Uber and Lyft and being jointly sued by Los Angeles, San Diego, San Francisco, and the state of California for allegedly violating the California Assembly Bill 5 (AB5).
More widely known as the “gig worker bill”, the AB5 bill requires businesses that hire independent contractors to reclassify and treat them as employees. Under the bill, stricter rules are in place to determine if a worker is classified as an employee or as an independent contractor.
As employees, workers are entitled to benefits such as the right to minimum wage, worker’s compensation, overtime pay, disability insurance, sick leave, unemployment insurance.
The suit claims that Uber and Lyft are consciously and illegally misclassifying their drivers as independent workers instead of independent contractors. Amid the COVID-19 pandemic, it also claims that the misclassified drivers are being denied of workplace protections and relief offered under the Families First Coronavirus Response Act (FFCRA).
The state also argues that due to these misclassifications, Uber and Lyft haven’t been paying enough payroll taxes. While the state also argues that Uber and Lyft are trying to pay less payroll taxes by misclassifying their drivers, its main goal is to recover drivers’ unpaid wages and civil damages.
Uber and Lyft earn some of their largest revenues from California. Drivers of share-ride companies, delivery services, and construction laborers are among those affected by AB5. Uber and Lyft are just two of several companies fighting to exclude their drivers from the law.