Re: Sexual Harassment of Handy Home Service Workers

Public Rights Project sent the letter below to the California Department of Fair Employment and Housing, detailing how Handy’s misclassification of their workers as independent contractors contributes to the rampant, unaddressed sexual harassment of home cleaners on the platform.

As part of remedying Handy’s illegal treatment of their workers, we are demanding that Handy:

• Follow California law and properly classify its workers as employees.
• Implement a process for meaningfully and promptly investigating workers’ reports of sexual harassment.
• Ban harassers and assailants from its platform to keep its workers safe.
• Implement additional safety measures to protect workers, including addressing issues with their cancellation fee policy, rating system, and customer service system that disempower workers and make them more vulnerable to harassment.

If you are a Handy worker who has experienced harassment or other problems with the company, we would love to connect with you. Please fill out this brief form to share your story with us.

If you are a state or local government that would like to learn more about how you can help protect workers in your community, please email us at fellows@publicrightsproject.org.

Kevin Kish, Director
Department of Fair Employment & Housing
2218 Kausen Dr., Suite 100
Elk Grove, CA 95758

Re: Sexual Harassment of Handy Home Service Workers

Dear Mr. Kish,

Public Rights Project, a project of the Tides Center, is a nonprofit dedicated to supporting local and state government efforts to protect the rights of their residents. As an organization committed to economic justice, civil rights, and environmental protection, Public Rights Project has a substantial interest in the enforcement of California’s labor and civil rights laws, which include protecting workers from discrimination and harassment in the workplace.

We write this letter to bring to the attention of the Department of Fair Employment and Housing (“Department”) incidents of sexual harassment that have been committed against workers for Handy, a company providing “on-demand home services.”¹ Handy has failed to take corrective action to remedy these incidents of sexual harassment and has affirmative policies that disincentivize workers from reporting and protecting themselves from sexual harassment and assault. Specifically, we ask the Department to investigate Handy for a pattern and practice of failing to take immediate and appropriate corrective action under the California Fair Employment and Housing Act (“FEHA”) to remedy complaints of sexual harassment by customers.²

Moreover, we also ask that the Department treat Handy’s workers as “employees” rather than “persons providing services pursuant to a contract” when imposing liability for harassment. Although Handy is liable for failing to take corrective action for sexual harassment whether workers are classified as independent contractors or employees³, Handy’s practices of misclassifying its workers makes them more vulnerable to sexual harassment. Furthermore, by treating Handy as an employer here, the Department will better align with the practice of other California state agencies, advance the purpose of Assembly Bill 5 (“AB 5”), and promote workers’ equal access to paid sick leave, workers’ compensation, and unemployment insurance.

Handy’s Policies and Incidents of Sexual Harassment

Handy is a subsidiary of ANGI Homeservices that provides on-demand home services. The vast majority of Handy’s business in California consists of providing cleaning and furniture assembly to customers. A number of workers provide additional home improvement services, including electrical and construction work. Since its founding in 2012, Handy’s business model has relied on improperly classifying its workers — which Handy refers to as “Pros” — as independent contractors, and has deprived those workers of benefits and protections to which they are entitled as employees, such as workers’ compensation, paid sick leave, and protections against discrimination. This exploitation disproportionately affects the women of color that make up the majority of in-home workers.⁴ The problem will only grow — market analysts estimate that the home services market is worth as much as $800 billion and that globally, on-demand services could grow by $1.5 trillion in the next four years, with technology giants like Amazon, Facebook, and Google entering the market.⁵

As further described in the complaint form, incidents of sexual harassment by customers against Handy home services workers are far too common. In early 2020, Public Rights Project surveyed 25 current and former Handy workers in California. Eleven of those workers — or 42% — said they had experienced sexual harassment while working for Handy. Three of those workers share their stories below and in the attached DFEH Complaint.

• Worker 1 was greeted by a fully naked customer when she arrived at a cleaning appointment. She left the residence and reported this to Handy immediately through the app. The company’s response was to deduct $15 from her pay for leaving the harasser’s residence early. Handy never provided any response to her report of harassment and refused to reverse the fee.
• Worker 2 was asked by a cleaning customer to wear a revealing outfit to future appointments. When she reported this to the company, she was informed that “they had no control over what their clients wanted and it was up to [the worker] to decide what was acceptable.”
• Worker 3 was offered money for sex by a Handy customer. When the worker suggested he might call the police in response to the proposition, the customer said he would complain about the worker to Handy and would refuse to pay him for four days of work. The worker reported the harassment and threatened retaliation to Handy. The worker received a follow up email asking if he had a recording or pictures to support his allegations. After he told Handy that he did not, he never received any further follow up from the company about his report.

Handy disregarded the seriousness of these allegations.⁶ None of the three workers above were interviewed by the company about their allegations, nor did they receive any notification that Handy had concluded an investigation or taken any corrective action. Handy — unlike some other gig companies — also has no rapid response system in place to handle reports of worker safety issues like sexual harassment and assault.

Moreover, Handy’s exploitative gig platform is intentionally set up to avoid any meaningful involvement by the company in workers’ complaints. Handy’s policies penalize workers for taking steps to protect themselves from harassment, disincentivize reporting of sexual harassment complaints, and generally put workers in situations where the unequal power dynamic permits abusive behavior to persist unabated. Some of those policies include:

1. Fees for “failure to comply.” Handy charges workers a $15 fee, deducted from their pay, if they leave a booking early.⁷ In order to avoid the fee, workers must obtain “explicit approval” to leave from the client, who may be sexually harassing them. If the client does not agree to contact Handy to notify them that the worker should not be charged, then the fee is automatically applied. (Workers’ locations are monitored by GPS through the Handy app, and they must “clock in” and “clock out” at a set time at the job site.) The Handy Pro must then dispute the fee through the app, with no guarantee of success or even a response from the company. The “failure to comply” fees serve as a disincentive for workers to protect themselves on the job by leaving a residence if they are experiencing sexual harassment. By putting the customer in the position to decide whether the Pro is charged the fee or not, the fee system reinforces a power dynamic between Handy workers and clients that can make workers more vulnerable to harassment. Workers reported that the process for getting a fee reversed is very challenging, with slow responses from the company and no clear standards.
2. Rating system. After each job, Handy prompts clients to give workers a rating on a scale from one to five stars. Handy workers’ hourly pay rate and the jobs that are made available to them are determined by their average rating over the prior four weeks. If a workers’ rating dips below 4.3, they will be deactivated (i.e. terminated). As a result of this system, workers feel unable to speak up for themselves when they experience sexual harassment. They fear that clients will retaliate by giving them a bad rating. For example, one worker explained, “Jobs depend on rating, rating depends on the customer. You kind of want to walk away without pissing them off, so you let it go.” Another said, “You can’t say anything because you get a bad review. I’m just trying to get to the next job.”
3. Customer service communication system. All communication between workers and Handy is electronic, either via email or through the app itself. Reporting sexual harassment by clients goes through the same general purpose customer service system that workers use for all communication with Handy. Handy is notorious with workers for being slow to respond to worker communications, and appears to rely primarily on bots, rather than live representatives, to respond to workers’ reports of sexual harassment.⁸

Handy’s Workers Are Employees Under California Law and Should Be Entitled to Robust Protections from Sexual Harassment and Discrimination Under the FEHA

In 2019, California codified a stricter employment test in AB 5 to prevent the exploitation of workers through misclassification. A co-sponsor of the bill specifically noted that without the ABC test⁹, misclassified workers are not “protected from discrimination.”¹⁰

State courts and agencies also have recognized that app-based companies with platforms similar to Handy’s — in which workers and customers are “matched” — do not satisfy all of the independent contractor factors and that gig workers are properly classified as employees under California law.¹¹ In February, a state court concluded that the City of San Diego was likely to succeed at proving that Instacart misclassified its workers. The California Attorney General and the Cities of San Francisco, Los Angeles, and San Diego have obtained a preliminary injunction against Lyft and Uber relating to their unlawful misclassification of drivers.¹² Despite notice of its unlawful misclassification practices, Handy continues to deprive workers of their basic legal protections as employees, including discrimination and harassment protections, and to exploit workers by misclassifying them in order to unlawfully lower its costs.

▹ A: Applying the ABC test to determine the employment relationship would ensure that gig workers are protected from discrimination going forward

Under California law, the Department has the power to adopt the ABC test to determine whether Handy workers are employees or independent contractors. FEHA itself does not define an “employee.” See Cal. Gov’t Code §§ 12925–26. Rather, the Fair Employment and Housing Council has the power to adopt regulations that interpret and implement FEHA. Cal. Gov’t Code § 12935(a)(1). Regulations currently define an employee as “[a]ny individual under the direction and control of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written.” Cal. Code Regs. tit. 2, § 11008(c).

Adopting the ABC test for Handy workers would provide clarity to California courts adjudicating FEHA claims. Compare Spaulding v. Shannon Diversified, Inc., No. Adopting the ABC test for Handy workers would provide clarity to California courts adjudicating FEHA claims. Compare Spaulding v. Shannon Diversified, Inc., No. CIVDS1609525, 2019 WL 4737918, at *1 (Cal. Super. Sep. 05, 2019) (applying ABC test in the context of a disability accommodation claim), with Sepah v. Cty. of Los Angeles, No. B290775, 2020 WL 1038078, at *4 (Cal. Ct. App. Mar. 2, 2020) (unpublished) (applying Borello factors to gender discrimination claim), reh’g denied (Mar. 23, 2020), review denied (July 22, 2020).

As a policy matter, using the ABC test also would be consistent with providing Handy workers needed relief under other state protections. Applying the ABC test to claims made under FEHA would create a more uniform set of regulatory expectations across the Labor Code and the Unemployment Insurance Code for workers and employers.

Exposure to the indignity of harassment without redress is part of the overall exploitation of gig workers, such as those who work on the Handy platform. DFEH must adopt the ABC test in order to ensure that workers are fully protected by state law and to align with the purpose of the California legislature in passing AB 5. A nationally representative sample of in-home workers reveals that 97 percent of workers are women; 78 percent are Black or Brown workers; and 47 percent of workers are undocumented.¹³ Handy has also stated in press reports that “more than 90 percent” of Handy workers are women.¹⁴ Handy’s refusal to properly classify its workers currently puts the most vulnerable California workers at increased risk for discrimination and other harms. The legislature specifically passed AB 5 to ensure that misclassified workers receive the “basic rights and protections they deserve under the law.” Act of Jan 1, 2020, Stats. 2019, Ch. 296, Sec. 1(e).

▹ B: Under the ABC test, Handy misclassifies its workers

Under the ABC test, employers must establish that the worker: (1) is “free from the control and direction of the hiring entity in connection with the performance of the work” both in the contract and in fact; (2) performs work outside the “usual course of the hiring entity’s business”; and (3) is “customarily engaged in an independently established trade, occupation, or business of the same nature” as the work performed for the hiring entity. Cal. Labor Code § 2750.3(a)(1); see also Dynamex, 416 P.3d at, 35–40. Failure to satisfy any one of the factors results in a worker being classified as an employee rather than an independent contractor. 416 P.3d at 39–40.

First, the A factor requires Handy to establish that its workers are free from its control and direction. Minute Order: Ruling on Motion for Preliminary Injunction, People v. Maplebear, Inc., №37–2019–00048731, at *4 (Cal. Sup. Feb. 18, 2020).¹⁵ In fact, Handy exerts substantial control over its workers in connection with the performance of all home services. Unlike some other marketplaces or referral platforms, Handy pays workers at a non-negotiable hourly rate.¹⁶ The work must also be performed within a set time by fining workers $15 for showing up late or leaving early. It also imposes a variety of fees and penalties ranging up to $50 for cancelling jobs.¹⁷ Handy also uses a rating system to assess workers’ performance. The company can and will terminate workers from the app for cancelling two gigs within a month or for dipping below 4.3 out of 5 average rating for their prior four weeks of work.

Second, Handy fails to demonstrate that their business meets the B factor — that their workers perform work outside the usual course of their home services business. The “usual course” of a business includes any work that is essential or necessary to a company’s functions, rather than incidental.¹⁸ See Yellow Cab Coop., Inc. v. Workers’ Comp. Appeals Bd., 226 Cal. App. 3d 1288, 1294, 1300 (Cal. Ct. App. 1991) (finding that drivers form an “indispensable” and“regular and integrated” part of a taxicab business, applying the Borello factors). In applying this prong, courts have often looked to the employer’s definition of their business. See, e.g., Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1078 (N.D. Cal. 2015).

Handy’s workers perform home cleaning and maintenance services that occur entirely within the usual course of Handy’s home services business.¹⁹ Describing Handy’s brand, Handy founder Oisin Hanrahan said,“Cleaning is the core of what we do today because it gets us in your home on a regular basis. We’re there every week, every two weeks, every four weeks.”²⁰ In 2016, Hanrahan described cleaning as 80 percent of Handy’s business, and said that the Handy platform was built to “take[] care of your home magically.”²¹

Third, Handy’s business does not meet the C factor which requires that workers engage in an independently established trade, occupation, or business. Dynamex, 416 P.3d at 38–39.²² Courts have interpreted this factor as a person who “independently has made the decision to go into business for himself or herself.” Id. at 39. Common indicia of that decision include taking steps to establish and promote their own business, through: “incorporation, licensure, advertisements, [and] routine offerings to provide the services of the independent business to the public.” Id. Not only must businesses permit their workers to operate independently, but also there needs to be an existing independent business operation. Garcia v. Border Transp. Grp, LLC, 239 Cal. Rptr. 3d 360, 373 (Cal. Ct. App. 2018).

Far from permitting workers to work independently, Handy charges all of its workers a $100 fee if they are found to have arranged off-platform work with a Handy customer, directly undermining the ability of workers to engage in an independently established trade.²³ Additionally, Handy’s workers do not customarily engage in an independently established trade, occupation, or business when performing home cleaning and maintenance services. Of the workers we surveyed, the majority worked full-time hours (30+ hours/week) for app-based home services companies like Handy, and half worked for one app-based home services company exclusively. Generally, no specialized skills or training are necessary to perform the primary services offered by Handy: cleaning, furniture assembly, and lawncare.²⁴

▹ C: Handy’s misclassification of its workers makes them more vulnerable to sexual harassment

Because Handy’s business model is structured around misclassifying workers as independent contractors and attempting (but failing) to minimize the amount of control over its workers, Handy has developed workplace policies that leave workers more vulnerable to harassment. For example, Handy workers do not receive sexual harassment prevention training required under California law for all employees of companies with at least five employees. Cal. Gov’t Code § 12950.1(a)(1). Handy also does not have a sexual harassment policy that it shares with workers, leaving workers on their own to determine the appropriate course of action when they are victimized.

The low net pay of Handy workers, which results from their misclassification, also makes them more vulnerable to harassment. For example, the $15 “failure to comply” fee, which automatically penalizes workers who leave a harasser’s residence early, is substantial in the context of the net earnings workers receive through Handy. Handy workers are paid fixed hourly rates that vary based on the type of work performed. See Attachment C: Payment Tiers. For example, workers earn from $15 to $25 per hour for cleaning work in California. See Attachment D: Job Rates. This wage is quickly eaten up by unreimbursed costs for self-employment taxes, transportation between appointments, cleaning supplies, equipment, and other expenses, and by the work that Handy workers are often forced to do off the clock to avoid poor ratings. After all these unreimbursed expenses, a $15 fee can easily wipe out a worker’s entire net earnings from a cleaning job. And all of this comes without the real possibility of investigation or punishment of customers who harass with impunity.

In light of the harms suffered by Handy workers, we ask that the Department investigate the sexual harassment allegations described therein and find Handy liable under FEHA. As a policy matter, we also urge the Department to apply the ABC test in determining whether its protections against discrimination and harassment extend to certain workers.

Respectfully submitted,

Jill Habig

Founder and President, Public Rights Project

Endnotes:

1. See Attachment G (screenshot of Handy’s website promotion).
2. See Cal. Gov’t Code § 12961; Alch v. Superior Court, 19 Cal. Rptr. 3d 29, 58–59 (Cal. Ct. App. 2004) (describing imposition of pattern and practice liability under Sections 12940 and 12961).
3. See Cal. Gov’t Code § 12940 (j)(1) (“An employer may also be responsible for the acts of nonemployees, with respect to harassment of employees, applicants, unpaid interns or volunteers, or persons providing services pursuant to a contract in the workplace, if the employer, or its agents or supervisors, knows or should have known of the conduct and fails to take immediate and appropriate corrective action.”).
4. Julia Ticona et al., Beyond Disruption: How Tech Shapes Labor Across Domestic Work & Ridehailing 17 (2018), https://datasociety.net/wp-content/uploads/2018/06/Data_Society_Beyond_Disruption_FINAL.pdf.
5. Hilary Stout, Amazon, Google and More Are Driven to Home Services Market, N.Y. Times (Apr. 12, 2015), https://www.nytimes.com/2015/04/13/technology/amazon-google-and-more-are-drawn-to-home-services-market.html; Technavio, Online On-demand Home Services Market by Service and Geography — Forecast and Analysis 2020–2024 (Nov. 2019), https://www.technavio.com/report/online-on-demand-home-services-market-industry-analysis.
6. California law indisputably imposes liability on employers for harassment by non-employees including customers. Cal. Gov’t. Code § 12940 (j)(1); Carter v. California Dep’t of Veterans Affairs, 135 P.3d 637, 641–42 (Cal. 2006) (holding that 1984 version of law imposed liability for harassment by employer’s clientele).
7. See Attachment A — Early Departure Fee.
8. One worker who was sexually harassed on a Handy gig told us he didn’t report the harassment because “Handy customer service is a forty-eight — hours type of thing. There’s no live chat or phone number or anything. It makes me think if it’s immediate or there’s a serious problem, you’re kind of on your own.” Another worker told us, “A customer was watching me throughout a job, and it made me uncomfortable. He then gave me such a low rating that I was not allowed to take jobs anymore. I reached out to tell my side of the story via email, and the response said, ‘There’s an investigation process.’ After that, I didn’t hear anything from them. I sent three follow-up emails. Each response from the company took a couple days to a week. At that point I was losing work; losing money. And the emails I got back from them wasn’t asking more questions, trying to figure out what happened. They just gave me canned responses. Like, ‘Looking into this.’ They were giving me the runaround.” Another worker said, “I reached out to customer service about it, and we went back and forth six times. They were always dismissive in the same way. I wouldn’t be surprised if the replies are even automated.”
9. See Dynamex Operations W. v. Superior Court, 416 P.3d 1 (Cal. 2018) (“Dynamex”), reh’g denied (June 20, 2018).
10. AB 5, 2019–2020 Assemb., at 2 (Cal. Sept. 20, 2019) https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=201920200AB5#
11. See, e.g., Carolyn Said, California Regulators Say Uber, Lyft Drivers are Employees, S.F. Chronicle (June 10, 2020), https://www.sfchronicle.com/business/article/California-regulators-say-Uber-Lyft-drivers-are-15330779.php (discussing the California Public Utilities Commission’s presumption of the applicability of ABC test to ride-share companies).
12. Order on People’s Motion for Preliminary Injunction and Related Motions, People v. Uber Tech., Inc., No. CGC20584402 (Super. Ct. Aug. 10, 2020), https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=3CB64099D142D97B3A1AF7DEE8177A7C4B5FCBDA&URL=https%3A%2F%2Fimgquery.sftc.org%2FSha1_newApp%2Fmainpage.aspx%3FWeb_Server%3Dimgquery.sftc.org%26MINDS_Server%3Dhoj-imx-01%26Category%3DC%26DocID%3D07331167%26Timestamp%3D20200903135128%3D3aa4eddad287f4e47b7946feedd6df07aa024278.
13. Linda Burnham & Nik Theodore, Home Economics: The Invisible and Unregulated World of Domestic Work, Nat’l Domestic Workers’ All., 13, 41 (2012), https://domesticworkers.org/sites/default/files/HomeEconomicsReport.pdf
14. Sirin Kale, There Was a Stranger in My Own House: Is the Sharing Economy Safe for Women?, Vice (June 17, 2016), https://www.vice.com/en_us/article/j5eey4/sharing-economy-women-discrimination-violence.
15. See also Complaint at ¶¶18–25, People v. Maplebear, Inc., №37–2019–00048731 (Cal. Sup. Sept. 13, 2019) (describing control exerted by Instacart over Shopper workers).
16. In 2020, Handy has attempted to shift its contractual arrangements to emphasize the independence of its home service workers, but in fact the company continues to exert a great deal of control over the performance of the work. See Payment Tiers, Handy, https://prohelp.handy.com/hc/en-us/articles/217290407-Payment-tiers; see also ANGI Homeservices Inc., Form 10-K at 28 (Feb. 27, 2020), http://ir.angihomeservices.com/static-files/424ada97-4486-4920-9e77-35dab3a48603.
17. Neils Van Doorn, Late For a Job in the Gig Economy? Handy Will Dock Your Pay, Quartz (Oct. 3, 2018), https://qz.com/work/1411833/handy-charges-fees-to-its-workers-for-being-late-or-canceling-jobs.
18. Since AB 5 came into effect on Jan. 1, 2020, California courts have had a relatively limited opportunity to apply the ABC test to gig based companies. However, a number of states including Massachusetts have applied the test to gig based companies. See M.G.L. c. 149, § 148(B);ee, e.g., Mass. Att’y Gen., An Advisory from the Attorney General’s Fair Labor Division on M.G.L. c. 149, §. 148B (2008) https://www.mass.gov/doc/an-advisory-from-the-attorney-generals-fair-labor-division-on-mgl-c-149-s-148b-20081/download.
19. Of the workers surveyed by PRP, most performed more than one kind of work. Sixty-four percent did furniture assembly, 61 percent did home cleaning, 50 percent provided help with moving, 42 percent did home improvement projects and 32 percent did lawn care and landscaping. See DFEH Handy Worker Stories.
20. Felicia Shivakumar, Oisin Hanrahan CEO of Handy, Tech Crunch (May 4, 2015) (starting at 00:50), https://techcrunch.com/video/oisin-hanrahant-ceo-of-handy-at-startup-alley.
21. Vator, Vator Splash Spring May 2016 — The On-Demand Revolution With Oisin Hanrahan & Bambi Francisco, YouTube (May 26, 2016) (starting at 8:18), https://www.youtube.com/watch?v=N_LLlqXZ6eQ.
22. See also Compl., ¶26, People v. Maplebear, Inc., №37–2019–00048731 (Cal. Sup. Sept. 13, 2019), (describing lack of training required for delivering groceries).
23. Van Doorn, supra note 17.
24. Handy also fails to meet the C factor when considering the minority of workers who perform more specialized home improvement services like electrical work, plumbing, and construction work. See Attachment F. None of the Handy workers that we surveyed advertise as or operate an independent business.