California to Sue Uber, Lyft Saying They Misclassified Drivers as Independent Contractors
May 05 2020 - 2:13PM
Dow Jones News
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)
Copyright (c) 2020 Dow Jones & Company, Inc.
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