General Assembly’s $1M Lawsuit Settlement Asks: Are Instructors...


General Assembly’s $1M Lawsuit Settlement Asks: Are Instructors Employees or Contractors?

By Tony Wan     Aug 29, 2018

General Assembly’s $1M Lawsuit Settlement Asks: Are Instructors Employees or Contractors?

Roughly 16.5 million Americans work in the “gig economy,” based on estimates from the Bureau of Labor Statistics. A part of that workforce has long been a staple in higher education, where adjunct professors teach full-time but with few benefits.

Joining them are professionals from other industries who teach at nontraditional educational programs. But the rise of alternative education providers that rely on contractors raises the question: Should these instructors be considered employees instead?

That issue led to a class-action lawsuit and settlement involving General Assembly and two former instructors, who alleged that the New York City-based education company misclassified them as independent contractors. That designation meant they were not eligible for overtime pay, paid lunch and rest breaks.

The case is drawing to a close. But it resurfaces disputes that have become increasingly commonplace among companies that rely on contract labor. Startups like Uber and delivery service GrubHub have found themselves in court over this issue. In General Assembly’s case, the question remains: Should educators for an education company be classified as employees?

The Suit

Founded in 2010, General Assembly offers part-time and full-time courses in design, business and technology skills. These take place at one of the company’s 20 onsite campuses across the world, and are also offered online.

In their complaint, filed in July 2017, two former full-time General Assembly instructors who taught at the company’s California campus argued that, because of their contractor status, they did not receive overtime pay or rest and meal breaks. In addition to teaching classes during normal business hours, both said they worked extra to prepare lessons, grade assignments, meet with students and attend marketing events. One of the plaintiffs claimed he was working up to 16 hours a day, and more than 80 hours per week.

Both were paid a flat fee for teaching these courses, and in its monthly paychecks the company did not provide a record of how many hours they worked.

The pair argued that these conditions violated the California Labor Code, which requires employers to record the number of hours worked by each employee and compensate for overtime hours. In March 2018, both parties entered mediation, and agreed to a $1 million settlement proposed by a judge. Both parties executed and signed off on the agreement on July 3, 2018.

Per the settlement terms, General Assembly has agreed to pay $1 million. After legal and administrative fees, about $589,000 will be left and distributed to 1,214 current and former instructors who taught for the company between July 24, 2013 and June 30, 2018. That fee may be adjusted, pending final court approval.

Overworked and Undercompensated

On the week of Aug. 20, 2018, former and current instructors began receiving notice about the settlement and their share of the sum.

Former instructors interviewed for this story were not surprised at the plaintiff’s description of the work that happened outside of the classroom. They recalled similar experiences about being asked to help recruit students at the company’s promotional events and workshops, and staying after class to help students with homework and other needs.

Lesson preparation could require an unexpectedly large portion of time, according to multiple former teachers. Some said they were hired for their industry experience, more so than formal teaching experience, and those who taught for General Assembly in its early years described learning how to teach as a “trial-and-error” process.

The company has since hired coaches to train instructors on teaching with course curriculum developed in-house. Still, former instructors recalled spending extra hours customizing these materials for their lesson plans. “The company tells instructors that they just have to offer professional expertise on top of its curriculum,” says a former instructor who taught in San Francisco. “But in reality, there’s a lot more work to teaching a class than that.”

Neither the plaintiffs nor General Assembly and their legal representatives responded to requests for comments, citing that the settlement terms barred them from commenting on the case. The company declined to clarify how exactly its instructors are now classified, but said in a statement that it complies with local employment laws across the 15 cities and five countries where it has campuses. General Assembly is owned by Adecco Group, a Switzerland-based recruiting and staffing company that acquired the startup for $412.5 million earlier this year.

An Assembly of Questions

General Assembly joins a growing list of companies whose use of contractors is increasingly under question. Over the past five years, dozens of private companies have emerged offering intensive 9- to 12-week courses (sometimes called “bootcamps”) that aim to prepare students for jobs. Many of them contract with industry professionals to teach these courses.

Other education companies, particularly tutoring startups, have found themselves the subjects of attention over their labor classification. Varsity Tutors was initially fined by Colorado state’s labor department for misclassifying online tutors as independent contractors. The company appealed the fine, and the court ruled in its favor. Similar questions have been raised about VIPKID, a Beijing-based company that recruits English native-speakers to tutor Chinese students online.

Legal experts say these cases could become more common. In California, where many education companies are based and employ workers, the state Supreme Court recently ruled that companies have to pass the three-part “ABC test” in order to legally classify someone as a contract worker (and not as an employee). Among the things a company must prove: “the worker performs work that is outside the usual course of the hiring entity’s business.”

That condition “will be the most troublesome for companies that employ a large workforce of independent contractors,” says Michael Weil, a partner at the law firm Orrick. Following the California Supreme Court’s April ruling, he says the firm has seen a “surge of lawsuits” initially targeting businesses like Uber that operate in the gig economy. “Over time, you will see lawsuits impact other industries.”

In a national survey published in 2016, Harvard and Princeton economist estimated that independent contractors accounted for 8 percent of workers in the education industry.

The questions remains: Are instructors who teach for education companies performing work that is outside the “usual course” of business?

The answer could involve plenty of wordsmithing and legalese, says Weil: “It will depend on how those employers define their business going forward.”

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