Court Says Yelp Reviewers Aren’t Employees (Forbes Cross-Post)

Way before sharing economy labor practices fueled presidential candidate soundbites, there have been allegations that users contributing content and services to websites were employees. For example, an employment lawsuit over AOL’s “Community Leader” program from the late 1990s led to a $15M settlement. In contrast, in 2012, the Huffington Post won a decisive ruling over the employment status of unpaid contributors. Adding to the good news for user-generated content websites, recently Yelp got a favorable court opinion holding that its reviewers aren’t employees.

The lawsuit, structured as a class action, alleged that:

each of the three named plaintiffs alleges that he or she “was hired by Yelp, Inc. as a writer and she fulfilled that job description and job functions.” Each plaintiff allegedly was “directed how to write reviews and given other such employee type direction from employer defendant.” Yelp allegedly controlled each plaintiff’s “work schedule and conditions.” Two of the three plaintiffs are alleged to have been “fired” with “no warning [and] a flimsy explanation.”

Although the lawsuit focused on Yelp, these arguments easily extend to every website (including social media websites such as Facebook and Twitter) that rely on users to contribute valuable content and services that comprise the website’s core assets. Thus, the employment issue pervades the entire user-generated content industry.

The court interpreted the plaintiff’s use of the terms “hire” and “fire” to refer to account creation and termination. So interpreted, the court says a “reasonable inference is that plaintiffs and the putative class members may contribute reviews under circumstances that either cannot be reasonably characterized as performing a service to Yelp at all, or that at most would constitute acts of volunteerism.” In a footnote, the court says “That Yelp may realize financial profit from publishing the reviews written by plaintiffs and other putative class members (through third-party advertising on the website) does not necessarily mean that the writers are performing a service for Yelp.” Based on these inferences, the court says that the plaintiffs’ Fair Labor Standards Act claims fail. The court additionally dismissed the lawsuit as a “SLAPP.”

While the court’s result is sensible, employment law doesn’t really have a safe harbor for “volunteers.” Typically, services provided to for-profit companies must fit into one of two categories: “employee” or “independent contractor.” If the court successfully establishes a new third category of “volunteer,” that would be major news in employment law.

The court hedges its opinion by suggesting that the reviewers may not be providing any services to Yelp at all. Indeed, there are many ways that a business’ customers provide valuable services to a for-profit business without creating either an independent contractor or employment relationship. Customer suggestion cards/performance surveys and spreading word of mouth to friends might be two examples. To me, this highlights the core weakness of the plaintiffs’ case: they apparently seek to impose an employment relationship because website users provide value to a user-generated content website, but many value exchanges between businesses and vendors/customers are well outside of employment law.

This ruling probably will not affect the employment law battles faced by Uber, Lyft and other sharing economy companies. Those companies are more explicitly structured as online labor marketplaces than Yelp, so those companies have more interrelationships with their users than Yelp does.

A final note: The plaintiffs’ lawyer in this case is Daniel Bernath, who has unsuccessfully agitated against Yelp for a while. The court expresses some concern about the plaintiffs’ advocacy, calling it “strident” and “marked by ad hominem attacks on counsel.” You can get a flavor for the court’s concerns from this 2014 motion, which includes the remarkable line, “Yelp’s at times cult like control of plaintiffs through social prestige, casual sex, hetro, homo, perverted, free liquor and demands of more labor from plaintiffs,” as well as a photo gallery that you need to see to believe.

Case citation: Jeung v. Yelp, Inc., 15-cv-02228-RS (N.D. Cal. Aug. 13, 2015)