New York Times writer Kate Conger reported recently that, “California’s attorney general and a coalition of city attorneys in the state sued Uber and Lyft on [May 5th], claiming the companies wrongfully classified their drivers as independent contractors in violation of a state law that makes them employees.
“The law, known as Assembly Bill 5, requires companies to treat their workers as employees instead of contractors if they control how workers perform tasks or if the work is a routine part of a company’s business.
“At least one million gig workers in the state are affected by the law, which is supposed to give them a path to benefits like a minimum wage and unemployment insurance that have been traditionally withheld from independent contractors.”
The article noted that, “Although A.B. 5 took effect on Jan. 1, Uber, Lyft and other gig economy companies that operate in California have resisted and are not taking steps to reclassify their drivers. Uber, Lyft and DoorDash have poured $90 million into a campaign for a ballot initiative that would exempt them from complying with the law. Uber has also argued that its core business is technology, not rides, and therefore drivers are not a key part of its business.
“The lawsuit also claims the ride-hailing companies are engaging in an unfair business practice that harms other California companies that follow the law. By avoiding payroll taxes and not paying minimum wage, Uber and Lyft are able to provide rides at ‘an artificially low cost,’ the suit claims, giving them a competitive advantage over other businesses. The suit seeks civil penalties and back wages for workers that could add up to hundreds of millions of dollars.”
Ms. Conger added that, “California’s move is a significant threat to the gig companies and could influence other states with similar laws to take action against them, labor experts said.”
