A regulatory agency in California has ruled that rideshare drivers at companies like Uber and Lyft should be classified as employees, not independent contractors, in opposition to standard industry practice.
Rideshare Drivers Must Be Reclassified
On June 9, 2020, the California Public Utilities Commission (CPUC) issued an 18-page document covering a number of upcoming rules pertaining to “transportation networking companies,” or TNCs, a category that includes Uber and Lyft. One such ruling in the document defines TNC drivers as employees rather than independent contractors.
This move puts the agency in line with a recently-enacted California law known as AB5. AB5, which was passed by the state’s Assembly in June 2019, codified into law a 2018 California Supreme Court ruling that laid out the conditions under which a worker can be considered an independent contractor or an employee. The legislation was enacted because most of the gig-economy companies that routinely misclassify their workers as independent contractors failed to reclassify them as employees, with the rideshare industry being among the biggest offenders.
If reclassified as employees, rideshare drivers at Uber and Lyft could have access to a whole host of advantages that are not available to independent contractors, such as guaranteed minimum wage, workers’ compensation benefits, overtime payments, unemployment benefits, health insurance, and retirement accounts. Understandably, this would be much costlier to their employers, which is why Uber, Lyft, and other rideshare and gig-economy companies have long resisted efforts to change the designation of their workers, both inside and outside of the courtroom.
Uber, Lyft Facing Legal Challenges
Given this historic opposition to reclassification, it is unclear what meaningful difference the CPUC’s recent ruling will make. However, the previous week, the agency also issued a formal reminder to the companies that they had to provide workers’ compensation for their employees by July 1. If they did not comply, the CPUC would consider revoking their relevant operating authority.
This is not the only legal challenge that Uber and Lyft are facing on this front in the state. In May, California Attorney General Xavier Becerra and the city attorneys from Los Angeles, San Francisco, and San Diego sued Uber and Lyft over the companies’ alleged noncompliance with AB5.
“We have long maintained that Uber and Lyft are misclassifying and exploiting their drivers, and we intend to prove that in court,” said a spokesperson for San Francisco City Attorney Dennis Herrera. “To the extent that the California Public Utilities Commission takes the position that Uber and Lyft drivers are employees, they join a long list of government entities and regulators that have consistently and correctly reached that same conclusion.”
For years, Uber and Lyft have claimed that if they are forced to reclassify rideshare drivers as employees it would have an adverse effect on their profitability and would result in an 80 to 90 percent reduction in their workforce. They have also insisted that the freer work schedule is an attractive perk for drivers.
However, critics have pointed out that, in exchange for this “perk,” rideshare drivers are responsible for significant work expenses, including gas, vehicle maintenance, and liability insurance, all of which can negatively impact their ability to earn a living.
Fighting for the Misclassified Worker
Workers’ compensation claims are always challenging, perhaps never more so than in the case of the misclassified worker. If someone is unable to prove that he or she is actually an employee, that person may not qualify for legally-mandated benefits for an injury sustained on the job. For this reason, many injured workers have sought out the guidance and the expertise of the Chicago workers’ compensation attorneys at GWC Injury Lawyers LLC.
With over $2 billion recovered in verdicts and settlements and offices throughout the state, GWC is one of the leading Workers’ Compensation and Personal Injury law firms in Illinois. For more than four decades, our dedicated Chicago workers’ compensation lawyers have been fighting for the rights of injured people in practically every profession. We have the experience, the determination, and the proven record of success you need to get you and your family the justice you deserve.
If you have been hurt performing the duties of your job, please contact GWC today to schedule a free, no-obligation consultation with an attorney. You may call our office at (312) 464-1234 or click here to chat with one of our representatives at any time.