California sued Uber and Lyft on Tuesday, alleging that the ride-hailing companies have illegally treated their drivers as independent contractors, depriving them of worker protections and benefits such as minimum wage and unemployment insurance.
The lawsuit, brought by state Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco, seeks restitution for unpaid wages it says are owed to drivers, and it requests that the court force the companies to immediately classify their drivers as employees.
Filed in the Superior Court of San Francisco, the suit also alleges that by classifying the drivers as independent contractors, the companies have failed to pay state and local payroll taxes that are used to fund welfare programs.
Lyft said in a statement that it is "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."
Uber, also alluding to the high unemployment caused by the coronavirus crisis, indicated clearly that it will fight the lawsuit. "We need to make it easier, not harder, for people to quickly start earning. 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," a company spokesperson said in a statement.
The lawsuit comes after California's Assembly Bill 5 took effect Jan. 1. The landmark law established stricter standards for which workers can be treated as independent contractors rather than employees, requiring companies to classify many as employees covered by minimum wage, overtime, workers' compensation, unemployment and disability insurance. It empowers California's attorney general and city attorneys in the state's biggest cities to force companies to follow that law.
Over the years, Uber and Lyft have battled numerous lawsuits alleging the companies have misclassified workers. Since February, more than 2,000 California ride-hailing drivers have filed claims against the companies, alleging Uber and Lyft owe them over $630 million in lost wages, expenses and damages for wrongly classifying them as independent contractors.
The companies say they do not employ the drivers but rather act as intermediaries between drivers and riders. They have mounted a vehement campaign against AB 5, spending the better part of 2019 working to derail the bill before state lawmakers approved it.
Two days before the law went into effect, Uber and delivery startup Postmates filed a suit alleging that AB 5 violates individuals' constitutional rights and unfairly discriminates against technology platforms and those who make a living through such platforms.
Uber and Lyft, along with other gig-economy companies, have poured $110 million into a ballot measure in California that could serve as an alternative to AB 5. The measure would create a third category of work in between contracting and employment.
Meanwhile, the trade group representing California newspapers has asked lawmakers to exclude newspaper delivery workers from being classified as employees, saying the move could further weaken the fiscal health of some publications. Management of the Los Angeles Times, as well as the paper's editorial board, has supported that effort.
