California’s Labor Commissioner’s Office slapped Uber and Lyft with lawsuits for depriving drivers’ employee benefits

Ridesharing technology services companies Uber and Lyft are being sued over allegations of violating California’s labor law.

Misclassification of Drivers

On Wednesday, the Labor Commissioner’s Office in California has announced that it is suing Uber and Lyft separately. This was over allegations of wage theft among the two companies by claiming that their drivers are “independent contractors.” This misclassifying move is said to deny their employees of several legal protections, according to the lawsuit.

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In a statement, California Labor Commissioner Lilia-García-Bower said: “The Uber and Lyft model rests on the misclassification of drivers as independent contractors. This leaves workers without protections such as paid sick leave and reimbursement of drivers’ expenses, as well as overtime and minimum wages.”

Denied Benefits

Classifying the drivers as employees would compel Uber and Lyft to give them added benefits like payment of minimum, compensation for overtime work, and paid rest periods, among others. If the drivers are still classified as independent contractors, the added advantages are not provided. The lawsuits also tell that the companies did not provide sick leaves and accurate itemized wage deduction statements.

These lawsuits also aim to return to the drivers of both Uber and Lyft the wages owed to them by the companies. Bower’s office had received almost 5,000 claims from drivers who are not paid correctly.

California’s AB5 Law

On May, Uber and Lyft were also both sued by several city attorneys and California’s attorney general for the same misclassification. Their lawsuit accused the ridehailing companies of violating the state’s Assembly Bill 5(AB5). The law, which took effect last January 1, puts out an “ABC Test” which determines a hire if a contractor or employee. The attorney general Xavier Becerra on June filed a motion for preliminary injunction which would force the companies to reclassify their drivers. 

Uber commented saying that with the current health crisis, the lawsuit is in wrong timing. “The vast majority of California drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under state law.”

The Uber spokesperson added: “When 3 million Californians are without a job, our leaders should be focused on creating work, not trying to shut down an entire industry.”

Lyft has yet to release a comment.

The post Labor Commissioner of California Files Lawsuit vs Uber, Lyft Over Alleged Wage Theft first appeared on Tekrati and is written by Sam Arnold

Uber and Lyft may likely stop operating in California after a court ordered them to reclassify their drivers as “employees.”

Ride-hailing companies Uber and Lyft may suspend their operations in California. This came as the two firms are facing lawsuits over allegations of misclassification of their drivers.

Alleged ‘Misclassification’

Recently, the two tech companies were at the other end of a lawsuit filed by the state’s Labor Commissioner. This was over allegations of wage theft among the two companies by means of labeling their drivers as “independent contractors.” With this alleged misclassification, added benefits like paid rest periods are not granted. The Labor Commission’s Office received outcry from thousands of drivers claiming that they are not receiving fair wages.

Stopping Operations

Uber and Lyft said they may not operate in California after a judge ordered them to reclassify their drivers as employees.The companies said they would need to do an overhaul of their business to accommodate the reclassification.

This was in accordance with the state’s AB5 Law that took effect last January 1. Through an “ABC Test,” a worker can be classified either as a contractor or an employee. Both the companies are providing ridesharing services through their apps. The drivers that users can find on their services are not actually receiving usual employee benefits like health insurance.

The ‘Prop 22’

Now, they are relying on the voters to reverse the order that compels them to consider their drivers as “employees,” as prescribed in California’s AB5. CNBC explained that the ridesharing companies made the effort to introduce Proposition 22. It is a referendum that the state’s residents will vote on. It was reported that Uber and Lyft each spent tens of millions of dollars for this move.

Should this work in their favor, it would exempt the likes of their businesses, including food delivery services, from the AB5’s employee classification prescriptions in California. 

CNN published a comment from a former regulatory adviser to Uber, Bradley Tusk. He is also a venture capitalist. Tusk said: “If voters couldn’t get an Uber or a Lyft when they wanted it, that’s one thing. But the ridership is down so drastically, if this does prompt a political outcry, it’ll come from the drivers, not the riders.”

The post Uber, Lyft May Stop Operating in California After Refusing to Reclassify Drivers first appeared on Tekrati and is written by Sam Arnold