LOS ANGELES– City Attorney Mike Feuer, California Attorney General Xavier Becerra, and the City Attorneys of San Diego, and San Francisco today filed a preliminary injunction motion to require Uber and Lyft to immediately halt the alleged unlawful misclassification of their drivers as independent contractors. The motion comes on the heels of a lawsuit filed by the Attorney General and City Attorneys alleging that Uber’s and Lyft’s misclassification of drivers deprives workers of critical workplace protections such as the right to minimum wage and overtime, and access to paid sick leave, disability insurance, and unemployment insurance. Misclassification often results in workers being significantly more likely to draw on government-funded income support to make ends meet, leaving taxpayers to foot the bill in lieu of big business. In fact, a University of California, Berkeley study found that worker misclassification by Uber and Lyft is estimated to have resulted in the companies being able to avoid $413 million in contributions over a period of five years to California’s State Unemployment Insurance Trust Fund.
"The exploitation has got to stop. We’re taking aggressive action to ensure these drivers finally receive the basic protections owed to all employees," said Los Angeles City Attorney Mike Feuer. "Ridesharing has been an incredible invention, giving the public another convenient transportation option. But this need not, and cannot, come at the expense of the drivers--or the public itself, with taxpayers left to the foot the bill for key worker protections for which these defendants must pay their fair share."
"It’s time for Uber and Lyft to own up to their responsibilities and the people who make them successful: their workers," said Attorney General Becerra. "Misclassifying your workers as ‘consultants’ or ‘independent contractors’ simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer — whether it’s paying a legal wage or overtime, providing sick leave, or providing unemployment insurance. That’s not the way to do business in California. We’re seeking a court order to force Uber and Lyft to play by the rules."
Worker misclassification occurs when a firm treats its employees as independent contractors, thereby evading legal obligations such as minimum wage, overtime, payroll taxes, and workers’ compensation insurance. From their inception, Uber and Lyft allegedly have refused to classify their drivers as employees in violation of California law. Instead, the companies ignore the fact that California law allows for drivers to choose when and how much to work and still be classified as employees. Nothing prevents the companies from providing flexibility to their drivers and properly classifying them as employees. By allegedly misclassifying hundreds of thousands of drivers as independent contractors, Uber and Lyft rob workers of critical protections in order to benefit their own bottom lines and create billions of dollars in private wealth for their venture capital investors. Misclassification harms workers by depriving them of basic labor standards and employee social safety net protections that serve as lifelines during times of social and economic crisis. And misclassification hurts taxpayers because taxpayers carry the load for funding social safety net services that out-of-luck workers without protections turn to in times of need.
In the motion filed today in the Superior Court of San Francisco, City Attorney Feuer, the Attorney General and City Attorneys highlighted the need for immediate action against Uber and Lyft and assert that the corporations’ allegedly unlawful misclassification:
Harms drivers, leaving workers struggling to make ends meet — with earnings hovering at or below state and local minimum wage rates. Moreover, as essential workers during the COVID-19 pandemic, drivers ferry passengers in enclosed personal vehicles in close proximity for extended periods of time, all the while laboring with a provisional to non-existent safety net as a result of the companies’ failure to comply with the law;
Harms law-abiding businesses and their workers, by allowing Uber and Lyft to avoid employer responsibilities and create an unfair competitive advantage — with some estimates calculating the illicit savings from misclassification to be 15 to 39 percent in labor costs across various industries. The alleged misclassification allows Uber and Lyft to shift their labor, vehicle, and maintenance costs onto drivers, creating an unfair marketplace advantage; and
Harms the public, depriving the state of tax revenue used to provide public services, as well as rewinding the clock on hard-won workplace protections. When fundamental employment protections go unfulfilled, the public is often left to assume the responsibility of the ill effects to workers and their families resulting from substandard wages or unhealthy and unsafe working conditions. Misclassified drivers who may lack access to paid sick days and medical care through workers’ compensation also pose risks to public health by increasing the risk of transmitting diseases such as COVID-19.
A copy of the preliminary injunction motion is here.
A copy of the lawsuit filed last month is available here.