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State Labor Commissioner Files Wage-Theft Lawsuits Against Uber And Lyft

August 5, 2020 / 2:50 PM PDT / CBS San Francisco

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OAKLAND (CBS SF) -- The California Labor Commissioner on Wednesday announced two separate lawsuits against Uber and Lyft for committing wage theft by incorrectly classifying employees as independent contractors.

According to a press release issued by the California Department of Industrial Relations, the suit claims both Uber and Lyft have deprived their drivers of a host of legal protections in violation of California labor laws -- including Assembly Bill 5, which went into effect on January 1, 2020 -- by misclassifying them as independent contractors.

The lawsuits are the latest legal actions taken against the two companies in connection with the passage of AB5. Back in May, San Francisco joined the state and other cities in suing Uber and Lyft over classifying their drivers as independent contractors.

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According to the press release, the goal of the lawsuits is to enforce California labor laws and recover amounts owed to all of Uber's and Lyft's drivers, including the nearly 5,000 drivers who have filed claims for owed wages with the Labor Commissioner's Office. The lawsuits additionally seek recovery for a wider range of statutory violations and damages than those asserted in individual wage claims and other lawsuits.

The lawsuits allege that by misclassifying workers, the two ride-hailing app companies failed to meet their obligations as employers as required by California labor law -- including to pay drivers at least minimum wage for all hours worked, to pay overtime compensation, to provide paid rest periods, to reimburse drivers for the cost of all equipment and supplies needed to perform their work and for work-related personal vehicle mileage.

The suits also allege the companies failed to provide paid sick leave, to provide accurate itemized wage deduction statements, to timely pay all wages owed during and upon separation of employment, and to provide notice of employment-related information required by law.

"The Uber and Lyft business model rests on the misclassification of drivers as independent contractors," said California Labor Commissioner Lilia García-Brower in the press release. "This leaves workers without protections such as paid sick leave and reimbursement of drivers' expenses, as well as overtime and minimum wages."

The lawsuits were filed Wednesday in Alameda County Superior Court and ask the court to order Uber and Lyft to stop misclassifying their employees and provide the protections available to all employees under the Labor Code. The suits additionally seek the recovery of unpaid wages, penalties and interest as well as civil penalties and any costs and reasonable attorneys' fees incurred by the Labor Commissioner's Office.

"The state labor agency has botched thousands of claims. They know they don't have the ability to process these claims, so they sent them into a legal abyss, where they know it will take years to resolve them," said Lyft spokesperson Julie Wood in a statement to CNN Business.

In a statement, Uber spokesperson Davis White said: "The vast majority of California drivers want to work independently, and we've already made significant changes to our app to ensure that remains the case under state law. When 3 million Californians are without a job, our leaders should be focused on creating work, not trying to shut down an entire industry."

The ongoing legal challenges in the state come at an uncertain time for both companies as they grapple with the pandemic, which significantly cut demand for their core ride-hailing businesses. Both Lyft and Uber have undergone layoffs in recent months and have long histories of steep losses.

Uber, Lyft and DoorDash have each put $30 million behind a ballot initiative, with additional support from Instacart and Postmates (which was recently acquired by Uber). If the initiative passes, it would exempt them from the AB-5 law, but offer drivers some benefits.