Online Reputation & Brand Protection Attorney

Class Action Lawsuit Claims that “Yelping” Creates an Employment Relationship

A class action lawsuit was filed against the company Yelp last week seeking to “recover unpaid compensation” for certain users of the site who write reviews.Yelp Logo

Yelp is a popular website that features information about local businesses nationwide and around the world that includes ratings, reviews, photos and more. The website is considered by many to be a valuable resource for consumers to learn about local businesses and service providers. The website averages 108 million visitors per month and users have posted over 42 million reviews. The majority of these reviews are submitted voluntarily by Yelp’s user.

The lawsuit was filed on behalf of four plaintiffs who were previously “elite Yelpers,” but seeks to represent thousands of other similarly situated users who have allegedly not been paid for their work and labor performed for the company.

The complaint alleges that Yelp has violated the Fair Labor Standards Act (“FLSA”) by refusing to pay wages to its users by designating them as “reviewers” or “Yelpers” or “independent contractors” or interns” or “volunteers” or “contributors” even though “they are performing vital work that inures to the benefit of Yelp.”

The complaint accuses Yelp of devising “a system of cult-like rewards and disciplines to motivate its  non-wage paid writers to labor without wages or expense reimbursement… by offering such rewards as trinkets, badges, titles, praise, social promotion, free liquor, free food, and free promotional Yelp attire, such as red panties with ‘Make Me Yelp!’” written on them. The lawsuit further claims that Yelp encourages unpaid user to work faster and churn out more reviews and that the company chooses to exercise direct control over its “reviews to pander to advertisers.”

The lawsuit seeks unpaid wages and liquidated and statutory damages for violations of the Fair Labor Standards Act, quantum meruit, and unjust enrichment. A Yelp spokeswoman made a statement calling the suit “frivolous on its face” and apologized that “the court has to waste its time adjudicating it.”

Analysis

This lawsuit likely has very little chance of succeeding. The Plaintiffs’ primary claim will require them to prove the existence of an employer-employee relationship between Yelp and it’s “Yelpers” pursuant to the Fair Labor Standards Act (“FLSA”).

Under the FLSA, the existence of the relationship will be determined by the “economic reality” test. In applying this test the Court will look at several factors, including whether Yelp has the power to: (1) hire and fire; (2) supervise and control work; (3) determine the rate and method of payment; and (4) maintain employment records.  The Court will also focus on whether Yelp exercises control over the nature and structure of the relationship or has “economic control.” Lambert v. Ackerley, 180 F.3d 997, 1012 (9th Cir. 1999).

Looking at the above factors, I don’t see how the plaintiffs are going to win this case. Yelpers sign up for Yelp pursuant to its “terms of use” and are not “hired” or “fired.” Yelpers write content how, when, and where they want. Finally, Yelp users are neither given nor promised any formal monetary compensation.

I do give the Plaintiffs’ attorneys points for creativity. But construing an individual’s voluntary choice to “Yelp” about things clearly does not constitute an employment relationship any more than someone choosing to voluntarily engage in activity on websites like Facebook, Twitter, Kudoala, LinkedIn, Instagram, or Vendalize. In fact, one could extrapolate on this analogy further to offline activities, like participating in non-profits or other social/community organization that have incentives or structure to encourage participation.

I also don’t see how the fact that Yelp chooses to engage in a more direct relationship with its “Elite” users by incentivizing and encouraging their participation, hosting events, and providing additional guidance regarding its preferences for reviews changes this analysis.  The case seems similar to an action against the Huffington Post for unpaid contributors.

The lawsuit also fundamentally ignores the fact that Yelp provides valuable services and benefits to its users, which completely undermines the Plaintiff’s claims that Yelp is being unjustly enriched without providing some sort benefit in return.

The case is interesting. It represents a growing trend of business and individuals who are becoming frustrated with online companies like Yelp and the use and power over user generated content. Its notable that it was filed by a law firm called “The Yelp Class-Action Law Firm.”  I would be surprised if any of the claims wind up sticking, but something tells me this might be the first of many more to come.

Written by Aaron Minc, a lawyer at the law firm of Dinn Hochman & Potter, LLC. For more information, contact Aaron at (440) 446–1100 or aminc@dhplaw.com.

Do you like what you read? Receive updates two different ways:
Subscribe to the feed or register for free email updates.

You can also connect with me on LinkedIn.

6 Responses to Class Action Lawsuit Claims that “Yelping” Creates an Employment Relationship

  1. Yelp Class Action says:

    This lawsuit likely has very little chance of succeeding. The Plaintiffs’ primary claim will require them to prove the existence of an employer-employee relationship between Yelp and it’s “Yelpers” pursuant to the Fair Labor Standards Act (“FLSA”).

    Under the FLSA, the existence of the relationship will be determined by the “economic reality” test. In applying this test the Court will look at several factors, including whether Yelp has the power to: (1) hire and fire; (2) supervise and control work; (3) determine the rate and method of payment; and (4) maintain employment records. The Court will also focus on whether Yelp exercises control over the nature and structure of the relationship or has “economic control.” Lambert v. Ackerley, 180 F.3d 997, 1012 (9th Cir. 1999).

    Looking at the above factors, I don’t see how the plaintiffs are going to win this case. Yelpers sign up for Yelp pursuant to its “terms of use” and are not “hired” or “fired.” Yelpers write content how, when, and where they want. Finally, Yelp users are neither given nor promised any formal monetary compensation.

    WRONG~COUNSELOR, YOU AREN’T FOLLOWING THE LAW HERE. The analysis is first they are employees under the right to control test. Secondly, if that is not dis positive, you look to the Nature of the Business Test. You have misstated the test. You appear to be speaking of waiver and a person cannot waive his rights under the Fair Standards Labor Act. You are also ignoring the case where “volunteer” “interns” who worked for Fox Searchlight were ordered paid by a US District Court Judge in NY.

    I do give the Plaintiffs’ attorneys points for creativity. But construing an individual’s voluntary choice to “Yelp” about things clearly does not constitute an employment relationship any more than someone choosing to voluntarily engage in activity on websites like Facebook, Twitter, Kudoala, LinkedIn, Instagram, or Vendalize. In fact, one could extrapolate on this analogy further to offline activities, like participating in non-profits or other social/community organization that have incentives or structure to encourage participation.

    ***””But officer, don’t give me a ticket. Look at all those other people who are speeding.” Please don’t use that argument before a judge with a live client. Yelp is unlike all of these other publishers as we point out in the complaint. You don’t discuss quantum meruit where Yelp pays some writers in wages but our plaintiffs in trinkets and the product is the same AND Yelp demands more and faster production from the non wage paid employees.

    I also don’t see how the fact that Yelp chooses to engage in a more direct relationship with its “Elite” users by incentivizing and encouraging their participation, hosting events, and providing additional guidance regarding its preferences for reviews changes this analysis. The case seems similar to an action against the Huffington Post for unpaid contributors.
    ****THIS GOES TO THE ISSUE OF ‘RIGHT TO CONTROL’ It also goes to the analysis of quantum meruit. Yelp pays writers. Just not our plaintiffs. FLSA demands that all writers get paid.

    The lawsuit also fundamentally ignores the fact that Yelp provides valuable services and benefits to its users, which completely undermines the Plaintiff’s claims that Yelp is being unjustly enriched without providing some sort benefit in return.

    ****So does Walmart but Walmart can’t convince you to work there for free just because its “cool” and they give you candy at the end of the day.

    The case is interesting. It represents a growing trend of business and individuals who are becoming frustrated with online companies like Yelp and the use and power over user generated content. Its notable that it was filed by a law firm called “The Yelp Class-Action Law Firm.” I would be surprised if any of the claims wind up sticking, but something tells me this might be the first of many more to come.

    **I have to give you legal analysis a D. Very poor, sloppy, lacks a knowledge of the law.

  2. Yelp Class Action says:

    Oh yes. I also give you high marks for using big lawyer like words. “Expocalate” or whatever.

  3. […] Minc, a prominent Defamation Attorney, has already written about and analyzed this case on his blog. He […]

  4. […] Minc, a prominent Defamation Attorney, has already written about and analyzed this case on his blog. He […]

  5. […] Minc, a Defamation Attorney, has a detailed analysis of this case on his blog. He […]

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>