California To Ask Judge To Classify Uber, Lyft Drivers As Employees

California Attorney General Xavier Becerra and a coalition of city attorneys plan to ask a state court judge to force ride-hailing companies Uber and Lyft to classify their drivers as employees rather than contractors.

Attorney General Becerra and the City Attorneys of Los Angeles, San Diego, and San Francisco said they will file a preliminary injunction motion to require Uber and Lyft to immediately halt the misclassification of their drivers as independent contractors.

"It's time for Uber and Lyft to own up to their responsibilities and the people who make them successful: their workers. Misclassifying your workers as 'consultants' or 'independent contractors' simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer - whether it's paying a legal wage or overtime, providing sick leave, or providing unemployment insurance," said Attorney General Becerra.

The motion will follow the lawsuit filed by the Attorney General and the City Attorneys in May against Uber and Lyft that claimed the companies were in violation of a state law known as AB-5. California is the biggest market for Uber and Lyft.

The AB-5 law, which was implemented by California in January this year, requires the companies to classify the contractors as employees, offering higher pay and other benefits such as medical insurance.

The law is said to hurt the gig economy business model of technology platforms, such as Uber, Lyft, Postmates, and DoorDash, who mainly use contract workers for ride-hailing or food delivery services.

The lawsuit alleged that the misclassification of drivers by Uber and Lyft deprived the workers of critical workplace protections, such as the right to minimum wage and overtime, as well as access to paid sick leave, disability insurance, and unemployment insurance.

Worker misclassification occurs when a firm treats its employees as independent contractors, thereby evading its legal obligations such as minimum wage, overtime, payroll taxes, and workers' compensation insurance. Uber and Lyft have allegedly refused to classify their drivers as employees.

A study by the University of California, Berkeley found that worker misclassification by Uber and Lyft resulted in the companies being able to avoid an estimated $413 million in contributions over a five-year period to California's State Unemployment Insurance Trust Fund.

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