California Attorney General Xavier Becerra filed suit against Uber and Lyft on Tuesday in a bid to force the ride-hailing companies to reclassify their contract workers as employees with full benefits, as required by the state’s Assembly Bill 5 law passed last year.
Becerra, joined by city attorneys for Los Angeles, San Diego and San Francisco, says that the companies have “exploited hundreds of thousands of California workers” by not classifying them as employees and thereby denying them access to benefits like a minimum wage, overtime pay, paid sick leave and family leave.
“The People bring this action to ensure that Uber and Lyft ride-hailing drivers — the lifeblood of these companies — receive the full compensation, protections, and benefits they are guaranteed under law,” reads the complaint, filed in the Superior Court of San Francisco.
Through the suit, the state is seeking restitution for the drivers, an end to the “unlawful misclassification,” and civil penalties that could amount to hundreds of millions of dollars.
In a news release, Becerra pointed to the coronavirus pandemic and related record job losses, saying: “The vulnerability of Uber’s and Lyft’s drivers has become more apparent than ever.”
Since California’s Assembly Bill 5 was signed into law last year (it took effect in January), Uber and Lyft have been fighting the measure. The companies’ bottom lines will be dramatically affected if thousands of drivers are reclassified as employees.
Lyft said in a statement Tuesday that it was “looking forward” to working with the attorney general “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 similarly cited “a time when California’s economy is in crisis,” to say: “We need to make it easier, not harder, for people to quickly start earning.” The company plans to contest the action in court.
Uber and delivery company Postmates filed a suit against California in December over the new AB5 law, claiming it was “unconstitutional.” In February, a judge rejected the companies’ attempt to block the law — though the suit may move forward if the companies choose to appeal.
Uber, Postmates, Lyft and other app-based companies have also put tens of millions of dollars toward a statewide ballot initiative to essentially exempt their drivers from the legislation. The companies claim the legislation doesn’t allow them to provide flexibility to drivers to choose their schedules and hours. California’s attorney general begs to differ.
“And now, even amid a once-in-a-century pandemic, they have gone to extraordinary lengths to convince the public that their unlawful misclassification scheme is in the public interest,” the AG’s suit reads, citing the companies’ “aggressive public relations campaign,” saying they’re “peddling the lie that driver flexibility and worker protections are somehow legally incompatible.”
San Francisco City Attorney Dennis Herrera called the companies’ claim “a lie” in a news release Tuesday, saying: “There is no legal reason why Uber and Lyft can’t have a vast pool of employees who decide for themselves when and where they work ― exactly as drivers do now.”