A Los Angeles-based cleaning services company has agreed to pay nearly $2 million to settle with California over the alleged misclassification of workers as independent contractors in violation of state law, officials announced Friday.
As a result of CleanNet USA’s unlawful misclassification of certain franchisees who personally performed cleaning work, workers were denied the protections of California’s employment laws, such as the right to minimum and overtime wages, regular meal and rest periods, reimbursement of business expenses and accurate and itemized wage statements, and were further subjected to unlawful deductions from their wages, according to California Attorney General Rob Bonta.
Misclassification of workers occurs when an employer improperly classifies their employees as independent contractors so that they do not have to pay payroll taxes, minimum wage or overtime or comply with other wage and hour law requirements such as providing meal periods and rest breaks, Bonta said.
“Too often, franchising is used by predatory businesses to misclassify vulnerable workers and avoid paying a fair wage and other employee benefits,” Bonta said in a statement. “I hope this settlement sends a strong message to others in the janitorial or other sectors who might consider skirting the law to save a quick buck. My office is watching, and we won*t hesitate to enforce our employment laws.”
Under the settlement, Sante Fe Springs-based CleanNet USA and its four California area operators, CleanNet of Southern California Inc., D&G Enterprises Inc., Paqnet Inc. and FCDK Inc., will change their franchising business model, pay civil penalties, and provide restitution to their cleaners for the losses the cleaners incurred due to their unlawful deductions, failure to reimburse cleaners for their supplies and failure to pay at least the minimum wage for all hours worked, according to the AG.
CleanNet USA is a nationwide company that provides janitorial franchising and commercial cleaning services under the CleanNet brand name and grants franchising rights to its California area operators, who sell CleanNet unit franchises to individuals and entities in California and enter into franchise contracts with these unit franchisees.
According to the settlement, CleanNet will pay $1.7 million in restitution and $150,000 in civil penalties and comply with injunctive terms requiring it to cease its misclassification of certain cleaners, notify all former and current workers of the settlement, and undergo monitoring for three years, among other terms, the AG said.