Los Angeles, CA Kevin Masuda, an operations manager at Serve Robotics, Inc. from 2021 to 2024, filed a proposed class action lawsuit in Los Angeles Superior Court on December 3. The lawsuit accuses Serve Robotics, Inc. of violating the California labor code. It cites the autonomous sidewalk delivery company for violating California labor laws by failing to pay employees legally required minimum wages and overtime for all hours worked including off-the-clock tasks. In addition, Serve Robotics allegedly failed to provide mandated meal and rest periods, reimburse expenses, or provide accurate wage statements.
According to the Complaint, the class of similarly-situated employees could top 100.
At this very early stage of the litigation, it is a little difficult to tell what Serve Robotics thought it was doing. It appears that the company sought to treat Masuda and others as temporary gig workers, albeit perhaps unprotected by any formal agreement. Contracts are the only protection that independent contractors have, outside of federal and state employment laws. More facts will certainly come to light, but it bears remembering that California employees, unlike robots, have a myriad of wage and hour protections.
Allegations of unpaid work, miscalculated pay
Masuda’s allegations fall into four general categories:
Miscalculated pay. He claims that Serve Robotics improperly excluded nondiscretionary bonuses and other compensation when calculating employees’ pay. This, in turn, affected overtime and meal break premiums.
Failure to provide meal and rest breaks. The lawsuit contends that Serve Robotics also failed to provide duty-free 30-minute meal breaks for every five consecutive hours worked.
Off-the-clock work. Masuda also contends that employees were frequently required to work off- the-clock, doing tasks such as retrieving equipment from storage and answering questions after clocking out, without receiving compensation.
No official policies or practices regarding rest periods or meal breaks. There do not appear to have been any procedures in place to ensure that the company was prepared to comply with California’s wage and hour laws.
Masuda seeks to represent a class of all individuals who worked as nonexempt employees for Serve Robotics during the past four years. He estimates that more than 100 workers would be able to join.
This case adds another layer to the ongoing debate surrounding worker classification and labor rights in the gig (or independent contractor) economy.
California wage and hour protections
The dispute at the heart of Masuda v. Serve Robotics, Inc. has to do with whether Masuda and the class of individuals he seeks to represent were employees or independent contractors. Independent contractors have the rights set out in their contracts, which are generally formalized.
California employees, on the other hand, are protected by the provisions of federal and California labor laws. The seminal test for determining whether a worker is an independent contractor or an employee is often referred to as the “ABC test.”
Under the ABC test, a worker is presumed to be an employee covered by the provisions of the law unless all three of the following conditions are met:
The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
The worker performs work that is outside the usual course of the hiring entity’s business; and
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
In addition, wage or hourly workers have greater protections (including minimum wages, overtime pay, and mandated rest and meal breaks) that salaried workers do not. Presumably, better-compensated salaried workers are in a stronger negotiating position when working out the terms of their employment.
Masuda’s Complaint, because it mentions wage, overtime and break time provisions, seems to posit that he and other members of the proposed class are hourly wage workers.
Implications for the gig economy
Much has yet to play out in the Masuda case, but it highlights the ongoing challenges in classifying workers in the gig economy. As technology continues to evolve and new business models emerge, traditional employment relationships are being redefined. The question of whether workers in the gig economy should be classified as employees or independent contractors has significant implications for their rights and protections.
If successful, the lawsuit could have broader implications for other companies that rely on similar business models. It may lead to increased scrutiny of worker classification practices, wage and hour compliance, and the overall treatment of workers in this rapidly growing sector.
If you or a loved one have suffered losses in this case, please click the link below and your complaint will be sent to an employment law lawyer who may evaluate your California Labor Law claim at no cost or obligation.