California sues Uber and Lyft, seeking millions for drivers in test of new labor law
California Attorney General Xavier Becerra announced on Tuesday a lawsuit against Uber and Lyft seeking millions of dollars in back wages for drivers who the state claims have been denied benefits and mislabeled for years as independent contractors.
City attorneys for San Francisco, Los Angeles and San Diego joined the lawsuit, filed in the San Francisco Superior Court. The attorneys claim the companies are skirting California’s new labor law, known as Assembly Bill 5, which requires employers to treat most workers as employees, with offered benefits for their labor.
Becerra and the attorneys allege the companies have exploited workers by mislabeling their employment status, which allowed them to deny drivers overtime pay, business expenses, workers’ compensation and disability insurance. The lawsuit seeks $2,500 for each violation against the California Unfair Competition Law and against seniors and disabled citizens.
“These companies are willing to take these workers’ labor as drivers, but they don’t want to accept the worker protections that should go with the work and that these employees should get,” Becerra said. “We want to make sure that Uber and Lyft play by the same rules.”
The attorneys said the coronavirus underscores a need for protections for the drivers who continue to jeopardize their health because they can’t afford to take off work.
“California law makes it clear that Uber and Lyft drivers are employees,” said Los Angeles City Attorney Mike Feuer. “We are going to aggressively fight to protect these hardworking drivers, to protect California’s taxpayers and we are going to fight to uphold California’s worker classification.”
Uber and Lyft, along with other tech companies like Postmates and DoorDash, have spent more than a year working against the new employment law, which Gov. Gavin Newsom signed in September. They’ve denounced the law as an infringement on their business model and driver’s work flexibility.
The companies have either refused to comply with the law or challenged the requirements in court.
Uber, Lyft and DoorDash are also pushing a November ballot measure that would allow drivers to maintain independent status with offered benefits like overtime pay, unemployment insurance and workers’ compensation.
“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,” said Lyft spokesman CJ Macklin.
An Uber spokesperson said in an email the company would “contest this action in court, while at the same time pushing to raise the standard of independent work for drivers in California,” by offering benefits.
Assemblywoman Lorena Gonzalez, D-San Diego, who carried AB 5 last year, cheered Becerra’s announcement.
“No corporation, no matter how powerful or rich they are, should be able to exempt themselves from providing basic workplace protections like minimum wage, Social Security and unemployment insurance. It makes sense that our state’s highest law enforcement officials are now stepping in.”
Gonzalez has written “clean-up” legislation this year that would loosen certain AB 5 rules for musicians, freelance journalists, barbers and cosmetologists. She’s also asked for $20 million in the state budget to finance grants for nonprofit arts groups attempting to comply with the law, and for a one-time tax relief for independent contractors who want to work for themselves but need to set up a limited liability company to acquire legal status.
Newsom has refused calls by the companies and Republican lawmakers to pause AB 5’s requirements during the pandemic. Instead, he announced on April 15 additional assistance from the Employment Development Department to help the self-employed.
This story was originally published May 5, 2020 at 12:25 PM.