If the state of California has its way, the ride-sharing companies Uber and Lyft will have no choice but to employ rather than independently contract their drivers.
Attorney General sued Uber Technologies and Lyft this week in San Francisco Superior Court, alleging the companies had misclassified their drivers and in the process are evading workplace standards and requirements, such as paid sick leave.
“The fact that Uber and Lyft communicate with their drivers by using an app does not suddenly strip drivers of their fundamental rights as employees,” wrote deputy attorney general Minsu D. Longiaru in the May 5 complaint.
The state’s lawsuit was filed on the heels of driver Spencer Verhines’ federal lawsuit against Uber Technologies in the Northern District Court of California, alleging that many drivers will continue accepting passengers even if they are infected with COVID-19 because the company doesn’t classify its drivers as employees and pay them sick leave.
“Faced with the choice of staying home without pay and risking losing access to their livelihood, Uber drivers across California will continue working and risk exposing hundreds of riders who enter their car on a weekly basis to this deadly disease,” wrote Verhines’ attorney Shannon Liss-Riordan in his March 17 complaint.
As of May 6, there were 60,614 positive coronavirus cases statewide and 2,504 fatalities, according to the Department of Health.
The AG in his state lawsuit seeks injunctive relief and an order from the Court, preventing the continued misclassification of rideshare drivers as independent contractors.
“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,” said Assemblywoman Lorena Gonzalez who represents Southern San Diego. “It makes sense that our state’s highest law enforcement officials are now stepping in.”
But Kyla Christoffersen Powell, president and CEO of Civil Justice Association of California (CJAC), criticized the state for filing the lawsuit during the COVID-19 pandemic.
“At a time when our state and local policy leaders should be taking steps to reverse unemployment and a looming recession, this lawsuit does the opposite,” Powell told the Southern California Record. “Without a broader legislative fix for those who wish to hire or work as independent contractors, litigation will continue to burden business and workers and negatively impact California’s economy.”
The state’s unemployment rate is 5.3 percent, according to the U.S. Bureau of Labor Statistics.
“The state is not viewing this from the perspective of freedom to contract,” said attorney Kelly O. Scott, partner and chair of the employment law department at Ervin Cohen & Jessup in Beverly Hills.
“They view it as saving the day for independent contractors by making them employees so that they can have paid sick leave, but most drivers I have talked to like the ability to write off taxes and car expenses and they don’t want tax withholdings. If the state is successful, which I think they will be, these drivers will either become employees or find work elsewhere. People who use these apps are likely to pay higher prices for a ride."