Is the gig up? Uber, Lyft hit with worker misclassification suit
In a potentially ominous note for gig companies, Calif. officials have vowed to ensure gig workers are properly classified under state law.
California’s attorney general and the city attorneys of Los Angeles, San Diego and San Francisco have alleged that Uber Technologies Inc. and Lyft Inc. have violated California law by classifying drivers as independent contractors.
In a lawsuit filed on May 5 in the San Francisco Superior Court, the state and city lawyers assert that the ride-hailing companies have exploited hundreds of thousands of California workers.
At a press conference announcing the lawsuit, Attorney General Xavier Becerra, San Francisco City Attorney Dennis Herrera, Los Angeles City Attorney Michael Feuer, and San Diego City Attorney Mara Elliott said that companies are avoiding millions of dollars in payroll taxes and skirting their responsibility to provide benefits like health care, a minimum wage and reimbursement for expenses for ride-hail drivers.
“California taxpayers end up having to carry the load that Uber and Lyft don’t want to accept,” Becerra said.
In a potential ominous note for other gig economy companies, Herrera said the government lawyers will be “keeping our finger on the pulse to make sure that gig economy companies are working in accordance with the law.”
Herrera pointed to a suit previously filed by Elliott against Instacart where San Diego Superior Judge Timothy Taylor found in February that California law required the grocery delivery company to classify its “shoppers” as employees. Herrera said the Instacart case was “Indicative of the attention that you can expect all of us to pay to make sure companies are abiding by the law and living up to their obligations.”
The California officials are asking the court to issue an order preventing Uber and Lyft from continuing to misclassify drivers and to impose penalties of $2,500 for each violation under the state’s Unfair Competition Law. The complaint seeks to enforce Assembly Bill 5, which codifies the worker classification test laid out by the California Supreme Court in Dynamex Operations West v. Superior Court and ensures access to paid sick leave, disability, family leave and unemployment insurance. The suit seeks an injunction requiring the companies to comply with that law.
A spokesperson for Lyft said, “We are looking forward to working with the attorney general and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable healthcare and other benefits is more important than ever.”
An Uber representative said that during an economic crisis, with four million people out of work, officials and businesses should be working to make it easier for people to quickly earn money.
“We will contest this action in court, while at the same time pushing to raise the standard of independent work for drivers in California, including with guaranteed minimum earnings and new benefits,” the company said in a statement.
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