California Is Suing Uber And Lyft Over How They Treat Drivers

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The state of California announced Tuesday that it's suing Uber and Lyft, alleging that by treating drivers as independent contractors, the companies are violating a state law that mandates those workers be treated as employees.

"The companies, we believe and we argue, are shirking their obligations to their workforce," said California Attorney General Xavier Becerra.

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Becerra is joined in the lawsuit by the city attorneys of San Francisco, San Diego and Los Angeles.

"Uber and Lyft as companies aren't paying for unemployment, aren't paying for health care," said L.A. city attorney Mike Feuer. "They're making those costs be borne by taxpayers."

OLD BEEF, NEW STRAIN ON UNEMPLOYMENT FUND

The attorneys said they've been working on this case for months. Legal action has been expected ever since California's new employee classification law, AB5, went into effect at the beginning of 2020.

But the attorneys said the coronavirus pandemic has highlighted the lack of protections and benefits provided by these companies to their driver workforce.

Feuer estimated there could be as many as 250,000 rideshare drivers in Los Angeles alone. Many of them are now facing a more complicated path to collecting jobless benefits, in part because Uber and Lyft don't pay into the state's unemployment insurance system on behalf of their drivers.

In response to the lawsuit, an Uber spokesperson said, "At a time when California's economy is in crisis with 4 million people out of work, we need to make it easier, not harder, for people to quickly start earning."

A Lyft spokesperson wrote, "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."

The case was filed in the San Francisco County Superior Court. The lawsuit seeks civil penalties that could amount to hundreds of millions of dollars, on top of compensation for drivers who have been working without overtime pay or minimum wage guarantees.