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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

Go deeper

Lyft beats Wall Street expectations for Q2

Photo: DON EMMERT/AFP via Getty Images

Lyft Wednesday posted narrower losses and higher revenue than expected for the second quarter, though revenue did fall 61% from the same period last year.

Why it matters: Lyft's business has been hard hit by the coronavirus pandemic as people stay home.

2 hours ago - Politics & Policy

Group of 20 bipartisan senators back $1.2T infrastructure framework

U.S. Senate Majority Leader Chuck Schumer (D-NY) arrives for a meeting with Senate Budget Committee Democrats in the Mansfield Room at the U.S. Capitol building on June 16, 2021 in Washington, DC. The Majority Leader and Democrats on the Senate Budget Committee are meeting to discuss how to move forward with the Biden Administrations budget proposal. Photo: Samuel Corum / Getty Images

A group of 10 Democratic and 10 Republican senators (the "G20") tasked with negotiating an infrastructure deal with the White House has released a statement in support of a $1.2 trillion framework.

Why it matters: Details regarding the plan have not yet been released, but getting 10 Republicans on board means the bill could get the necessary 60 votes to pass.

DOJ drops criminal probe, civil lawsuit against John Bolton over Trump book

Photo: Jabin Botsford/The Washington Post via Getty Images)

The Justice Department has closed its criminal investigation into whether President Trump's former national security adviser John Bolton disclosed classified information with his tell-all memoir, “The Room Where it Happened," according to a source with direct knowledge.

Why it matters: The move comes a year after the Trump administration tried to silence Bolton by suing him in federal court, claiming he breached his contract by failing to complete a pre-publication review for classified information. Prosecutors indicated they had reached a settlement with Bolton to drop the lawsuit in a filing on Wednesday.