The Attorney General of California, alongside city attorneys of San Francisco, Los Angeles and San Diego have jointly sued ride-hailing companies, Uber and Lyft on grounds of misclassifying their workers.
According to the suit, the two companies allegedly classified their drivers as contractors instead of employees, which violates the new state law that went into effect earlier this year.
The labor law, known as AB5 is considered the nation’s strictest test, and it took effect on 1st January 2020. It prohibits companies from classifying workers as independent contractors instead of employees.
The misclassification denies the drivers the right to minimum wage and overtime pay, reimbursement for business-related expenses, access to unemployment and disability insurance as well as paid sick leave.
Additionally, the suit alleges that Uber and Lyft haven’t paid enough payroll taxes as a result of the misclassification. It is, therefore, seeking compensation for unpaid wages owed to drivers, civil penalties, and a permanent ruling that would prohibit the companies from misclassifying drivers in the future.
Lyft Inc. is an American ride-sharing company based in San Francisco, California and operating in 644 cities in the United States and 12 cities in Canada. It develops, markets, and operates the Lyft mobile app, offering car rides, scooters, a bicycle-sharing system, and a food delivery service.
It is the second-largest ride-sharing company in the United States with a 28% market share after Uber.