The state of California is suing Uber and Lyft for classifying their drivers as contractors instead of employees. The state is seeking penalties that it estimates could reach 'hundreds of millions of dollars.'
The lawsuit is the first big test of a new state law that poses a serious threat to the ride-hailing apps' business models.David Paul Morris/Bloomberg via Getty Images
The lawsuit is the first big test of a new state law that poses a serious threat to the ride-hailing apps' business models.The state of California is suing Uber and Lyft for classifying their drivers as contractors instead of employees. The lawsuit is the first major test of a new state law intended to give gig workers more labor protections, including access to employer-sponsored health insurance.
"Uber and Lyft both claim that their drivers aren't engaged in the company's core mission and therefore qualify for benefits," said Xavier Becerra, the state's attorney general, at a press conference on Tuesday."If drivers in California contract the coronavirus or if they lose their job as a result, guess what? They're the ones that go missing. They're the ones that don't know what to do next.
Becerra said the companies are also harming taxpayers by classifying drivers as contractors rather than employees. The companies do not pay"hundreds of millions of dollars in social safety net obligations," or state payroll taxes, he said. The state is seeking penalties that it estimates could reach"hundreds of millions of dollars." It also wants the companies to pay restitution to hundreds of thousands of drivers in California.
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California Sues Uber, Lyft For Not Making Drivers EmployeesI’m a San Francisco-based reporter covering breaking news at Forbes. I’ve previously reported for USA Today, Business Insider, The San Francisco Business Times and San Jose Inside. I studied journalism at Syracuse University’s S.I. Newhouse School of Public Communications and was an editor at The Daily Orange, the university’s independent student newspaper. Follow me on Twitter rachsandl or shoot me an email rsandlerforbes.com.
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