--- title: "Charles v. Varsity Tutors: $2M Misclassification Settlement" meta: "og:description": "Alexander Charles won a $2 million settlement against Varsity Tutors LLC over claims of tutor misclassification and unpaid travel time in California." "og:title": "Charles v. Varsity Tutors: $2M Misclassification Settlement" description: "Alexander Charles won a $2 million settlement against Varsity Tutors LLC over claims of tutor misclassification and unpaid travel time in California." --- February 24, 2026 # **Charles v. Varsity Tutors: $2M Misclassification Settlement** Alexander Charles won a $2 million settlement against Varsity Tutors LLC over claims of tutor misclassification and unpaid travel time in California. [**Labor and Employment Law**](https://exlitem.com/jury-verdict/charles-v-varsity-tutors-2m-misclassification-settlement/jury-verdict/category/labor-and-employment-law) [**Wage and Hour Law**](https://exlitem.com/jury-verdict/charles-v-varsity-tutors-2m-misclassification-settlement/jury-verdict/category/wage-and-hour-law) ### **Outline** Author ![](https://media.jurimatic.com/cdn-cgi/image/q=70/profile_images/shared_image_1.webp) **Sohini Chakraborty****Sohini Chakraborty is a lawyer, with over two years of experience in legal research and analysis. She specializes in working closely with expert witnesses, offering critical support in preparing legal research and detailed case studies.** ![Article Image](https://media.jurimatic.com/cdn-cgi/image/q=70/images/Charles.webp) Alexander Charles and Henry Mulak challenged Varsity Tutors LLC’s business model, arguing that the company’s "Independent Contractor Agreement" was a legal workaround to avoid paying overtime and travel expenses. The tutors alleged they spent significant unpaid hours navigating California traffic and preparing materials without compensation. While the company defended its practices by citing tutor flexibility, the litigation exposed the high risks of misclassifying gig-economy workers. After years of legal maneuvering over arbitration clauses, the parties reached a $2 million settlement to resolve claims involving over 500 California-based tutors. ## **Case Background** Varsity Tutors LLC, an online platform headquartered in Missouri, connects students with private tutors for academic subjects and standardized testing. To work for the company, tutors had to sign a mandatory "Independent Contractor Agreement". This contract classified the tutors as independent contractors rather than employees. Alexander Charles and Henry Mulak, two California-based tutors, eventually challenged this arrangement. They argued that the company exercised significant control over their work, effectively making them employees entitled to legal protections like overtime pay and meal breaks. ### **Cause** The lawsuit originated from the company’s pay practices. While Varsity Tutors paid for actual tutoring sessions, it did not compensate tutors for "non-teaching" tasks. Tutors spent significant unpaid time traveling between student homes, preparing lesson materials, and handling administrative work like scheduling and bookkeeping. ### **Injury** The Plaintiffs claimed they suffered financial losses because the company misclassified them. This misclassification allowed Varsity Tutors to avoid paying overtime wages, even when tutors worked more than eight hours a day or 40 hours a week. Furthermore, the company failed to provide mandated meal and rest periods or itemized wage statements. In one instance, Mulak spent two hours stuck in rush hour traffic traveling between clients without receiving any reimbursement or pay. ### **Damages Sought** The Plaintiffs sought civil penalties under the Private Attorneys General Act (PAGA), a California law that allows employees to sue on behalf of the state for labor violations. They requested a Court declaration that the company’s mandatory arbitration agreement which tried to block such "representative" lawsuits—was illegal and void. They also asked for the recovery of unpaid wages, litigation costs, and attorney fees. ## **Key Arguments and Proceedings** The legal battle began in May 2019. The case centered on whether the tutors could even bring a PAGA claim in Court, as the company's contract tried to force all disputes into private arbitration. ### **Legal Representation** **Plaintiff(s):** Alexander Charles | Henry Mulak · **Counsel for Plaintiff(s):** Steven M. Tindall | Jeffrey Kosbie | Rosanne L. Mah | Amanda M. Karl **Defendant(s):** Varsity Tutors LLC. · **Counsel for Defendant(s):** Rafael Nendel-Flores | Guillermo M. Tello | Yesi Lagunas ## **Key Arguments or Remarks by Counsel** Counsel for the Plaintiffs argued that the company’s business model relied on underpaying its workforce by ignoring California’s strict labor laws. They highlighted that the arbitration agreement’s ban on representative actions was "unconscionable" and went against public policy. The defense countered that the tutors were true independent contractors who controlled their own schedules and locations. They maintained that the California Employment Development Department had previously determined their tutors were properly classified as independent contractors. Additionally, they argued the PAGA claims were unmanageable because they would require thousands of individual assessments of how each tutor worked. ### **Claims** The Plaintiffs raised several specific claims under the Labor Code, including: - Failure to pay all wages earned, including overtime. - Failure to provide duty-free meal and rest periods. - Failure to provide accurate, itemized wage statements. - Failure to reimburse necessary business expenses like travel. ### **Defense** Varsity Tutors raised 28 affirmative defenses. They argued that even if the tutors were employees, they were "masters of their own schedules" and could have taken breaks whenever they wished. The company also claimed a "good faith dispute" existed over whether any wages were actually owed, which should shield them from penalties. ## **Settlement** Rather than proceeding to a full trial, the parties attended mediation in June 2022. After several years of continued negotiation and appellate decisions, they reached a $2,000,000 settlement. Judge Theodore C. Zayner approved the settlement in December 2024, noting it was a fair resolution that avoided the risks of further litigation. The $2 million represents about 36.8% of the company’s maximum potential exposure, a figure the Court found reasonable. Under the terms of the deal: - **LWDA Payment:** 75% of the net settlement goes to the California Labor and Workforce Development Agency to support labor law enforcement. - **Tutor Distribution:** The remaining 25% will be split among the approximately 500 tutors who worked in California between May 2018 and December 2019. Payments are based on how many pay periods each tutor worked. - **Service Award:** Alexander Charles received a $15,000 service award for his role in leading the case and sitting for a two-day deposition. - **Fees and Costs:** The Court awarded $660,000 in attorney fees and $121,846 in litigation expenses. This judgment effectively closed the case, though the Court will hold a final compliance hearing in May 2025 to ensure the money reached the eligible tutors. 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