Uber, Lyft Sued By Calif. Labor Commissioner For Wage Theft, Misclassification

On Wednesday California’s Labor Commissioner’s Office announced it filed lawsuits against Uber and Lyft for wage theft, claiming the two transportation companies misclassified workers as independent contractors when they should have been classified as employees. The alleged misclassification “has deprived these workers of a host of legal protections in violation of California labor law.”

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

The Labor Commissioner uses California labor laws to support the argument for misclassification. In 2018, California’s Supreme Court established the “ABC test” to determine if a worker is an employee under California labor laws. The ABC test declares that workers are employees unless they satisfy this three-prong test. Specifically, they must be “free from control from the hiring entity, perform work outside of the hiring entity’s usual business, and engage in an independently established trade or occupation.” Assembly Bill 5 (AB-5), which went into effect on January 1, further limits the circumstances in which companies can classify workers as independent contractors.

The suits have sought to recover all wages and amounts owed to all Uber and Lyft drivers, including the approximately 5,000 drivers who filed complaints with the Commissioner’s Office. Commissioner García-Brower also requested penalties, costs, and damages for a wide range of statutory violations. The lawsuits asked the court to order the companies to top misclassifying their employees and to provide available labor protections to all workers.

The lawsuits proffered that Uber and Lyft failed to meet their obligations under California labor law by misclassifying workers. For example, by misclassifying drivers as independent contractors, Uber and Lyft failed to pay drivers at least minimum wage for all of their hours worked, overtime pay, paid breaks, and reimbursements. The companies also allegedly did not provide paid sick leave, accurate itemized wage deduction statements, timely payment of wages during and after employment, or notice of legally-required employment information.

The Labor Commissioner’s Office estimated that Uber and Lyft employ at least 100,000 drivers each. The Labor Commissioner’s Office noted that the amount it collects from the suits will be distributed to all drivers who worked for these companies during the time period that the suit covers, not just those who filed complaints with its office.

In a statement to The Verge, an Uber spokesperson noted the poor timing of the suits because of the COVID-19 pandemic. “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 … When 3 million Californians are without a job, our leaders should be focused on creating work, not trying to shut down an entire industry.”

These suits are the latest legal action taken against the companies. In May, California Attorney General Xavier Becerra along with the city attorneys of Los Angeles, San Diego, and San Francisco sued Uber and Lyft for misclassifying drivers under AB-5. They later filed a motion for preliminary injunction to commence the classification as employees immediately. Furthermore, in June the California Public Utilities Commission ruled that Uber and Lyft drivers are employees under AB-5. In November California voters will vote on Uber and Lyft’s ballot measure to exempt themselves from AB-5.