California sues Lyft, Uber over worker classification

May 5 (UPI) -- California Attorney General Xavier Becerra and the attorneys of three major cities in the state filed a lawsuit against Lyft and Uber, accusing the ride-share companies of misclassifying drivers as independent contractors.

The lawsuit, filed Tuesday in California Superior Court, says the two companies violated a new state law, evading obligations to provide workers with minimum wage, overtime, payroll taxes and workers' compensation insurance.

"Californians who drive for Uber and Lyft lack basic worker protections -- from paid sick leave to the right to overtime pay," Becerra said in a statement announcing the lawsuit.

"Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences. Uber and Lyft drivers who contract the coronavirus or lose their job quickly realize what they're missing."

The cities of Los Angeles, San Diego and San Francisco are also listed as plaintiffs in the legal challenge.

"All Californians are harmed when companies like Uber and Lyft cheat their employees out of healthcare, unemployment benefits and basic protections required by law," San Diego City Attorney Mara Elliott said. "Uber and Lyft are billion-dollar companies that refuse to follow the rules, expecting taxpayers to pick up the slack when their employees get sick, need a hospital or lose their jobs. It's time for Uber and Lyft to pay their own bills."

Lyft said in an email to UPI that it's "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."

Uber said California is "unfairly and arbitrarily singling us out," and that other companies also "should be worried about this enforcement action."

"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. "We will contest this action in court, while at the same time pushing to raise the standard of independent work for drivers in California, including with guarantied minimum earnings and new benefits."

California Gov. Gavin Newsom signed AB5 into law in September requiring companies to define independent contractors as employees if the companies hired the workers for their primary business and directly controlled their work.

Uber and food delivery service Postmates filed a lawsuit at the end of December to prevent the law from going into effect in January. Some employment experts said the law would add up to 30 percent to the companies' labor costs.

Uber said at the time that the new law lacks "equal protection and due process under both federal and state law" making it unconstitutional.