Gig Economy Comes Under the Microscope Amid Liability Lawsuits

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Consumer, Shareholder Complaints May Impact the Future of Work

 

When Rylan Aislee Koopmeiners’s parents found a babysitter on Care.com in July 2012, they thought they were getting a vetted professional who would take care of their three-month-old girl. Instead, they got an erratic drinker who killed their baby, according to a federal lawsuit against the online marketplace.

Court records stated that caregiver Sarah Gumm negligently struck and/or slammed the tyke on her head, causing a head injury and subsequently Rylan’s death. Gumm also left the baby unattended on several occasions to take a taxi cab to the pharmacy to purchase wine. An investigation of the incident by law enforcement revealed that Gumm had a history of alcohol abuse and violence.

“Defendant Care.com negligently performed its premier background check of Defendant, Gumm, resulting in the hiring of Defendant, Gumm, and death of Rylan on or about July 27, 2012,” wrote attorney Gail C. Groy in the complaint.

In 2017, the company settled the lawsuit, which highlighted the downsides and dangers of the gig economy, in the Eastern District of Wisconsin. Care.com did not respond to PacerMonitor’s request for comment.

Then, when Brandi Leonard and Richard Hennis, of Colorado, were arrested for production of child pornography in March, it was discovered that at least one of the defendants had been in contact with Care.com, an online service that connects caregivers to those in need of child or elder care services.

“There’s so many situations that can go wrong along the way of booking an individual worker of themselves at a lower price on an app or website where there’s no one to hold accountable,” said John Kelly, a personal injury attorney in Phoenix.

But there may be hope for accountability in the future now that Lesedi Toussaint has filed a federal shareholder class action lawsuit on April 3 in Massachusetts District Court.

Toussaint v. Care.com, Inc. et al complains of fraud on the market and violations of the Securities Exchange Act of 1934.

“The magnitude of change that Care.com potentially needs to embrace is much greater now that its own shareholders, who are concerned, have filed a lawsuit,” Mr. Kelly told PacerMonitor.

Mr. Toussaint’s suit emerged after a Wall Street Journal article on March 8 described caregivers in the U.S. “who had police records were listed on Care.com and later were accused of committing crimes while caring for customers’ children or elderly relatives.”

“Unbeknownst to investors, Care.com made false and/or misleading statements and/or failed to disclose that Care.com leaves it to its customers to vet the caregivers and day-care providers listed on its website,” according to the complaint. The company’s stock had allegedly traded at artificially inflated prices and subsequently declined.

“Consumers are beginning to realize the protection that they were accustomed to isn’t necessarily there when conveniently booking a babysitter or dog walker online,” Mr. Kelly said.

Pet service apps and websites, such as Rover and Wag, have had their share of complaints too.

For example, Bethany Anderson sued in the Southern District of New York, alleging she was violently attacked by a dog named Marv due to the negligence of Marv’s owner, Ryan Bratton, and Dogvacay’s Amy Allshouse. Dogvacay was acquired by Rover, an online network for pet sitting, boarding, and walking services.

“The defendant, Dogvacay, allowed the dog to be kept on the premises with inadequate safeguard, in that the dog was not properly leashed, guarded, attended, muzzled, or otherwise prevented from attacking individuals legally on or near the said premises,” wrote Attorney Raymond Schwartzberg  in his December 11 complaint on behalf of Ms. Anderson.

Rover Publicist Dave Rosenbaum declined to comment specifically on Anderson’s lawsuit but said that 1.4 million pet parents have booked a service through the platform and pet sitters or walkers are independent contractors who have passed a background check.

“Our algorithm includes response time from sitters and how often a sitter updates their calendars,” Rosenbaum told PacerMonitor. “We highlight those who are committed to providing good care and we have a number of factors built into the platform to ensure they surface to the top in searches. All of the reviews on our website are from verified stays from people who have previously booked the sitter.”

Whether for home care, pet care, child care or elder care,  rather than depending on an app or website, Mr. Kelly urges consumers to take the following actions before booking a worker online:

  • Gather as much information as possible under his or her legal name
  • Photograph or make copies of their Social Security card and/or driver’s license.
  • Search public records for criminal convictions
  • Order and pay for a background check
  • Call the local licensing authority to verify certification, if any
  • Gather and call references
  • Interview in person before acceptance
  • Arrange for a trial run in a supervised or monitored environment for pet, child or elder care services
  • Request the same person if apps or platforms tend to send different caregivers
  • Review posts on social media for information about lifestyle
  • Install cameras with remote viewing

Due to the rising number of apps and websites offering freelance services as well as an increase in complaints and media reports, the current climate around the future of how Americans will work remains unsettled, according to Kelly.

“If caregivers are not classified as employees, then sites and apps like Care.com, Rover or Wag and TaskRabbit, don’t have an obligation to the consumer who is booking the service,” Mr. Kelly said.

Potentially making matters worse for consumers is the Ninth Circuit Court of Appeals’ Sept. 25 decision in Hakan Yucesoy v Uber and Douglas OConnor v Uber, lawsuits that alleged violations of various federal and state statutes by, among other things, misclassifying drivers as independent contractors rather than employees. In reversing the lower court decisions originating from California Northern District Court, the appellate court generally freed gig and sharing economy platforms from employer liability when things take a turn for the worse on the ground after a consumer books services.

“The ruling establishes these types of online platforms as listings, not employers, which means they don’t have to provide training and they have no liability when something goes wrong,” said Mr. Kelly.

However, sites like Care.com may still be held responsible for falsely claiming that workers are vetted.

“The court will need to address whether it’s Care.com’s job or not to screen caregivers,” said Mr. Kelly.

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