California Senator Stephen Padilla called the state’s secretary of labor, Stewart Knox, to investigate Deel, a high-profile San Francisco HR startup, following allegations of “brazen employment misclassification.” Padilla referenced a recent Insider investigation into Deel’s treatment of its 2,000-strong workforce and requested a thorough examination by the Labor and Workforce Development Agency.
Deel, founded in 2018, offers tools for global expansion and hiring, including HR and payroll solutions, as well as an “employee of record” service. The company is valued at $12 billion.
In March, it was reported that approximately half of Deel’s global workforce consisted of independent contractors, despite no significant differences in their roles and responsibilities. These contractors worked full-time hours, received fixed monthly or semimonthly payments, had managers, and were on long-term contracts. Notably, even Deel’s CEO, Alex Bouaziz, was classified as an independent contractor.
Senator Padilla’s letter to the labor secretary emphasized the need to address the systemic inequities and exploitation of workers’ rights exhibited by Deel and similar companies. He also expressed concerns that Deel may be advising clients on misclassifying workers and evading taxes.
State Senator Dave Cortese, chair of the Senate Labor, Public Employment and Retirement Committee, vowed to hold any law-breaking company accountable and stated that such companies should not be advising others on labor law. Senator María Elena Durazo added that misclassification perpetuates the denial of essential worker protections.
A company spokesperson dismissed the Deel employment misclassification allegations as baseless and likely based on hearsay from competitors. The company claimed that less than 1% of its US workers were independent contractors and highlighted their commitment to compliance and the creation of the Deel Lab for Global Employment to study and prevent misclassification practices. It is worth noting that some Deel workers have contracts with the company’s California entity, potentially subjecting them to California labor regulations, even if they do not work within the state.
If your employer has wronged you, whether through unfair treatment, wage violations, or employment misclassification, you don’t have to face it alone. Labor Law Advocates is here to fight for your rights. Our experienced legal team specializes in labor law and is dedicated to seeking justice for employees like you. Call our California employment lawyers now.