California sues Uber and Lyft over alleged driver misclassification

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California’s attorney general and a group of city attorneys sued Uber and Lyft Tuesday, alleging that the companies misclassified drivers as independent contractors in violation of a recent law that classifies them as employees.

In their lawsuit, the attorneys allege that Uber and Lyft have run afoul of Assembly Bill 5, a law that enshrines the so-called “ABC test” for determining whether someone is a contractor or employee. The law officially went into effect on January 1st, but ride-sharing companies like Uber and Lyft have continued to lobby against it.

“Uber and Lyft are thumbing their noses at the California legislature and the public officials charged with enforcing these laws,” San Diego City Attorney Mara Elliott said during a press conference. “It’s time for Uber and Lyft to respect the law, their employees, and taxpayers, and it’s time for them to pay their own bills.”

On top of the misclassification claims, the lawsuit says that the ride-sharing companies are actively engaging in unfair and anticompetitive business practices that hurt other companies in California that abide by state law. Per the suit, the state is seeking civil penalties of $2,500 per violation and back wages for workers. If they are found to have violated the law, Uber and Lyft could be forced to pay out millions of dollars.

“Californians who drive for Uber and Lyft lack basic worker protections,” California Attorney General Xavier Becerra said Tuesday. “Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences.”

Earlier this year, Uber made a series of major changes to its app in an effort to better comply with AB5. The company is betting that by giving drivers more control over their rides and making fares more transparent, they could avoid some of the repercussions of the law.

Uber said that it would “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.” Lyft said that it was looking forward to working with California to “bring all the benefits” of the “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.”

As part of their response to the novel coronavirus pandemic, ride-sharing companies like Uber expanded sick pay for drivers that have tested positive for the disease. In a March letter to the White House and congressional leaders, Uber requested that the federal government provide financial assistance to drivers and delivery workers in an economic stimulus package. Now, drivers are eligible for unemployment insurance under state pandemic unemployment systems, but the federal government has not remedied Uber’s worker classification problems.

“This is a big win for drivers,” said Carlos Ramos, a driver and worker organizer with Gig Workers Rising. “Billionaires like to pick and choose what laws they follow. Today, California is showing that no one is above the law, not even big tech. This is a win for workers and for organizing.”

Updated 5/5/20 at 3:26PM ET: Included a statement from Uber.

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