The California Labor Commissioner has sued Uber and Lyft for alleged wage theft as reported by the LA Times. The state claims both companies “willfully” misclassified drivers as independent contractors instead of employees. This deprived them of basic worker protections and wages.
Uber has been busy over the past few weeks and had its business heavily impacted by the pandemic so this is the last thing it needs. In July, the company managed to acquire Postmates after failing to purchase GrubHub. Before this, Uber had to suspend Uber Pool due to restrictions imposed by the pandemic.
California becomes the latest state to try and take gig economy companies to task. Despite a hefty fight from the companies in question this legislation looks to be ploughing onwards.
Uber and Lyft sued over alleged wage theft
The suit was outlined on the labor commissioner’s website this week. It detailed that the commissioner wished to “stop the two companies from misclassifying their drivers”. This would allow the drivers to “recover unpaid wages and other compensation”
Assembly Bill 5, escalated the battle over contractor classification at the start of this year. It established stricter standards by which workers can be treated as independent contractors rather than employees.
Companies such as Uber, Lyft and DoorDash are continuing to fight this legislation. So far, between them, they have poured in millions of dollars during this fight.
These companies are aiming to establish a third category for drivers. They are funding a ballot measure called Proposition 22. If successfully, this would essentially give them exemption from Assembly Bill 5 as outlined above.
This suit comes one day before a hearing on another similar state lawsuit. The cities attorneys of Los Angeles, San Francisco and San Diego are seeking a temporary injunction to classify drivers as employees before their case proceeds.
Naturally, this announcement has received praise from various labor groups. They support the move for standing up for their workers. Transport Workers Union International President John Samuelson made a statement on the topic.
He said, “for years Uber and Lyft have been stealing wages and exploiting every legal loophole they can to avoid paying drivers what they deserve.”
Uber defend their position over wage theft
Uber spokesman Davis White defended his company’s actions in an email. He said that “the vast majority of California drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under state law.”
He went onto lay into the labor commission. Pointing out that given there are high levels of unemployed they should focus on creating work rather than shutting down their industry.
Uber and Lyft claim that independent contractor is of benefit to drivers. For those that want flexible hours and need the work it fits well. Some drivers support the companies stance, however, others do not.
Since February, more than 2,000 California ride-hailing drivers have filled complaints against the companies. They allege the companies owe them more than $630 million in wages, expenses and damages.
Lyft argues this suit was filled purely to reduce the workload involved in processing these claims. However, Uber has set up shell companies to act as intermediaries between themselves and their drivers.
The complaint alleges that Uber use this setup to “to obfuscate the evident conclusion that Uber’s drivers are its employees”. The complaints against both companies also note that California Public Utilities Commission said Uber and Lyft’s drivers were their employees.
The suit, therefore, argues that Uber and Lyft failed to pay drivers minimum wage, overtime, compensation for rest periods and business expenses, among other damages. The suit also makes each defendant liable for $10,000 for each driver who has been misclassified.
How this situation resolves itself will be an interesting one. Uber and Lyft, clearly, have the determination to fight this case. However, the state case does not look as if it will let up any time soon either.