What Does The Lawsuit Against Uber & Lyft Mean For California Employers?

Amongst one of the few news stories that have received attention and not been related to COVID-19 is the lawsuit filed by California Attorney General Xavier Becerra against the rideshare giants Uber and Lyft. This lawsuit strikes at the heart of the debate between gig economy companies and California officials over how to handle Assembly Bill 5 (AB5) that was passed last year. This law makes it illegal to misclassify employees and thereby avoid paying key benefits protections. At Sacks Law Group, APC, our workers’ compensation defense attorneys want to discuss this case with you today.

This lawsuit was inevitable

Ever since the Dynamex court decision and the passage of AB5, most employers in the state of California knew that a lawsuit against Uber and Lyft was coming. These two companies have then the most visible face of the gig economy in this state, and they have both been hesitant to make changes to worker classification. At the heart of this case, and many other potential cases in the state is whether or not a worker should be classified as an employee or an independent contractor.

The lawsuit against Uber and Lyft by the Attorney General (who was joined by several other cities) alleges that the companies have denied their workers benefits and protections by classifying them as independent contractors as opposed to employees. This includes their right to minimum wage and overtime pay, access to unemployment compensation, reimbursement for business-related expenses, and more. Also in contention is the ability of gig contractors to receive workers’ compensation benefits if they are hurt on the job.

Last year, Uber and Postmates sued the state of California over the passage of AB5, claiming the law was unconstitutional. Their lawsuit claim to that AB5 carved out “nonsensical” exemptions for roles such as “direct salespeople, travel agents, grant writers, construction workers, commercial fisherman” and more.

All of this matters if you own a business In California. Whether or not you have to provide workers’ compensation insurance for a worker largely revolves around how you classify the worker. Under AB5, a worker cannot be classified as an independent contractor unless the company can prove the following three things:

1. The worker is free to perform services without direction or control of the company.
2. The worker performs tasks that are outside the usual course of a company’s activity.
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature is that of the work they are performing.

We can help you get through this

If you have been accused of misclassifying employees, or if you have any questions about how AB5 will affect your business, please seek legal assistance as soon as possible. At Sacks Law Group, APC, we understand how difficult it can be to operate a business in California, and we want to ensure you stay on the right side of the ever-changing law. When you need a workers’ compensation defense attorney, you can contact us for a consultation of your case by clicking here or calling 310-216-7778.