What’s the Problem?
The class action lawsuit, filed by the state of California and the city attorneys of San Francisco, San Diego, and Los Angeles, alleges that Uber and Lyft are avoiding a new gig work law known as “AB5” by employing drivers as independent contractors.
AB5 took effect January 1, 2020, with the law making it harder for companies to classify workers as independent contractors instead of employees who are entitled to workplace protection such as minimum wage, benefits, overtime, sick leave and unemployment insurance.
The class action alleges that Uber and Lyft haven’t paid enough payroll taxes as a result of the misclassification. The complaint seeks restitution for unpaid wages owed to drivers, civil penalties, and a permanent ruling that would prohibit the companies from misclassifying drivers in the future.
Uber and Lyft almost shut down on Friday, August 21, 2020, before the ridesharing services won a last-minute reprieve from a preliminary injunction that would have forced them to turn drivers into employees. An appeals court agreed to stay the injunction until it hears an appeal by Uber and Lyft in October, according to the San Francisco Chronicle.
California represents Uber and Lyft’s largest source of revenue; however, the companies have taken a massive hit during the COVID-19 pandemic, with customers avoiding going out in public and drivers fearful of infection. Their business is down by about 75%, according to the Washington Post.
In 2018, a California Supreme Court decision known as “Dynamex” made it harder for companies to classify workers as independent contractors. The lawyers suing Uber and Lyft argue that the companies already have an infrastructure in place to hire and pay their executives as employees.
Uber and Lyft have avoided hiring employees because it’s a lot more expensive — the benefits can add 30% to labor costs. Additionally, the companies prefer the flexibility of the independent contractor model and say that many workers do as well. With employment, ride prices would increase and service would be reduced in many areas.
Do I Have an AB5 Class Action Lawsuit?
The Class Action Litigation Group at our law firm is an experienced team of trial lawyers that focus on the representation of plaintiffs in AB5 Lawsuits. We are handling individual litigation nationwide and currently accepting new cases in all 50 states.
Again, if you or a loved one was deprived workplace protections during COVID-19 by Uber or Lyft, you should contact our law firm immediately. You may be entitled to a settlement by filing a suit and we can help.