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California Labor Commissioner Sues Uber for Wage Theft
According to Andrew J. Hawkins, from Verge, California’s labor commissioner has filed separate lawsuits against Uber and Lyft, alleging that the companies are engaging in wage theft by incorrectly classifying drivers as independent contractors [1]. This misclassification, according to the lawsuits, deprives drivers of various legal protections guaranteed under California labor law.
These lawsuits are the latest in a series of legal challenges faced by Uber and Lyft in California, the state where both companies were originally established and have thrived. However, they now find themselves increasingly vulnerable to legal action.
Uber and Lyft are thumbing their noses at the California legislature and the public officials charged with enforcing these laws, San Diego DA Mara Elliott said during a press conference. It’s time for Uber and Lyft to respect the law, their employees, and taxpayers, and it’s time for them to pay their own bills.
Earlier in 2020, California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Francisco, and San Diego, sued the companies, arguing that their drivers should be classified as employees under California’s AB5 law, which took effect on January 1st. Becerra recently filed a motion for a preliminary injunction that could force Uber and Lyft to reclassify their drivers as employees immediately. A ruling on the attorney general’s motion is expected from California’s state court soon.
The lawsuits filed by the labor commissioner are in a similar vein. The commissioner has received nearly 5,000 claims from drivers seeking lost wages. However, the goal is to recover wages owed to all Uber and Lyft drivers in the state, as well as expenses for various statutory violations and damages.
If drivers were classified as employees, Uber and Lyft would be required to provide them with minimum wage, overtime compensation, paid rest periods, and reimbursements for driving-related expenses, including mileage. However, as independent contractors, drivers currently receive none of these benefits.
What is California Assembly Bill 5?
As stated by Leah Shepherd from SHRM, enacted in September 2019, California Assembly Bill 5 (AB5) mandates that workers should be classified as employees unless their employer can demonstrate that they [2]:
- Are free from the employer’s control and direction in connection with their work performance.
- Perform work that is outside the employer’s usual course of business.
- Are customarily engaged in an independently established trade, occupation, or business.
This law “made properly classifying workers as independent contractors much more difficult by conclusively establishing a presumption that a worker is an employee, placing the burden on employers to prove otherwise and by applying a more stringent test for workers to qualify as contractors, said Netta Rotstein, HR consultant at Engage PEO, an outsourcing firm based in Ft. Lauderdale, Florida. The law’s constitutionality continues to be challenged in court, and while the verdict is still out, the number of misclassification cases is expected to rise.
In 2020, California voters passed Proposition 22, allowing companies offering ride-hailing services to classify their drivers as independent contractors. However, on August 20, 2021, a California superior court deemed Proposition 22 unconstitutional and unenforceable. Supporters of Proposition 22 have appealed this decision.
Additionally, in July 2021, Uber filed a lawsuit asking a federal appeals court to declare AB5 unconstitutional and block its enforcement.
Key Uber Statistics
- In 2023, Uber reported a revenue of $37.2 billion, marking a 16% increase compared to the previous year.
- Of this revenue, $19.6 billion was generated from ride-hailing services and $12.1 billion from delivery services, with the remaining revenue coming from freight services.
- The platform saw a total of 137 million users on Uber or Uber Eats each month, representing an 11% increase from the previous year.
- Uber drivers completed a total of 9.44 billion trips in 2023, nearly two billion more trips than in 2022.
Uber Signs $8.4 Million Settlement Over Driver Misclassification
According to Paulinet Tamaray from HRD, Uber Technologies Inc. has agreed to a settlement of $8.4 million in a lawsuit involving California drivers who claimed they were misclassified as contractors instead of employees [3]. This settlement has led to discussions about the potential revival of a California law that was recently weakened.
The settlement, which the US District Court approved in the Northern District of California on July 21, covers drivers who used the Uber Rides app in California between February 28, 2019, and December 16, 2020. It also includes drivers who used the Uber EATS app in the state between June 28, 2016, and October 7, 2021, and who rejected Uber’s arbitration agreement.
FAQs
How does California’s AB5 law affect Uber drivers?
California’s AB5 law requires companies to classify workers as employees rather than independent contractors if they meet certain criteria. This law impacts Uber drivers by potentially granting them benefits such as minimum wage, overtime pay, and unemployment insurance.
What steps should I take immediately after an Uber accident in California?
After an Uber accident in California, seek medical attention, report the incident to the police, document the scene with photos and witness information, notify Uber through their app, and consult with a lawyer to discuss your legal options.
Can I join a class action lawsuit against Uber in California?
Yes, if there is an existing class action lawsuit related to Uber in California, you may be able to join if you meet the criteria. Class action lawsuits allow multiple plaintiffs to combine their cases, providing a stronger collective legal action.
What should I do if Uber’s insurance company contacts me after an accident in California?
If Uber’s insurance company contacts you after an accident in California, consult with a lawyer before speaking with them. Insurance adjusters may attempt to minimize your claim, and a lawyer can help protect your rights and negotiate on your behalf.
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The Litigation Group at Schmidt & Clark, LLP is an experienced team of trial lawyers that focuses on the representation of plaintiffs in lawsuits. We are handling individual litigation nationwide and currently accepting new legal challenges in all 50 states.
If you or a loved one was involved with these matters, you should contact our law firm immediately for a free case evaluation. You may be entitled to a settlement by filing a suit and we can help.
References:
1. https://www.theverge.com/2020/8/5/21356096/uber-lyft-california-labor-commissioner-lawsuit-driver-classification
2. https://www.shrm.org/topics-tools/employment-law-compliance/uber-signs-8-4-million-settlement
3. https://www.hcamag.com/us/specialization/employment-law/uber-enters-into-84-million-settlement
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