California sues Uber, Lyft for classifying drivers as contractors

California sued Uber and Lyft this week for treating their drivers as contractors rather than full employees, in the latest episode of the state’s feud with big tech companies.

The Tuesday complaint accuses the ride-hailing giants of misclassifying their drivers as independent contractors and denying them protections such as a minimum wage, overtime pay, sick leave and unemployment benefits.

“American taxpayers end up having to help carry the load that Uber and Lyft don’t want to accept,” California attorney general Xavier Becerra said in a statement. “These companies will take the workers’ labor, but they won’t accept the worker protections.”

The lawsuit seeks a court order barring Uber and Lyft from continuing to misclassify drivers as well as up to hundreds of millions of dollars in civil penalties, officials say.

The cities of San Francisco, Los Angeles and San Diego joined Becerra in bringing the suit under a controversial state law known as AB5, which aims to make companies give gig workers like drivers and couriers the same benefits afforded to more traditional employees. The law took effect Jan. 1.

Tech firms such as Uber have fought the law tooth and nail, arguing it would fundamentally change their business models and reduce flexibility for workers.

California’s complaint comes amid the coronavirus pandemic that has reportedly depressed demand for ride-hailing services and put millions of Americans out of work. The crisis led Lyft to lay off nearly 1,000 employees while Uber has reportedly discussed similarly deep cuts.

Uber said it plans to fight the lawsuit in court. The company is also waging its own legal battle against the AB5 law alongside food-delivery firm Postmates.

“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,” Uber said in a statement.

Lyft said it would work with state and local officials “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.”

Uber shares were up 0.4 percent in premarket trading at $28.20 as of 7:24 a.m. while Lyft’s were recently up 1.2 percent at $27.00. Lyft is due to report its first-quarter earnings Wednesday, followed by Uber on Thursday.

With Post wires

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