State of California sues Uber and Lyft for denying drivers rights under new AB5 employment rules

Ride-hailing firms Uber and Lyft are being sued by California who are accusing the app companies of denying their drivers paid sick leave and other workers' rights.

In the lawsuit issued on Tuesday, Attorney General Xavier Becerra said the app firms are falsely classifying drivers working on the apps as independent contractors, instead of employees.

Attorneys from San Francisco, San Diego and Los Angeles are also following Becerra’s lead by filing a suit against two of the world's biggest mobility firms.

The lawsuit is looking to enforce a new Californian state law that was brought in early last year called Assembly Bill 5 (AB5). The new law was designed to raise standards for firms wishing to keep their workers as independent contractors.

However, Uber and Lyft have both opposed AB5, seeking different ways to provide their drivers' protections, whilst maintaining the flexibility of app offered work.

Attorney General Becerra said in a statement on Tuesday: "Californians who drive for Uber and Lyft lack basic worker protections — from paid sick leave to the right to overtime pay. Uber and Lyft claim their drivers aren't engaged in the companies’ core mission and cannot qualify for benefits.

"Sometimes it takes a pandemic to shake us into realising what that really means and who suffers the consequences. 

“Uber and Lyft drivers who contract the coronavirus or lose their job quickly realise what they're missing. But it’s not just these workers who lose. American taxpayers end up having to help carry the load that Uber and Lyft don’t want to accept. These companies will take the workers’ labor, but they won’t accept the worker protections.

“California has ground rules with rights and protections for workers and their employers. We intend to make sure that Uber and Lyft play by the rules.” 

An Uber spokesperson said it would contest the claims made by Becerra, saying:

“At a time when California’s economy is in crisis with 4m people out of work, we need to make it easier, not harder, for people to quickly start earning.

“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 guaranteed minimum earnings and new benefits.”

As part of the lawsuit the Attorney General and the City Attorneys assert that Uber and Lyft have gained an unfair and unlawful competitive advantage by inappropriately classifying massive numbers of California drivers.

The lawsuit is seeing up to $2,500 for each violation of the California Unfair Competition Law and up to another $2,500 for violations perpetrated against senior citizens or individuals with disabilities.

Los Angeles City Attorney, Mike Feuer, said: "Enough is enough. California law makes it clear that Uber and Lyft drivers are employees. We allege Uber and Lyft defy this mandate, exploit their drivers, and unlawfully shift the costs of their responsibilities as employers to California's taxpayers.

"As law enforcement leaders across the state, we're going to aggressively protect these hard-working drivers and fight to uphold California's worker classification laws."   

San Diego City Attorney, Mara W. Elliott, added: "All Californians are harmed when companies like Uber and Lyft cheat their employees out of health care, unemployment benefits, and basic protections required by law.

“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.”