California sues Uber and Lyft: why should it please drivers in these companies

California authorities sue Uber and Lyft, which provide online taxi booking services, reports LA Times.

Photo: Shutterstock

California Attorney General Javier Bessera and a group of state city attorneys have sued Uber Technologies and Lyft taxi service providers. The lawsuit claims that services are hiring hundreds of thousands of employees in California in direct violation of the law.

Since the beginning of the year, California law AB 5 has entered into force, designating the terms and conditions of hiring an independent contractor as part of the gig economy. For example, independent contractors cannot perform work related to the core business of the company.

The law also obliged companies to pay guaranteed minimum wages and overtime, to provide medical insurance and other social guarantees to people who can be classified as employees.

The state authorities considered that the drivers of Uber and Lyft are not independent contractors, but employees with the guaranteed minimum salary due to them, compensation for overtime work and a social package.

A lawsuit filed by the state in the San Francisco Supreme Court said Uber and Lyft gained an illegal advantage in the market, while evading the payment of official wages and related taxes to the budget.

“Uber and Lyft are transportation companies in the business of selling transportation services to customers, and their drivers are employees who provide paid transportation,” the lawsuit states.

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If a case of violation of the law is proved in court, the plaintiffs will be entitled to collect from the defendants up to $ 2 a fine for violation of the rights of drivers.

At a press conference, California Attorney General Javier Besser said the outbreak of coronavirus exposed serious problems in the area.

“Uber and Lyft drivers who contracted the coronavirus and were left without work quickly realized what they were missing.” His statement states that unemployment has increased in the state amid the pandemic. Because of this, “the vulnerability of Uber and Lyft drivers has become more apparent than ever.” The document explained that companies refuse to partially cover the cost of paying unemployment benefits to drivers. These costs are borne by California authorities.

The giants of the private transport services market Uber and Lyft, who should report on their financial results for the past quarter this week, oppose the law.

An Uber spokesperson said the company will "fight this lawsuit in court" and will also "raise California's driver independent work standards, including minimum wage guarantees."

Lyft said the company will “work with state attorneys general and mayors” on behalf of workers, “especially at a time when creating jobs with access to health care and other benefits is more important than ever.”

Drivers and activists have supported the lawsuit and are demanding that the government enforce law AB 5.

“Billionaires like to choose which laws they follow,” said Carlos Ramos, a driver and activist with Gig Workers Rising. “Today, California shows that no one is above the law, not even the tech giants.”

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For many years, Uber and Lyft have been struggling with claims that they misclassify their drivers, thereby avoiding paying taxes and creating unhealthy competition in the market.

Since February 2020, more than 2000 California passenger carriers have sued Uber and Lyft, claiming they owe them more than $ 630 million in compensation for salaries, expenses, and losses.

In March, a federal court in San Francisco granted the Lyft drivers' request that they be recognized as full-time employees under AB 5.

“It’s obvious,” said Vince Chhabria, U.S. District Judge for the Northern District of California, when asked whether the law applies to taxi drivers. He said the law was created to guarantee the rights of Lyft and Uber drivers. And what is happening now can be called nothing other than “an obvious disregard for the rule of law.”

However, Chhabria rejected the proposal to urgently recognize drivers as employees so that they would receive guaranteed benefits during the quarantine from the government. The district judge explained his decision by saying that the court case was opened in a hurry and was literally “infested with errors.”

Representatives of Uber and Lyft themselves say that they are not direct employers, but act as intermediaries between drivers and passengers.

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In 2019, companies launched a large-scale struggle against the adoption and implementation of the AB 5 bill.

So, two days before the law came into force, Uber and the Postmates delivery service sued AB 5 to violate the constitutional rights of people, unfairly discriminate against online platforms and those who make a living from them.

Together with other companies, Uber and Lyft invested $ 10 million in a California ballot paper that could serve as an alternative to the AB 5 bill.

It proposes registering an additional category of people - somewhere between full-time employees and contractors.

On May 5, Los Angeles attorney Mike Foyer said the upcoming election campaign would not affect the trial. If corporations still manage to block AB 5, then the state will operate in the Dynamex Operations West case against the Supreme Court of 2018. Then a strict audit format was approved, which would determine whether a person is a hired employee of the company.

Companies that provide transportation services are not the only ones opposing this law in California.

Thus, print media require that peddlers of newspapers be excluded from the category of people to whom the new law applies.

California Governor Gavin Newsome has already announced his intention to request additional funds from the state budget to enforce AB 5.

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