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Lawsuit Targets Crowdsourcing Operation

December 11 2012

An Oregon man filed a lawsuit against CrowdFlower, a crowdsourcing website, claiming the firm violated the Fair Labor Standard Act by paying below minimum wage, in fact paying less than $2 or $3 per hour, according to court records. It claims CrowdFlower’s workers are employees. However, CrowdFlower says its employees are actually independent contractors.

The lawsuit seeks unpaid wages and other damages. It also seeks class action status.

The suit appears to strike at the heart of the crowdsourcing business model, which some feel could be a new part of staffing.

Crowdsourcing is a recent concept, but large players such as Amazon.com are taking part. Crowdsourcing involves taking a large, data-heavy task and breaking it down into micro tasks, which are then sent out to thousands of workers. The workers receive a small amount of money for each task completed.

Crowdsourcing can include projects such as validating phone numbers on a list of business contacts or classifying a list of blog posts to determine which are positive or negative, according to Amazon.com.  Those are just two examples among many. Another recent example of crowdsourcing, that was advertised online, called for crowdsourced workers to find the address of businesses on company websites for 2 cents per business.

Crowdsourced workers simply register with a crowdsourcing site and begin working on tasks.

The San Francisco Chronicle reports this is a new arena because there are no labor laws that describe crowdsourcing or its workers.

Julie Crabill, a spokesperson for CrowdFlower said the company hasn’t issued a statement regarding this lawsuit but will file its response in court.

However, Crabill said the company’s crowdsourced workers are independent contractors.

“We definitely stand by the fact that we think the folks that do this kind of work are independent contractors,” she said.

The suit was filed in federal court in Northern California. And it names the company as well as CEO Lukas Biewald and Chief Technology Officer Chris Van Pelt.

“Biewald and Van Pelt have exercised control over the nature and structure of CrowdFlower’s employment relationships, exercised economic control over those employment relationships, held the power to hire and fire workers, supervised and controlled conditions of employment, determined the rate and method of payment and maintained employment records,” according to the lawsuit.

CrowdFlower’s CEO said in an article that workers were paid about $2 to $3 an hour, according to the lawsuit. A rate less than that was paid the named plaintiff in the lawsuit: Christopher Otey of Astoria, Ore., the lawsuit said.

In addition, the lawsuit reports some workers received noncash compensation in lieu of wages such online game credits and points for award programs.

Crowdsourcing differs from another new service called “online staffing” offered by firms such as Elance and oDesk. Online staffing firms connect buyers with workers online (often independent contractors). In online staffing, buyers choose and know what contractor they are working with. And online staffing firms do not take a single project and divide it into smaller tasks to be performed by thousands of workers online as is the case with crowdsourcing.


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