Yelp Faces Class Action Suit Over Unpaid Reviews

November 19, 2013 | Charles Bowen

Yelp and its review-based brethren have been in the news quite a bit recently. Not too long ago I mentioned the attention several sites (including Yelp) received following the revelation that as many as one-third of all reviews are either fake or paid. Another attention-getting claim has Yelp back in the news once again, this time revolving around a class action lawsuit filed against the company on behalf of a group of writers who say they are owed back pay for their all their efforts.

The unusual case was filed late last month in a Los Angeles federal courthouse. The claim says that Yelp owes money to a group of reviewers who provided sometimes thousands of reviews for no pay, something that the lawsuit claims is vital to the company’s existence. In the lawsuit, plaintiffs refer to themselves as “writers” rather than reviewers, saying that they ought to be considered non-wage paid employees of Yelp given the huge sums of money their toil has generated for the company.

The lawsuit appears to take a page out of another case I recently discussed, the intern lawsuits against Fox and several other major media corporations. In that case, interns successfully claimed that they had been deprived wages by being classified as “interns” while performing work that Fox and other companies would normally have had to pay someone to do. In this case, the plaintiffs say that Yelp’s classification of writers as “reviewers” or “Yelpers” is akin to labeling someone an “intern” or a “volunteer.” The suit claims that such a classification exists to avoid paying the contributors wages that are required by law.

The plaintiffs state that federal law requires all employers to pay workers who “provide material benefit to their employer.” They claim that their reviews did just that and they now expect to receive compensation in return. Beyond their normal reviews, the suit mentions that some Yelpers, especially those who were labeled “Elite,” had to work even harder to maintain their designation. One plaintiff alleged that Yelp sent her emails reminding her that she needed to produce more reviews if she wanted to keep her “Elite” status. Others claim they wrote thousands of reviews, but were still threatened with the removal of their status as well as the loss of certain site awards if they ever started to slack off.

The case, which Yelp describes as “frivolous,” has received a lot of attention given that--if successful--it could lead to massive changes to many online review sites. One person associated with the suit says he wants $273 per review, a number he was unable to justify. At such a rate, Yelp would be required to pony up $12.8 billion for all the reviews on its site, a number 56 times more than what the company is expected to earn in 2013.

If Yelp is forced to pay for its reviewers than it could certainly follow that TripAdvisor, Angie’s List and even Amazon might have to do the same, a prospect that many believe would result in the immediate extinction of online review sites as we know it. Whether the case has legs remains to be seen, but you can bet many in Silicon Valley will watch it carefully.

To read the full initial class action complaint, click here.