A California judge has ruled that Uber and Lyft drivers must be classified as employees, as the two rideshare giants threaten to pull out of the state in response.
Uber and Lyft Drivers Not Independent Contractors
On August 10, 2020, California Superior Court Judge Ethan Schulman issued a ruling on a lawsuit brought against Uber and Lyft by California Attorney General Xavier Becerra and city attorneys of Los Angeles, San Francisco, and San Diego in May. The lawsuit argued that Uber and Lyft drivers have been misclassified as independent contractors instead of employees under the state’s AB5 law, which went into effect at the beginning of the year. AB5 enshrines the “ABC test” to determine whether someone is an independent contractor or an employee. The independent contractor classification denies Uber and Lyft drivers many benefits available to traditional employees, such as minimum wage, overtime compensation, health insurance, unemployment payments, workers’ compensation, paid rest periods, and reimbursements for the cost of driving.
In his ruling, Judge Schulman wrote, “It’s this simple. Defendants’ drivers do not perform work that is ‘outside the usual course’ of their business. Defendants’ insistence that their businesses are ‘multi-sided platforms’ rather than transportation companies is flatly inconsistent with the statutory provisions that govern their businesses as transportation network companies, which are defined as companies that ‘engage in the transportation of persons by motor vehicle for compensation.’”
The judge issued a preliminary injunction ordering the companies to reclassify Uber and Lyft drivers. However, the injunction has been stayed for ten days, which gives Uber and Lyft an opportunity to appeal the decision.
Uber and Lyft Threaten to Pull Out of California
The companies maintain that the ruling conflicts with the desires of most Uber and Lyft drivers and will result in fewer jobs during a global pandemic.
“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” said an Uber spokesperson. “When over three million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”
“Drivers do not want to be employees, full stop,” a Lyft spokesperson added. “We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
Uber and Lyft claim that their drivers prefer the flexibility of working as freelancers. However, labor unions and elected officials contend that this classification deprives Uber and Lyft drivers of many traditional benefits.
In the days following the judge’s ruling, Uber CEO Dara Khosrowshahi said that the company might shut down operations in California if it is forced to classify its drivers as employees. Lyft president John Zimmer also said that “If our efforts here are not successful, it would force us to suspend operations in California.”
This November, California residents have the opportunity to vote on a ballot measure that would override AB5 by classifying rideshare drivers and other gig economy workers as independent contractors.
Attorneys for Misclassified Workers
Workers’ compensation claims can be challenging, particularly when it comes to misclassified workers. If a worker cannot prove that he or she is an employee, that person might not qualify for legally mandated benefits for an on-the-job injury. This is why many injured workers turn to the Chicago workers’ compensation attorneys at GWC Injury Lawyers LLC.
With more than $2 billion recovered in verdicts and settlements, GWC is one of the premier Workers’ Compensation and Personal Injury law firms in Illinois. Our dedicated Chicago workers’ compensation lawyers have fought for the rights of injured people in virtually every profession. We have the experience, the determination, the resources, and the reputation necessary to get you and your family the justice you deserve.
If you have been hurt while working at your job, contact GWC to schedule a free, no-obligation consultation with one of our attorneys. You can call our office at (312) 464-1234 or click here to chat with a representative at any time.