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Uber, Lyft face California suit over worker classification

Months after the state enacted new legislation over over worker classificiation, Uber Technologies Inc. and Lyft Inc. are facing a lawsuit filed by California Attorney General Xavier Becerra and the cities of Los Angeles, San Francisco and San Diego, alleging the ride sharing firms misclassified workers as independent contractors when they should have been classified as employees.

The complaint, filed in the Superior Court of San Francisco, alleges Uber and Lyft launched a campaign against a new independent contractor law called Assembly Bill 5, that went into effect on Jan. 1, and continue to deprive drivers and other workers of essential benefits, including minimum wage, overtime pay, paid sick leave, unemployment insurance and disability insurance. 

The suit seeks restitution, reclassification of workers and potentially millions of dollars in civil penalties. The plaintiffs seek up to $2,500 for each violation of the California Unfair Competition Law and another $2,500 for violations against seniors or those with disabilities. 

"Californians who drive for Uber and Lyft lack basic worker protections — from paid sick lave to the right to overtime pay," Becerra said in a press release from the AG office. "Uber and Lyft claim the employees aren't engaged in the company's core mission and cannot qualify for benefits." "Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences," he added. 

An Uber spokesperson said the company would contest the suit and push to raise the standard of independent work for drivers in California, including minimum earnings and new benefits. 

"At a time when California's economy is in crisis, with four million people out of work, we need to make it easier, not harder for people to quickly start earning," a spokesperson said via email.

A source familiar with Uber noted the company recently created a relief guide for drivers to help them apply for unemployment insurance and previously made a series of changes to benefits back in December 2019 and in January.

The source also stated the classification crackdown — which led to the AB5 law —  is impacting other industries, including janitors, truckers, delivery drivers and freelance journalists, noting that Vox Media cut 250 freelancers in the state and replaced them with less than a dozen staffers. The dispute also has a major impact on the restaurants indsutry, as thousands of workers for DoorDash, Uber Eats, Postmates and Grubhub deliver restaurant meals for QSR's and small, independent restaurants in California and other states. The other delivery firms were not named in this particular case.

Uber late last year launched Uber Money in part to address the need for improved driver benefits, including the ability to pay drivers on demand for completed rides. Uber also teamed up with other ride sharing and delivery firms to campaign against the new law. 

The American Society of Journalists and Authors in December also filed suit against the AB5 law, alleging it violates the Equal Protection Clause of the constitution. 

Lyft spokesperson C.J. Macklin said the company "was looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California's innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable healthcare and other benefits is more important than ever," via email.