May 5, 2020 - Economy

California attorney general leads labor lawsuit against Uber and Lyft

Photo: Justin Sullivan/Getty Images

California's attorney general, along with city attorneys for San Francisco, Los Angeles and San Diego, is suing Uber and Lyft over the companies' classification of drivers are independent contractors instead of employees.

Why it matters: This is the latest move in a long-running effort to get the companies to reclassify their drivers. It follows multiple lawsuits from individual drivers over the years, as well as last year's new California law codifying a state supreme court decision that makes it harder to classify workers are contractors.

Details: The lawsuit seeks penalties and damages, and aims to get the companies to stop classifying drivers are independent contractors.

  • Along with enforcing the new labor law, known as AB5, the lawsuit also cites the state's Unfair Competition Law, arguing that the companies are getting unfair advantages over others that are classifying their workers as employees.

While the lawsuit is focused on Uber and Lyft, the attorneys told reporters during a press call that they are monitoring other gig economy companies and are not ruling out taking further action.

Between the lines: The lawsuit could have national ramifications for gig economy companies if other states decide to adopt similar laws, or if companies decide to shift their business models if forced to do so in California.

Meanwhile: Uber, Lyft, and other gig economy companies are hoping to overturn the law via a state ballot measure in November. Uber, Postmates, and drivers have also filed a lawsuit against the state over the law.

From Uber:

"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. 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."
— Uber spokesperson

From Lyft:

"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."
— Lyft spokesperson
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