Lyft Misclassification Suit: Independent Contractor or Employee?

On November 21, plaintiff Renier Gonzalez filed a class and collective action complaint against defendant Lyft, Inc. (Renier Gonzalez v. Lyft, Inc. 2:19-cv-20569-BRM-JAD) for misclassification. The complaint was filed in the District of New Jersey. Gonzalez is represented by the Law Office of Roosevelt N. Nesmith, LLC , a law firm that specializes in representing employees in class action suits.

The complaint stated that Lyft violated the Fair Labor Standards Act (FLSA) and New Jersey Wage and Hour Law and the New Jersey Wage and Hour Regulations (collectively, the NJWHL) because Lyft misclassified Gonzalez and others as independent contractors, not employees, and failed to pay these employees for all hours worked at minimum wage after work-related expenses, failed to pay overtime wages and failed to reimburse for business-related expenses.

In 2017, Gonzalez drove 763 miles and completed 92 trips for Lyft. Lyft paid him $1,068.80 for his work. Gonzalez was not reimbursed for out-of-pocket expenses from the job, such as toll fees, vehicle maintenance, gas, and insurance, for a total of $408.17. Thus, Gonzalez’s pay after expenses was $660.63. As a result of Lyft’s lack of reimbursement, he was paid less than minimum wage and he was also not compensated for overtime. The IRS’s reimbursement rate was $0.53.5 per mile.

In 2018, Gonzalez drove 334.23 miles and was paid $879.98 for his work. As in 2017, he was not compensated for out-of-pocket expenses from the job, which totaled more than $178.81. As a result, his pay after expenses was $701.17. Therefore, as a result of Lyft’s lack of reimbursement to Gonzalez, he did not make minimum wage for the hours he worked. The IRS’s calculated mileage reimbursement was $0.54.5 per mile in 2018.

According to the plaintiffs, Lyft has violated the FLSA and NJWHL, which require companies to sufficiently reimburse employees for job-related expenses to make sure that the employees’ hourly wage is equal to or greater than the minimum wage after the expenses are taken out. Lyft under-reimbursed its drivers. Further, as a driver for Lyft, Gonzalez regularly participated in interstate commerce, such as driving passengers from New Jersey to New York City, or New Jersey to New York airports and picking up and dropping off passengers from Newark International Airport and New Jersey train stations. Thus, the complaint stated, the arbitration clause in the Lyft Driver Agreement is unenforceable. The complaint alleged that Lyft’s classification of drivers as independent contractors is an attempt to “shield itself from liability for its blatant minimum wage violations… Lyft drivers, however, are employees. They are required to follow a litany of detailed requirements imposed on them by Lyft and they are graded, and subject to termination, based on their failure to adhere to these requirements.”

The complaint also stated that Lyft controls or supervises its drivers as reasoning that the drivers are employees. For example, after 14 hours of work, Lyft will automatically log the driver out of the app and not allow the driver to log in for another six hours, thus preventing the driver from working during that time. Lyft can deactivate its app at any time, during which a driver could not work. Lastly, the complaint stated “[w]hen a New Jersey Lyft driver enters New York, Defendant prevents the driver from logging into the Driver App, thus making it impossible for a New Jersey driver to obtain a return fare back to New Jersey.” Lyft also controls the driver payment method and rates.  

The complaint alleged that Lyft’s “improper and illegal, company-wide policy, pattern and/or practice of mischaracterizing Defendant’s labor force as ‘independent contractors’ improperly reduced Defendant’s labor cost, thereby fraudulently increasing the appearance of Defendant’s profitability.” As independent contractors, Lyft was exempt from ensuring it met the minimum wage and the overtime provisions in the FLSA and NJWHL. Additionally, Lyft’s control over its drivers has demonstrated that they are employees, not independent contractors.

Gonzalez has sought all available relief for unpaid minimum wages, unpaid overtime wages and unreimbursed business expenses pursuant to the Fair Labor Standards Act, the New Jersey Wage and Hour Law and the New Jersey Wage and Hour Regulations.