Source: US State of California
Settlement includes $1,700,000 in restitution for underpaid CleanNet janitorial workers
OAKLAND – California Attorney General Rob Bonta today announced a nearly $2 million settlement with CleanNet USA, Inc. and its four California Area Operators resolving an investigation by the Attorney General’s Office, which found that some of CleanNet’s janitorial franchisees were misclassified as independent contractors under CleanNet’s franchising model in violation of state law. CleanNet USA is a nationwide company that provides janitorial franchising and commercial cleaning services under the “CleanNet” brand name and grants franchising rights to its California Area Operators, who sell CleanNet unit franchises to individuals and entities in California and enter into franchise contracts with these unit franchisees. After the payment of an initial franchise fee, CleanNet assigns cleaning services contracts to unit franchisees, who then provide cleaning services for CleanNet’s customers. As a result of CleanNet’s unlawful misclassification of certain individual franchisees who personally performed cleaning work, these workers were denied the protections of California’s employment laws, such as the right to minimum and overtime wages, regular meal and rest periods, reimbursement of business expenses, and accurate and itemized wage statements, and were further subjected to unlawful deductions from their wages. Under the settlement, CleanNet will pay $1,700,000 in restitution and $150,000 in civil penalties and comply with injunctive terms requiring it to cease its misclassification of certain cleaners, notify all former and current workers of the settlement, and undergo monitoring for three years, among other terms.
“Too often, franchising is used by predatory businesses to misclassify vulnerable workers and avoid paying a fair wage and other employee benefits,” said Attorney General Bonta. “I hope this settlement sends a strong message to others in the janitorial or other sectors who might consider skirting the law to save a quick buck. My office is watching, and we won’t hesitate to enforce our employment laws.”
Misclassification of workers occurs when an employer improperly classifies their employees as independent contractors so that they do not have to pay payroll taxes, minimum wage or overtime, or comply with other wage and hour law requirements such as providing meal periods and rest breaks. “Employees,” unlike “independent contractors,” are entitled to a wide range of rights, benefits, and protections under California law, including workers’ compensation coverage if injured on the job, the right to family leave, unemployment insurance, the legal right to organize or join a union, and protection against employer retaliation. As courts across the country have found, the use of a franchising business model does not shield companies who use these models to misclassify their workers from liability.
Under the settlement, CleanNet USA and its four California area operators, CleanNet of Southern California, Inc. (DBA CleanNet of Southern California), D&G Enterprises, Inc. (DBA CleanNet of the Bay Area), Paqnet, Inc. (DBA CleanNet of San Diego), and FCDK, Inc. (DBA CleanNet of Sacramento), (collectively, CleanNet) will change their franchising business model, pay civil penalties, and provide restitution to their cleaners for the losses the cleaners incurred due to their unlawful deductions, failure to reimburse cleaners for their supplies, and failure to pay at least the minimum wage for all hours worked. All current and former cleaners will be notified by CleanNet with next steps to claim restitution.
Additionally, CleanNet will preserve all documents and records necessary to demonstrate its compliance with the terms of the stipulated judgment and make those records available to the California Department of Justice for at least three years. CleanNet will also provide training to all current and future cleaners as part of a mandatory initial certification program to ensure that all cleaners understand their duties as employers when they hire other workers to perform cleaning work for CleanNet’s customers, and that they are aware of the liabilities and risks associated with misclassifying their own employees as independent contractors. The franchise will also remove a clause from its template customer service agreement that restrains employee mobility.
Attorney General Bonta is dedicated to upholding workers’ rights and combating unfair labor practices. In 2024, Attorney General Bonta filed 31 criminal charges against US Framing for wage theft and tax evasion; defended wages and overtime owed in the West Coast Drywall lawsuit; and secured a settlement with Amalfi Stone & Masonry Company, Inc., resolving allegations of unfair competition, payroll tax, and labor violations. In 2023, Attorney General Bonta launched a historic investigation into gender discrimination in the National Football League; joined 17 attorneys general in supporting the Federal Trade Commission’s proposed rule limiting non-compete agreements; launched a legal fight for in-home-healthcare workers; and fought for the rights of transportation workers and immigrant children.
A copy of the complaint and stipulated judgment, which is subject to court approval, is available here and here.