California sues Uber, Lyft over misclassifying drivers as contractors instead of employees
- California accuses Uber and Lyft of classifying employees as independent contractors, evading workplace protections and withholding worker benefits
- The companies have said most of their drivers would not want to be considered employees, cherishing the flexibility of on-demand work
The suit, joined by Los Angeles, San Francisco and San Diego, was brought under a new state law intended to protect workers in the so-called gig economy. It argued the companies’ misclassification harms workers, law-abiding businesses, taxpayers, and society more broadly.
The controversial law strikes at the heart of the business model of technology platforms like Uber, Lyft, Postmates, DoorDash and others who rely heavily on the state’s 450,000 contract workers, not full-time employees, to drive passengers or deliver food via app-based services.
“No business model should hang its success on mistreating workers and violating the law,” California Attorney General Xavier Becerra said during a virtual news conference with his city counterparts, adding that Uber and Lyft drivers lacked basic worker protections, including sick leave and overtime payment.
Shares in Uber and Lyft dropped briefly but recovered soon after the lawsuit was announced.
Uber shares were up more than 2 per cent and Lyft shares flat in a broadly positive market.