the company will pay $2.1 million in restitution to the remaining misclassified delivery drivers and $200,000 in civil penalties to the City Attorney's office, spread over the next three years. From January 1, 2027, every worker on the app in California counts as an employee, with paid breaks, sick pay and safety protections, according to the city's announcement. The announcement says the agreement covers the drivers still classified as contractors after the earlier rounds, and it brings the city's litigation against the company to a close.

The settlement also resolves a dispute over Proposition 22, the ballot measure California voters approved in 2020 that lets certain ride-hail and delivery companies treat drivers as contractors when conditions are met. WorkWhile argued the measure covered its drivers. The city argued it does not apply to staffing companies, and the company has now agreed to reclassify its drivers as employees. That distinction is the part of the case other staffing platforms are most likely to study, because it separates firms that supply workers to other businesses from firms that dispatch drivers for their own service.

Three rounds to a closed case

The case unfolded in rounds. The city sued in June 2024, saying WorkWhile deprived gig workers of protections and benefits by classifying them as contractors. A settlement that December required $1 million in restitution for non-driver workers and moved them into employee status. A second agreement the following January covered a subset of delivery drivers. Together, the two earlier deals produced $5.1 million in restitution for workers and $400,000 in civil penalties, the city said.

An earlier city filing added a detail that helps explain why regulators pressed the case. The city said WorkWhile did not provide legally required workers' compensation insurance and instead charged workers a fee that funded an insurance-like product, as reported by Staffing Industry Analysts. The company, in a statement after the January agreement, said it would keep defending the voter-approved framework for driver flexibility while resolving claims tied to earlier periods so workers could receive money sooner.

With the new agreement, the full case yielded $7.2 million in restitution for workers and $600,000 in penalties for the city, the City Attorney's office said. City Attorney David Chiu said California labor laws are clear and gig companies cannot sidestep them to shortchange workers. The statement frames the outcome as a warning to platforms that treat a contractor label as the end of the legal question, when regulators look instead at how the work is actually organized.

Why staffing apps are watching

For workers on the app, the practical change is the set of protections that comes with employee status rather than the shift-by-shift terms of contractor work. Paid breaks, sick pay and safety protections apply as a matter of employment law once the reclassification takes effect, instead of depending on company policy. For workers who valued choosing shifts freely, the trade is real: employee status brings payroll tax contributions from the employer and a steadier floor of protections, while contractor status left scheduling and tax handling largely in the worker's hands.

For other staffing platforms, the case shows a city willing to litigate the same question job category by job category until the whole workforce is reclassified. San Francisco did not win employee status for every WorkWhile worker in a single ruling. It secured it first for non-drivers, then for one group of drivers, and now for the drivers who remained. The WorkWhile gig worker settlement gives other city attorneys a template, and it gives staffing companies a reason to review how they classify workers before a regulator does it for them. The classification fight is not limited to California: New Jersey put its own contractor classification rules into effect at the start of October, as GenZ NewZ reported. Readers can read the city's full announcement and a summary of Mission Local's reporting.