On Tuesday, California Attorney General Xavier Becerra announced that the state is suing rideshare giants Uber and Lyft over numerous labor rights violations, and for not treating their drivers as employees.
California, Los Angeles, San Francisco, and San Diego push for AB 5 compliance, fines
Uber and Lyft have classified their drivers as independent contractors rather than employees. Under this system drivers are more flexible and can work when they want but also don’t have some protections that employees have.
Becerra, joined by city attorneys from Los Angeles, San Francisco, and San Diego, argued on Tuesday that under several Californian laws, most notably the controversial AB 5 independent contractor defining law, rideshare workers should get more labor protections such as minimum wage, reimbursements, overtime, and offered health insurance. The extra hardships drivers now face with coronavirus restrictions were also pointed out.
“Californians who drive for Uber and Lyft lack basic worker protections—from paid sick leave to the right to overtime pay,” said Attorney General Becerra in a statement on Tuesday. “California has ground rules with rights and protections for workers and their employers. We intend to make sure that Uber and Lyft play by the rules.”
“Uber and Lyft both claim that their drivers aren’t engaged in the company’s core mission and therefore qualify for benefits,” added Becerra at a press conference. “If drivers in California contract the coronavirus or if they lose their job as a result, guess what? They’re the ones that go missing. They’re the ones that don’t know what to do next. They’re the ones who have to worry about how they’ll pay their bills.”
California is also asking for fines to be levied against the rideshare companies due to lost tax revenue being paid into social safety net programs. If successful, Uber and Lyft could have to pay up to $250,000 per driver, with money going to the state and to drivers who were affected by not being employees. While the state is estimating ‘hundreds of millions’ in fines similar to the $640 million they were ordered to pay for similar violations in New Jersey, if the full amount is applied in California, it could potentially reach over $1 billion.
The AB 5 wording of ‘misclassification’ was also used by many during the press conference to point out how AB 5 not being applied was hurting workers.
“Misclassification means cheating,” noted Los Angeles City Attorney Mike Feuer at the press conference.
AB 5 and rideshare companies
Uber, Lyft, and other rideshare and delivery services such as Doordash, have said that AB 5 does not apply to them because workers are independent contractors that enjoy numerous freedoms like working their own hours that they wouldn’t receive as employees.
“At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning,” Uber said in a press release. “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.”
Lyft also gave a statement. “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.
Another lawsuit by the rideshare and delivery companies is currently trying to overturn AB 5 in federal court. Lyft, Uber, Doordash, Postmates, and Instacart also are currently backing a ballot measure that will likely be on the November ballot to reverse AB 5.
“They all have a lot of irons in the fire right now,” pointed out Shirley Verne, a rideshare expert in Oakland. “This lawsuit is a hindrance, but they all have so many plans and backup plans to take down AB 5. There are lawsuits, they keep fiddling with the app formula, they have that ballot measure, they have boosted some employees rights. All of it is adding up to make them look as best as possible for when it becomes crunch time. Then all the state officials and lawmakers going after them will look like they’re not just in the wrong, but they’re fighting for redundant policies that they already have. California is playing the short game and the companies are playing the long game here. A ballot measure would trump all.”
The lawsuit, expected to be the first major court battle on the side of AB 5, will most likely go to trial later this year.