Misclassification by Uber and Lyft deprives workers of critical protection and leads to tax avoidance in the tens of millions every year
June 26, 2020 – SACRAMENTO – California Attorney General Xavier Becerra and the Los Angeles, San Diego, and San City Lawyers Francisco has announced that it will file an injunction asking Uber and Lyft to immediately cease the illegal misclassification of their drivers as independent contractors. The application follows the lawsuit brought by the Attorney General and the city's attorneys, alleging that Uber and Lyft's misclassification of drivers provides workers with critical workplace protection such as the right to minimum wages and overtime, as well as access to paid sick leave, disability insurance, and Unemployment withholds insurance. Misclassification often means that workers are much more likely to use government-funded income support to make ends meet and taxpayers will have to pay the bill instead of the large company. A study by the University of California at Berkeley found that misclassification of workers by Uber and Lyft was estimated to result in the companies contributing $ 413 million to the California State Unemployment Insurance Trust Fund over a five-year period could avoid.
"It is time for Uber and Lyft to face up to their responsibilities and the people who make them successful: their workers." Attorney General Becerra said. "Misclassifying your employees as" consultants "or" independent contractors "simply means that you want your employees or taxpayers to cover the costs of obligations that you have as an employer, regardless of whether you pay statutory wages or overtime, Take sick leave or take out unemployment insurance. You can't do business like this in California. We are seeking a court order to force Uber and Lyft to abide by the rules. "
“The exploitation must stop. We take aggressive measures to ensure that these drivers finally get the basic protection that all employees have. " said Los Angeles City Attorney Mike Feuer. "Carpooling has been an incredible invention that provides the public with another convenient transportation option. However, this must not and cannot be at the expense of the driver – or the public itself, as taxpayers are responsible for protecting the key workers themselves, what these accused are doing have to pay their fair share. "
"It is time for Uber and Lyft to stop violating the law and treating their workers fairly by classifying them as the employees they are." said the San Diego City Attorney, Mara W. Elliott. "While the world is grappling with the aftermath of the global pandemic, these billion dollar companies are taking advantage of their employees by denying them basic protections like sick leave and unemployment insurance and not paying them living wages. California taxpayers shouldn't." pay the bill for their misconduct. "
"It is time for Uber and Lyft to give drivers the protection they deserve." said San Francisco City Attorney Dennis Herrera. "Drivers are employees under California law, and there is no reason to deny them basic workplace benefits such as access to paid sick leave or the right to reimbursement of travel expenses. Uber and Lyft's current misclassification of drivers does not only force drivers to do so Loss, but it makes California taxpayers pay the bill for these companies. Drivers need these benefits more than ever. Despite a campaign of misinformation, nothing prevents Uber and Lyft from correctly classifying drivers and giving them flexibility. "
Employee misclassification occurs when a company treats its employees as independent contractors, thereby avoiding legal obligations such as minimum wages, overtime, income taxes and employee compensation insurance. From the beginning, Uber and Lyft have consistently refused to classify their drivers as employees, which violates California law. Instead, companies ignore the fact that California law allows drivers to decide when and how much they want to work, and yet is classified as an employee. Nothing prevents companies from offering their drivers flexibility and properly classifying them as employees. By allegedly misclassifying hundreds of thousands of drivers as independent contractors, Uber and Lyft deprive critical protection employees of their businesses to increase their own profits and create billions of dollars in private wealth for their venture capital investors. Misclassification harms workers by depriving them of basic labor standards and protecting the social security network of workers, which serve as lifelines in times of social and economic crisis. And misclassification hurts taxpayers because taxpayers bear the burden of financing social security networks to which unfortunate workers turn without protection in times of need.
In the petition filed with the San Francisco Supreme Court, the attorney general and city attorneys emphasized the need for immediate action against Uber and Lyft, arguing that the illegal misclassification of companies:
- Harms drivers, Workers struggle to make ends meet – and income is at or below state and local minimum wage rates. In addition, drivers as key employees during the COVID 19 pandemic carry passengers in closed private vehicles in the immediate vicinity for long periods of time, while operating due to the companies' failure to operate a temporary to nonexistent safety net complies with the law;
- Harms law-abiding companies and their employees, by giving Uber and Lyft the opportunity to avoid employers' responsibility and create an unfair competitive advantage. Some estimates assume that the illegal savings from misclassifications in various industries amount to 15 to 39 percent of labor costs. Misclassification allows Uber and Lyft to shift their labor, vehicle, and maintenance costs to drivers, which creates an unfair market advantage. and
- Harms the public, Deprivation of the state of tax revenue for the provision of public services and turning back the clock for hard-won protective measures in the workplace. If basic employment protection is not met, the public often has to take responsibility for the negative effects on workers and their families that result from inferior wages or unhealthy and insecure working conditions. Misclassified drivers who may not have access to paid sick days and employee compensation medical care also pose a public health risk by increasing the risk of transmission of diseases such as COVID-19.
Attorney General Becerra is committed to protecting hard-working Americans and their families in California and throughout the country. Earlier this month, Attorney General Walmart asked to step up efforts to protect workers and the public during COVID-19. In May, he struck the President's ruthless order to force meat and poultry processing workers to work without adequate protection during the current public health crisis. In March, the Attorney General urged the Trump administration to stop implementing common employer schemes that threaten to undermine workers' ability to collect their wages. The attorney general also secured an agreement that prevented Burger King, Popeyes and Tim Hortons from imposing franchise agreements that would make it difficult for workers to find better wages and benefits from competing franchises. And in January, Attorney General Becerra submitted an Amicus letter to defend flight attendants' rights and California labor laws.
A copy of the brief filed with the court to justify an injunction is now available here. A copy of the lawsuit filed last month can be found here.
Source: CA. DOJ