California seeks to force Uber and Lyft to reclassify drivers as employees within weeks

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California is looking for to power Uber and Lyft to reclassify their drivers as staff, in a dramatic escalation of the state’s months-long warfare with the gig financial system corporations.

In May, California Attorney General Xavier Becerra, together with metropolis attorneys of Los Angeles, San Francisco, and San Diego, sued Uber and Lyft, arguing that their drivers had been misclassified as unbiased contractors when they need to be staff beneath the state’s AB5 regulation that went into impact on January 1st.

Now, Becerra plans to file a movement for a preliminary injunction that might compel the ride-hailing corporations to reclassify drivers as staff inside weeks.

“It’s time for Uber and Lyft to own up to their responsibilities and the people who make them successful: their workers,” Becerra said in a statement. “Misclassifying your workers as ‘consultants’ or ‘independent contractors’ simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer — whether it’s paying a legal wage or overtime, providing sick leave, or providing unemployment insurance. That’s not the way to do business in California. We’re seeking a court order to force Uber and Lyft to play by the rules.”

AB5, which was signed into regulation by California Gov. Gavin Newsom on September 18th, enshrines the so-called “ABC test” for figuring out whether or not somebody is a contractor or worker. Legal specialists agree the regulation will make it tougher for gig financial system corporations like Uber, Lyft, and DoorDash to categorise their drivers and couriers as unbiased contractors. And the businesses have argued that the regulation represents an existential risk to their enterprise fashions.

Uber and Lyft accused the lawyer common and his allies of making an attempt to close down ride-hailing within the state. They argued that if Becerra is profitable, lots of of 1000’s of drivers might be out of labor, prices would rise, and riders who rely on Uber and Lyft’s service could be left stranded.

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” an Uber spokesperson stated. “When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry.”

A Lyft spokesperson argued that California’s voters ought to resolve the difficulty. The firm, together with Uber, Instacart, and DoorDash, is funding a $90 million effort to go a poll initiative in November to counteract the consequences of AB5.

“We believe the courts should let the voters decide,” the Lyft spokesperson stated. “Trying to force drivers to give up their independence 100 days before the election threatens to put a million more people out of work at the worst possible time. It would be incredibly harmful to millions of people and the California economy to grant this motion 100 days before the voters decide, and we will oppose this motion.”

The gig corporations had been getting ready this poll initiative as a contingency plan even earlier than Newsom signed the invoice into regulation. The hope was that after hanging out with lawmakers and labor teams, the businesses may win a reprieve by interesting on to voters.

The poll measure would override AB5 by classifying ride-hail drivers and different gig financial system employees as unbiased contractors. According to Ballotpedia, it will additionally enact labor and wage insurance policies for ride-hail drivers, together with a web earnings ground based mostly on 120 p.c of the minimal wage and 30 cents per mile; a restrict to the hours permitted to work throughout a 24-hour interval; healthcare subsidies; occupational accident insurance coverage; and unintentional dying insurance coverage. The poll measure would additionally require the businesses to develop anti-discrimination and sexual harassment insurance policies.

“This is yet another malicious legal action against drivers that underscores exactly why we’re pursuing the ballot measure,” stated Stacey Wells, spokesperson for the Uber-and-Lyft funded group.

Meanwhile, pro-AB5 driver teams protested outside Uber CEO Dara Khosrowshahi’s San Francisco home to stress the corporate to drop the poll initiative and name consideration to the corporate’s alleged discrimination towards clients from non-white neighborhoods.

Update Thursday, June 25th, 8:24AM ET: Updated to incorporate a press release by Attorney General Xavier Beccera.