The Labor Commissioner for the state of California has sued Uber and Lyft in state court over allegations that the ride-sharing companies are continuing to misclassify drivers as independent contractors despite the passage of Assembly Bill 5 (AB 5).
“As has been identified by the different driver organizations, they have filed thousands of complaints with our office and that absolutely does inform the information that we have,” said Lilia Garcia-Brower, who was appointed commissioner by Gov. Gavin Newsom last year.
Uber and Lyft each employ a minimum of one hundred thousand drivers throughout the state, according to the complaint.
Garcia-Brower filed the lawsuits in her official capacity in the Superior Court for the County of Alameda on Aug. 5, alleging that subsidiaries Rasier and Rasier-CA were created to act as intermediaries between Uber and its drivers. Rasier and Rasier-CA are also named as defendants.
“Rasier licenses the smartphone technology from Uber and then hires the drivers on Uber's behalf for transportation services,” wrote Miles E. Locker, attorney for the commissioner, in the complaint. “Uber incorrectly claims that because of this scheme, it is the drivers alone who are providing the on-demand transportation services. Uber's claim is specious because Uber and or its subsidiaries organize and control all of the activities necessary to Uber’s business. The Rasier defendants further the misclassification scheme by adding an additional layer to superficially distance Uber from its drivers in an effort to obfuscate the evident conclusion that Uber's drivers are its employees.”
When AB 5 became effective Jan. 1, 2020, it forced companies to reclassify many independent contractors, such as Uber and Lyft drivers, photographers, freelance writers and other gig-economy workers, as employees.
“We believe that the harms caused by misclassification have been compromising California's ability to respond during the pandemic,” Garcia-Brower told the Southern California Record. “We're continuing our fight to end misclassification for those reasons. Last month, we filed another lawsuit involving misclassification against a small car wash operator. So these are not going to be the only actions our office takes to ensure that businesses properly classify workers.”
The state of California has experienced a surge in COVID-19 cases in recent months.
As of Aug. 8, there were 538,416 reported cases and 10,011 deaths, according to the California Department of Public Health.
“I have a statutory obligation to represent the responsible employer and to level the playing field and that's really what misclassification undermines is the responsible employers but also the state because when you have uninsured work site accidents, workers go to the county hospitals,” said Garcia-Brower in an interview. "When you have employers not paying their fair share of taxes, the state of California doesn’t have enough money to pay for roads, build parks and support our schools. So, this really is an attack on California that we need to stop.”
Other than lawsuits, another enforcement tool, according to Garcia-Brower, is the issuance of administrative citations that cover wages, damages and penalties due to the state.
“Injunctive relief is not available through the citation process,” she said. “So, in this case, the lawsuit is the most effective tool. The courts are empowered to stop the ongoing violation.”
The causes of action against Lyft include willful misclassification, failure to pay driver’s minimum wage, failure to pay overtime compensation and failure to pay wages for rest periods.
“Although these two lawsuits are in this particular sector, misclassification runs rampant throughout so many industries in California,” said Garcia-Brower. “This is not a new problem that was introduced by the evolution of the gig economy. This is a big longstanding problem in construction, janitorial and in so many other industries and the damages that are caused there are just as threatening and impactful."