Uber Technologies Inc and Lyft Inc have been sued by California and three of its largest cities, San Francisco, San Diego and Los Angeles. The companies are accused of violating the new law made to protect the working sector of the states. They have been charged with classifying their drivers incorrectly depriving them of the workplace protection and withholding worker benefits.
The new law was made to protect workers under gig economy. It stated that companies’ wrong classification harms the workers, law-abiding businesses, taxpayers and society of all. Uber and Lyft are said to categorize their drivers as independent workers instead of employees which violates the law. This law though has implications on all the delivery and transportation businesses as they rely on contract workers heavily.
California Attorney General, Xavier Becerra stated during a virtual news conference that no Business model should count on its profits from mistreating workers and going beyond the law and added that Uber and Lyft drivers lacked basic facilities like sick leave and overtime payments.
Uber stated that it will oppose the lawsuit in the court and push implementation of its own proposal. It further said that in times where around 4 million people are unemployed, state should not make it harder for people to earn. Labor Union also argued that Uber is trying to evade the laws by creating a new “underclass” of workers who have lesser benefits,
On the other hand, Lyft did not specify if they are looking for settlement or they will, like Uber fight the state in court. The company said it will collaborate with the attorney general and mayors to bring benefits of innovation economy to the workers of California.
Uber has previously challenged the law saying that it not only targets the ride-hailing companies but also is a roadblock for independent workers. The enterprises have said their drivers were rightly categorized as independent drivers which is also appreciated by the workers because of flexibility.
Becerra argued that the taxpayers of the country end up taking the load that Uber and Lyft are supposed to take. He accused them of accepting the worker’s labours but not their protection rights. Although he has not yet clarified if other such industries will be sued as well. The current crisis has left the workers in gig economy without safety as they do not come under the federal coronavirus relief bill for unemployment benefits.