California's government has now accused ride-hailing companies Uber and Lyft of breaking a state law by misclassifying their drivers as contractors. As CNBC reports, California Attorney General Xavier Becerra claimed that the popular ride-hailing services denied operators essential employee protections and benefits -- entitlements that operators would have access to if classified as employees.
These benefits include -- but are not limited to -- the right to a minimum wage, access to unemployment benefits, paid sick leave, and reimbursement for vehicle expenses. As contractors, drivers do not receive reimbursement for expenses that may arise from maintaining their personal vehicles to meet company safety standards.
Attorneys from major Californian cities, including San Francisco and Los Angeles, have supported Becerra in the lawsuit as well.
The law being invoked in the suit is Assembly Bill 5 (AB5), which went into effect on January 1, 2020. The bill required gig workers and contractors to be re-classified as employees so that they can receive benefits from the state. However, Uber and Lyft claimed that AB5 did not leave room for operators to exercise flexibility, nor to control their work hours.
"Uber and Lyft claim that properly classifying drivers as employees is incompatible with flexibility. That is a lie," says Attorney Dennis Herrera.
However, as The New York Times reported, Uber resisted the law and claimed that "drivers are not a key part of its business." Uber argued that its core focus lies on the technical aspect of the business.
Should Uber and Lyft refuse to comply with the government's interpretation of the bill -- and should the companies lose the suit -- there could be civil penalties totaling "up to hundreds of millions of dollars," per The New York Times.
As the widespread lockdown in response to the coronavirus pandemic likely contributed to a reduction in demand for ride-hailing services, Uber and Lyft drivers experienced a significant loss of income as a result. As contractors, Uber and Lyft drivers were unable to gain unemployment benefits, and those who were sick could not get paid sick leave.
California's AB5 would ostensibly provide these workers with greater access to the aforementioned benefits and entitlements.
"Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences," Bercerra stated in support of the suit.
As previously reported by The Inquisitr, Uber directly requested that its customers not to use its service to protect themselves from contracting coronavirus, instead encouraging self-quarantine.