CA Judge Smacks Uber and Lyft: Take Responsibility for Your Drivers
You might recall that we have a case where we allege that Uber’s driver was an employee—not an independent contractor—and Uber paid $70,000+ in sanctions for failing to disclose discovery documents related to the status of their drivers.
Uber and Lyft have long claimed that their drivers are “independent contractors,” even though their entire business depends on drivers completing rides and they control how drivers do their work. This allows Uber and Lyft to enjoy all the profits and benefits of having a fleet of drivers all over the world, without any responsibility for employment benefits or the impact on city roadways, highways, and other drivers.
Some states, including Uber and Lyft’s home state of California, are not having it. Last fall, New Jersey regulators fined Uber $649 million for misclassifying drivers as non-employees. California passed AB 5, a bill aimed at clarifying employment status in favor of employees based on a California Supreme Court decision. In June 2020, state regulators classified drivers as employees.
Earlier this year, the State of California sued Uber and Lyft to enforce classification of drivers as employees, asserting, “The time has come for Uber’s and Lyft’s massive, unlawful employee misclassification schemes to end.”
On August 10, Judge Ethan Schulman of San Francisco County Superior Court basically laid the smackdown on Uber and Lyft. He entered a preliminary injunction (a temporary order granting what California requested) against Uber and Lyft ordering them to classify drivers as employees. He notes, “the People have amply demonstrated a reasonable probability of prevailing on their claim that Defendants are misclassifying their drivers. Defendants' contrary arguments lack merit.” Uber argued simultaneously in separate actions (1) that California’s A.B. 5 unconstitutionally “targets” Uber, and (2) that A.B. 5 did not apply: “Defendants make no attempt to explain away these glaring inconsistencies.” With regard to driver classification, Judge Schulman observes, “It's this simple: Defendants' drivers do not perform work that is ‘outside the usual course’ of their businesses.” Rather, “drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business.” Uber’s assertion that drivers are not carrying out Uber’s business “flies in the face of economic reality and common sense.” Judge Schulman notes that the costs of restructuring Uber’s business as an employer are costs “Defendants should have begun incurring more than two years ago, when the Supreme Court handed down its unanimous Dynamex decision.” He concludes, “It is high time that [Uber and Lyft] face up to their responsibilities to their workers and to the public.”