California sues Uber, Lyft for stepping over labor laws and misclassifying drivers as independent contractors

The state of California sued the ride-sharing giants Uber and Lyft, over violations of labor rights. The two have been accused of misclassifying drivers as independent contractors instead of employees which keeps the latter from availing any employee benefits including paid sick leave, minimum wage, health insurance and unemployment benefits.

Xavier Becerra, the California state’s attorney general, filed a lawsuit against the ride-hailing companies earlier this week. “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.”

“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 Mr. Becerra at a media 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.”

Besides California, three other states, including Los Angeles, San Francisco, and San Diego, also joined in to drag the ride-sharing companies to court. The coronavirus pandemic, which triggered economic crisis all over the world, unveiled how flawed and exploitative was the business model of technology platforms like Uber and its likes. Empathising with the pain of state’s 450,000 contract workers who work with these companies, Mr. Becerra said, “No business model should hang its success on mistreating workers and violating the law.”

Veena Dubal, a law professor at the University of California Hastings who studies the gig economy said in an interview, “These companies should have never been allowed to proliferate using the business model they were using, and it was the state of California that first legalized and allowed this, so that it’s the state of California that is finally stepping in and saying that these are employees is so gratifying.”

Uber released a statement contesting the allegations, while also pressurising the state for the implementation of additional driver benefits, which is Uber’s personal proposal. Many view it as a means to shift its burden on taxpayers. Uber’s statement read, “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.”

Becerra criticised Uber’s and Lyft’s demand to include its drivers in a federal coronavirus relief bill for unemployment benefits. He said, “American taxpayers end up having to help carry the load that Uber and Lyft don’t want to accept. These companies will take the workers’ labor, but they won’t accept the worker protections.” Besides, those benefits are generally provided to workers whose employers contribute to the unemployment insurance system, which Uber and Lyft do not.

Uber clarified classifying drivers as independent contractors to help them avail the flexibility of on-demand work, without keeping them tied to work for specific hours and one company. Uber has also objected to the implementation of the new law labour law, AB5, which came in effect in January. AB5 makes it harder for companies to classify its workers as contract ones. Uber called it an unfair law, battering not only ride-hailing companies, but also independent workers across industries, like freelancer writers and photographers. Lyft seemed to have adopted a more mellowed tone towards the legal complaint. It said that it would “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”.