LYFT Lyft Inc

By Sebastian Herrera 

California is suing Uber Technologies Inc. and Lyft Inc. for allegedly misclassifying their drivers as independent contractors instead of employees, a move that intensifies a battle between the ride-hailing giants and their home state.

California, which is suing the companies under authority granted by a new state law and under the California Competition Law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance.

The state, which seeks millions of dollars in civil penalties and to force the companies to restore unpaid wages to drivers, also said Uber and Lyft haven't contributed to state payroll taxes used to fund general health-welfare programs.

Uber and Lyft have maintained that their drivers are properly classified after the state passed the so-called gig economy law last year and Gov. Gavin Newsom signed it. The law codified a test companies must pass to classify their workers as independent contractors, which enables companies to avoid costly benefits such as health care. Uber and Lyft have said the law could take away flexibility for drivers and force them to work pre-scheduled shifts.

Uber, Lyft and several other companies have amassed more than $110 million to pass a November ballot initiative to exempt themselves from the law. Uber, along with food delivery company Postmates Inc., late last year filed a lawsuit challenging the law.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com

(END) Dow Jones Newswires

May 05, 2020 13:58 ET (17:58 GMT)

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