Deel denies senator allegations of violating California labor laws, claims they are “completely made up”
Deel denies senator allegations of violating California labor laws, claims they are “completely made up”
Senator Steve Padilla, a Democrat from San Diego, blamed the remote HR startup of advising its clients, including major California companies, to misclassify their employees and evade taxes, as well as avoid providing employee benefits
Senator Steve Padilla, a Democrat from San Diego, has raised serious allegations against remote HR unicorn Deel. In a letter addressed to Stewart Knox, the Secretary of Labor for the State of California, Senator Padilla claims that Deel, valued at $12 billion in its latest fundraising round, is advising its clients, including major California companies, to misclassify their employees and evade taxes, as well as avoid providing employee benefits.
According to the Senator, Deel's CEO, Alex Bouaziz, who is also one of the company's founders, allegedly approached clients and suggested alternative methods of employing workers to avoid hefty tax payments. The American press has reported that Bouaziz even offered to assist these companies in implementing these strategies.
Furthermore, Senator Padilla highlighted that Deel itself classifies its workers as independent contractors rather than employees, thereby denying them various benefits they would have been entitled to if they were classified as regular employees. This practice has raised concerns about the company's treatment of its workforce.
The allegations made by Senator Padilla are significant, as they call into question Deel's business practices and the potential exploitation of workers.
“No company is above the law. Deel has been openly flaunting their violation of California labor laws, intentionally misclassifying their employees as independent contractors and denying them critical benefits,” said Senator Padilla in a press release. “California is clear on this issue; employees are entitled to benefits and protections. Corporations engaging in malicious employment schemes like this need to be held accountable and these employees need to see their rights restored.”
Deel released a statement in response to the allegations, stating: “These allegations are completely made up and regurgitated from old news, most likely based on competitor hearsay. Compliance is literally what we do, in over 120 countries. We have to understand it for our customers, and we certainly practice it ourselves. Today we have over 50 compliance experts in house and an external network of country advisors. To advise clients on how to misclassify their workers would be at complete odds with our business model. We’ve also created a consortium with external academics called the Deel Lab for Global Employment to study and help prevent misclassification practices. In California we engage a handful of contractors for services, and in the US, contractors represent less than 1% of our workforce. Claims of misclassification there are ridiculous. Unfortunately Senator Padilla did not reach out to us for comment or facts prior to publishing his letter. We welcome speaking with him directly to provide factual information.”
Earlier this year, Deel said that it hit $295 million in annual recurring revenue (ARR) at a $12 billion valuation - up from just $57 million ARR a year earlier.
