An Instawork lawsuit or enforcement action has come from several directions at once: Colorado’s attorney general reached a $400,000 settlement in November 2025 over worker misclassification, Denver’s labor auditor assessed more than $820,000 in fines for wage and hour violations, California’s Civil Rights Department settled a Fair Chance Act case in May 2025, and private plaintiffs have three active class actions pending in San Diego Superior Court. A hotel workers’ union has also filed an unfair labor practice complaint with the National Labor Relations Board. Most of the disputes trace back to the same question: whether the people picking up shifts through the app are independent contractors or employees.
Instawork, formally Garuda Labs, Inc., runs an app that matches hourly workers it calls “Pros” with businesses needing short-term shifts in restaurants, hotels, warehouses, events, retail, and cleaning. Workers are engaged either as 1099 independent contractors or as W-2 employees of an Instawork affiliate, Advantage Workforce Services, LLC. That split is at the center of most of the legal fights.
Colorado’s $400,000 Settlement
On November 24, 2025, the Colorado Attorney General’s Office and the Colorado Department of Labor and Employment announced a $400,000 settlement with Instawork and Advantage Workforce Solutions, LLC.1 The state alleged that the company violated the Colorado False Claims Act and the Colorado Employment Security Act by misclassifying employees as independent contractors and failing to pay required unemployment insurance premiums.
A state audit covering 2022 through 2024 found more than $134,000 in unpaid premiums, with another $82,000 accumulating after the audit period. The $400,000 figure covers those unpaid amounts plus double damages.
The practical change for Colorado workers is bigger than the dollar amount. Under the settlement, Instawork agreed to stop offering independent contractor shifts in Colorado entirely and to treat every worker in the state as an employee going forward. The agreement requires final court approval.
Attorney General Phil Weiser said the case was about companies in the app-based staffing industry properly classifying workers and paying the taxes and unemployment insurance they owe. It was also the first settlement reached under Colorado’s False Claims Act, a 2022 statute that lets the state pursue fraud against government programs. Colorado used that fraud framework to go after misclassification rather than a conventional labor complaint.
Denver’s Wage Theft Fines
Before the statewide settlement, the Denver Auditor’s Office had already acted on its own. In January 2024, Denver Labor issued a liability determination finding that Instawork workers in the city were employees under Colorado law, not contractors. The investigation, launched under Denver’s wage-theft ordinance, identified more than 16,000 violations dating back to October 2020.
Denver Labor described Instawork as a staffing company exercising “significant control” over work conditions, pointing to vetting processes, mandatory location tracking, performance monitoring, dress codes and phone-use rules, floor wage rates set by the platform, and a 35% markup charged to clients on hourly labor.
The initial determination broke down this way:
- More than 13,000 paid sick leave violations under the Colorado Healthy Families and Workplaces Act, with $659,750 in fines.
- More than 700 overtime violations, with $275,516 in restitution for unpaid wages, interest, and damages, plus $86,837 in fines.
- Hundreds of minimum wage violations; the company itself identified 386 instances of underpayment totaling roughly $6,800.
- Failure to inform nearly 3,000 workers of their rights, drawing $73,900 in fines.
The total: more than $820,000 in fines and $275,516 in restitution owed to nearly 3,000 workers. Instawork had 30 days to comply, with some fines waivable on compliance. A company representative called the determination “incomplete and non-final.”
By August 2024, Denver Labor issued a supplemental order finding that Instawork had withheld payroll data the agency had requested. The sick leave fine rose to $974,300, the notice-of-rights fine to $121,940, and the agency added a $982,890 fine for failure to produce historical records plus $1,000 per day for ongoing refusal, which had reached $37,000 by the date of the order.
California Fair Chance Act Settlement
On May 2, 2025, the California Civil Rights Department announced a settlement with Instawork over the state’s Fair Chance Act, which governs how employers use criminal background checks. The case started with a 2023 complaint from a Bay Area bartender who said the platform blocked them from accepting shifts without following required procedures.
The CRD alleged that Instawork failed to conduct an individualized assessment of the worker’s criminal history, did not weigh the gravity of the offense or the time since the conviction, and never determined whether the past conviction was related to the job. The company also allegedly did not tell the worker they could submit evidence of rehabilitation or mitigating circumstances.
While denying liability, Instawork agreed to several changes:
- Submit its individualized assessment process to the CRD for review and stop running “enhanced” background checks for shifts that only require a standard check.
- Update pre-adverse action notices so workers know they can submit evidence of rehabilitation, provide context, or dispute the accuracy of a report.
- Require at least one hour of Fair Chance Act training for staff who review background checks, including new hires for at least 12 months.
- Report to the CRD after 12 months on the number of California background checks performed and the number of pre-adverse and final adverse action notices issued.
The settlement also compensated the complainant for lost wages and other harms, with the specific amount kept confidential.
California Class Actions Still Pending
Private plaintiffs have filed three cases in the Superior Court of California, San Diego County, all challenging worker classification.
Da Silva, et al. v. Instawork, et al. (Case No. 24CL014486C), filed October 1, 2024, alleges misclassification of California workers from July 2022 onward. A companion case under the same number brings claims under the Private Attorneys General Act for wage, break, and record-keeping violations against both Instawork and Advantage Workforce Services, LLC.
Fordham, et al. v. Instawork, et al. (Case No. 25CU008176C), filed February 18, 2025, alleges Instawork pays workers hourly but classifies them as independent contractors, denying overtime, meal and rest breaks, accurate wage statements, sick pay, expense reimbursement, and workers’ compensation. The case reaches back to February 2021 and has not settled.
Belle, et al. v. Advantage Workforce Services, LLC, et al. (Case No. 25CL052138C), filed September 29, 2025, targets the W-2 affiliate directly with wage, overtime, and break claims for California employees dating back to September 2021.
These cases face a procedural hurdle. Instawork’s contractor services agreement contains a mandatory individual arbitration clause under the Federal Arbitration Act, waiving the right to participate in class, collective, or mass actions, with a separate waiver of representative PAGA claims. The agreement defines a “mass action” as 25 or more similar arbitration demands filed by one law firm within 180 days. Whether courts will enforce those waivers against the pending class actions is still open.
NLRB Complaint Over Alleged Strike Retaliation
In July 2023, Unite Here Local 11, a hotel workers’ union, filed an unfair labor practice complaint with the NLRB alleging that Instawork automatically penalized temporary workers who joined strikes or other union activity by cutting their in-app ratings and canceling future shifts.
The complaint pointed to Thomas Bradley, who said his rating dropped after he was marked as a “no show” for joining a picket line at the Laguna Cliffs Marriott Resort and Spa, and whose account was suspended for a week after he joined a strike at the Hilton Anaheim. The complaint also named the hotel’s owner and its management company, Aimbridge Hospitality Group.
Instawork spokesperson Meghan Hermann said the company does not “retaliate against [workers] for engaging in protected activity” but declined to comment on the specifics. Bradley’s suspension was lifted shortly after a media outlet contacted the company.
What This Means If You Work Through Instawork
If you pick up shifts in Colorado, the contractor option is going away under the state settlement, and ongoing work will run through the W-2 affiliate. If you work in California, you are already covered by one or more of the pending class actions depending on when you worked and under which entity, though the arbitration clause in Instawork’s agreement may shape how those claims proceed. If you were affected by a background check decision in California, the CRD settlement changed the notice and assessment process going forward but did not create a broader restitution fund beyond the individual complainant. Nothing in the resolved cases bars Instawork from continuing to operate the platform; the changes are to how workers are classified and how certain employment decisions are made.