Janitorial Company Pays Millions to California Workers Over Misclassification

Many California workers may not realize they are entitled to more legal protections than their job title suggests. This is especially true in industries where companies rely on complicated business models that try to limit their responsibilities to workers. One recent case involving CleanNet USA, a janitorial franchising company, is a clear example of what can happen when employers try to sidestep labor laws.

In July 2025, the California Attorney General announced a settlement with CleanNet USA and its four California-based area operators. The nearly $2 million agreement resolves claims that CleanNet misclassified janitorial workers as independent contractors rather than employees. This misclassification meant that workers were denied access to basic legal rights such as overtime pay, minimum wage protections, and reimbursement for business expenses.

CleanNet operates in several parts of California, including the Bay Area, Sacramento, San Diego and Southern California. The company sold unit franchises to individuals who were then assigned cleaning contracts. Many of these individuals personally performed the cleaning work but were not treated as employees. According to the state, this business model violated California employment laws.

The settlement requires CleanNet to pay $1.7 million in compensation to affected janitors and $150,000 in civil penalties. In addition to the financial terms, CleanNet must notify all current and former workers of their eligibility for restitution. The company is also required to change its business practices. That includes removing contract terms that restrict employee mobility, providing workers with training and keeping detailed records for future review by the state.

At the heart of this case is a common issue in many industries across California. Worker misclassification happens when an employer labels someone as an independent contractor instead of as an employee. That distinction matters. Employees are legally entitled to many rights that contractors are not. These rights include meal and rest breaks, coverage under workers’ compensation laws, unemployment insurance, family leave and reimbursement for necessary work-related expenses.

California uses what is known as the ABC test to determine whether a worker is an employee. Under this test, a person is presumed to be an employee unless the hiring entity can prove three things. First, the worker is free from the company’s control in how the tasks are performed. Second, the work being done is not part of the company’s usual business. Third, the worker has an independent business providing the same kind of service.

In the CleanNet case, the workers performed janitorial services directly for the company’s customers, which is the heart of its business. Despite being labeled as independent contractors, many of these workers were not truly independent; they lacked separate businesses or other clients and followed cleaning assignments set by CleanNet. Because of this level of control and the nature of their work, it is hard to justify classifying them as independent contractors under California law.

Employers also can’t avoid paying employees for necessary supplies or make unlawful deductions from wages. Companies are required to reimburse workers for job-related expenses, such as equipment, cellphone bills or travel costs. In the CleanNet case, some workers had to purchase their own supplies and were not reimbursed. Others also experienced wage deductions that were not authorized by law.

What happened in this case is not unique to the janitorial industry. Similar misclassification issues affect workers in many other fields, such as rideshare driving, delivery services, hospitality and construction. In some cases, companies even use franchise models to avoid their responsibilities as employers. As this settlement shows, however, California law does not allow businesses to use those structures as a shield.

If you are working under conditions where your employer controls your schedule, assigns your work and supervises how you do your job, you may be entitled to employee protections even if you have been told otherwise. You may have the right to overtime pay, rest breaks and reimbursement for business expenses. You may also be protected against retaliation if you speak up about these issues.

Erlich Law Firm helps workers understand their rights and take action against unlawful treatment. If you think you have been misclassified or have questions about your status as an independent contractor or employee, contact the Oakland employment lawyers at Erlich Law Firm for a free initial consultation.