For more information please call  800.727.2766


Uber and Lyft Sued for Misclassification

California’s Attorney General and the city attorneys of Los Angeles, San Diego, and San Francisco have sued Uber and Lyft for misclassifying drivers as independent contractors. The state’s lawyers allege that Uber’s and Lyft’s driver misclassification deprives workers of critical workplace protections, such as the right to minimum wage and overtime, and access to paid sick leave, disability insurance, and unemployment insurance.

Assembly Bill 5 (AB5) went into effect January 1st and calls for a three-part “ABC” test to determine if a worker should be classified as an independent contractor or employee. The core test is based on whether or not the worker is free from the control of the company. Uber, Lyft and other similar gig-economy-based companies, dependent on independent contractors, have a financial self-interest in classifying drivers or workers as contractors. Independent contractor models enable corporations to avoid paying payroll taxes, FICA (Social Security and Medicare), disability, federal and state-level unemployment and health insurance benefits. Additionally, companies are not required to comply with minimum wage laws or offer vacation days to independent contractors. Companies avoid those costs and the state of California, in this case, misses out on a significant tax revenue. 

Should California prevail, drivers may be entitled to all of the benefits afforded to full-time employment. In addition, class-action lawsuits by drivers may also follow to recoup money that they feel are owed to them due to the misclassification and other states may follow California’s lead in filing similar suits.