California is suing Uber and Lyft over driver misclassification. If you have been following the California Assembly Bill 5, that passed into law on January 1st, then this will not come as any surprise to you. Here are 6 articles out in the last couple hours relating to today’s news regarding the lawsuit:
- “SAN FRANCISCO — California Attorney General Xavier Becerra on Tuesday filed a lawsuit against the ride-hailing giants Uber and Lyft, alleging that they have evaded state law by declaring their workers to be contractors rather than employees, his office announced. The state filed the lawsuit in San Francisco County Superior Court along with the city attorneys from San Francisco, Los Angeles and San Diego, and it accuses the companies of violating a new state law known as “AB5.” If a court rules against the companies, they could potentially owe huge penalties and substantial restitution to California drivers…” [NBC NEWS]
- “The suit argues Uber and Lyft are depriving workers of the right to minimum wage, overtime, access to paid sick leave, disability insurance and unemployment insurance. The lawsuit, filed in the Superior Court of San Francisco, seeks $2,500 in penalties for each violation, possibly per driver, under the California Unfair Competition Law, and another $2,500 for violations against senior citizens or people with disabilities. “The companies, we believe and argue are shirking their obligation to their workforce,” Becerra said in a call today. By shirking those obligations, Becerra said, Uber and Lyft are shifting those costs to California taxpayers…” [TECH CRUNCH]
- “California and its biggest cities are suing ride-hailing giants Uber Technologies Inc. UBER, +2.40% and Lyft Inc. LYFT, +0.59% for misclassifying their drivers as independent contractors instead of employees in violation of the law, officials said in a statement Tuesday. Uber and Lyft were not immediately available for comment. California is suing the companies under authority granted by a new state law and under the California Competition Law. Uber and Lyft, which report financial results this week, are in the midst of undergoing big layoffs because of a downturn in the business due to the coronavirus pandemic…” [MARKET WATCH]
- “Uber has worried that providing those things could expose it to misclassification claims from workers, and the company has asked lawmakers to shield it from lawsuits over how its drivers are classified if it provides the drivers with medical supplies or compensation. Its chief executive, Dara Khosrowshahi, wrote a letter to President Trump recently asking for a new classification for drivers that would make them neither employees nor contractors. Mr. Khosrowshahi has called for a so-called third way of classifying workers, which would provide some health benefits to drivers without making them employees who could receive full employment benefits. The lawsuit comes at a fraught moment for Uber and Lyft, as the businesses struggle to adapt to the sudden decline in demand caused by the pandemic. Consumer data suggests that spending on ride-hailing has dropped as much as 83 percent. Lyft is expected to report its first-quarter earnings on Wednesday, while Uber reports on Thursday…” [NEW YORK TIMES]
- “While expected, the lawsuit that officials said is being filed Tuesday marks a serious threat to the business model of an array of companies that save on labor costs classifying workers as independent contractors. If the companies ultimately lose the suit, they could be forced to pay for overtime, health care and other benefits. The complaint “asserts that Uber and Lyft gain an unfair and unlawful competitive advantage by inappropriately classifying massive numbers of California drivers as independent contractors,” California Attorney General Xavier Becerra said during a virtual press conference. The cities of Los Angeles, San Francisco and San Diego are joining the legal action…” [BLOOMBERG]
- “The lawsuit would affect hundreds of thousands of drivers and seek penalties of $2,500 per driver, with the total potentially reaching several hundred million collars or more. “Uber and Lyft are thumbing their noses at the California legislature,” said Mara Elliott of San Diego. “Uber and Lyft are billion-dollar companies that aren’t following the rules.” Mike Feuer of Los Angeles said drivers are essential workers during the pandemic, yet are “exposing themselves to danger every day” without employment protections…” [TIMES OF SAN DIEGO]
It will be very interesting to see how Uber and Lyft respond to this lawsuit. As we all know, they never were planning on paying drivers under this AB5 law. We also know there are many suffering because of AB5. Carve outs have begun for specific self-employed, freelancers, independent contractors, non-profits, etc.
One thing is certain, it will be a very expensive case for the state of California, as well as the rideshare giants!
Questions, Comments, Concerns?