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California Attorney General Xavier Becerra and Los Angeles, San Diego, and San Francisco city prosecutors filed a complaint alleging that Uber and Lyft obtained an unfair and unconstitutional competitive advantage by misclassifying employees as independent contractors.

The case claims that Uber and Lyft deprive employees of the right to a living wage, overtime, access to paid maternity leave, compensation for disabilities, and unemployment insurance. The case, brought before the San Francisco Superior Court, seeks $2,500 in damages under the California Unfair Competition Act for each violation, likely per driver, and another $2,500 for violations against senior citizens or persons with disabilities.

The firms are shirking their responsibility to their workforce, we believe and contend, “Becerra said in a call today. By shirking those commitments, Becerra said, Uber and Lyft transfer those costs to taxpayers in California.


In a statement to TechCrunch, Lyft says it looks forward to partnering with the California AG “and majors across the state to bring all the benefits of California’s innovation economy to as many people as possible, particularly during this period when creating good jobs with access to affordable healthcare and other benefits is more important than ever.”

Uber and Lyft face misclassification litigation

Those who work as 1099 contractors will set their timetables, and decide when, where, and how much they want to work. For employers, having 1099 contractors ensures that they can stop paying payroll taxes, overtime wages, benefits, and salaries for the employees.

Also Read: IBM and Red Hat are Widening Their Corporate Telco, Edge and AI Services

According to the ABC test, in order for a hiring agency to legitimately identify a worker as an independent contractor, it must show that the worker is free from the influence and guidance of the hiring entity, does work beyond the framework of the entity’s business and is frequently engaged in a ‘independently defined trade, profession, or activity of the same nature as the work done.’

The ballot initiative Uber and Lyft are seeking to introduce an earnings bonus of at least 120 percent of the minimum wage when on-the-job, 30 cents per mile for expenses, a welfare stipend, on-the-job injury workplace accident benefits, safeguards against discrimination and sexual harassment, and auto accident and liability insurance coverage.

Labor problems were at the forefront and the core of the pandemic COVID-19. Amazon Web Services VP Tim Bray just yesterday resigned from the company, citing Amazon’s firings of employees who were critical of the company. Furthermore, several strikes and demonstrations have been organized by gig employees to demand basic workplace security including masks and gloves while they are on the job. And the drivers Uber and Lyft have fought for themselves for a long time. Last year, when both Uber and Lyft were planning to make their public sector debuts, drivers organized a series of demonstrations demanding fair wages, healthcare, and the right to join a union.


This is not the first case Uber and Lyft have encountered concerning driver misclassification, but it is the most collaborative one. Since AB 5 became effective in January, organizations such as Gig Workers Rising have been calling on lawmakers to enforce the legislation.


Akansha Pandey

Akansha Pandey, Director of Sales at Fluper, is a leader in technology sales with a decade of experience. Known for her strategic approach, she excels in driving business growth and forging strong client relationships. Akansha's expertise lies in consultative selling, team leadership, and exceeding revenue targets. Passionate about mentoring, she enjoys sharing insights with aspiring sales professionals.

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