A lawsuit filed in California is seeking employment benefits and wages for reviewers (a.k.a. "Yelpers") that have been posting free reviews on Yelp. The lawsuit claims Yelp has violated the Fair Labor Standards Act (FLSA) and has refused to pay wages to its reviewers.
The lawsuit is similar to a few past lawsuits that claimed interns and volunteers should get paid for their work. A few entertainment companies have lost such lawsuits and were held liable to pay damages and past wages.
In California, there is actually a law that requires all volunteers or interns of private companies to get paid at least the state minimum wage, unless they are college interns getting college credit.
The lawsuit, which is requesting a Class Action status, has been brought forward by four plaintiffs: Dr. Allen Panzer, Amy Sayers, Lily Jeung, and Darren Walchesky. Interestingly enough, they are being represented by a law firm called "The Yelp Class-Action Law Firm," with lead attorney Randy Rosenblatt.
Three of the plaintiffs appear to have been Elite reviewers, two having more than 1,000 reviews, and one with more than 500. One plaintiff has 70 reviews.
The lawsuit claims that they should have been paid minimum wages for their efforts, but instead they were awarded badges, such as "Elite" status, "First to Review," "Review of the Day," "Duke," "Duchess," etc. and that Elite reviewers were also encouraged to leave more positive reviews, otherwise they might lose their "Elite" status.
The lawsuit also claims that Yelp held parties for "Elite" reviewers to encourage more activity and provided them with free food and drinks. The participants were expected to leave positive reviews for the venue that hosted the event.
I spoke to Jeung, an "Elite" reviewer with over 1,000 reviews whose account was shut down because she had left a review for a business that appeared to be buying fake reviews. Yelp had sent her a very generic email about why her account got closed:
We're sorry to let you know that we've been forced to close your account due to some unusual account activity. Our systems flagged a number of the reviews you wrote in connection with an investigation of businesses that have tried to pay for positive reviews. Unfortunately, this decision is final and not appealable.
"I put so much work into my account," Jeung said. "About 5 years worth of memories, stories, over 1,000 reviews and over 1,600 pictures, all removed without any warning, only a vague email explaining that somehow I reviewed a public business under investigation informing me that the decision was final."
Jeung said she should be able to leave reviews for any company that is publicly listed on Yelp, but yet Yelp's actions are making Yelpers think twice before leaving a positive review for a company that has primarily negative reviews, as now you may lose your account if Yelp considers it a fake.
I spoke to Eric Goldman, a law professor at Santa Clara University School of Law who also runs a Technology & Marketing Legal Blog, to get his feelings about this lawsuit.
"The Panzer lawsuit is almost certainly doomed to fail," he said. "It's a broad-based attack on the user-generated content (UGC) ecosystem, and there's no chance that courts will say that every author publishing their content online are employees of the publishing websites. See the Huffington Post case.
"More fundamentally, the complaint implicitly treats authors' contributions as a one-way transfer of value from authors to Yelp," Goldman added. "This is simply incorrect: Yelp provides a lot of valuable services to its authors, so it creates a bilateral exchange, not an exploitative one."
Goldman said he thinks Yelp's relationship with its Elite members will pose a closer legal question.
"I still think there's no question that Yelp Elites are contractors, not employees, but Yelp's higher level of interactions with its Elite members checks off more factors on the various multi-factor tests for classifying employees," he said. "The lawsuit likely has little chance for success. In order to succeed, the Plaintiffs' primary claim will require them to prove the existence of an employer-employee relationship between Yelp and its 'Yelpers' pursuant to the Fair Labor Standards Act (FLSA)."
Aaron Minc, a prominent Defamation Attorney, has already written about and analyzed this case on his blog. He stated:
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 does not change this analysis.
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.
I also reached out to Yelp for comments regarding this lawsuit and here is what they had to say:
This is a textbook example of a frivolous lawsuit; it is unfortunate the court has to waste its time adjudicating it and we will seek to have it dismissed. The argument that voluntarily using a free service equates to an employment relationship is completely without merit, unsupported by law and contradicted by the dozens of websites like Yelp that consumers use to help one another. We believe this suit is probably a result of the enforcement action we were required to take against some of the plaintiffs for improper conduct rather than based on any real merit.
A representative of the lawsuit sent me this info:
Writers who want their wages from Yelp, Elites or non-Elites can write to [email protected] and go to the website http://www.yelpclassaction.info for the questions we need answered.
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