Uber, Lyft Sued by California in Major Gig-Economy Crackdown
- Ride-hailing firms accused of violating new state labor law
- Uber has successfully fought previous suits over driver status
Uber Technologies Inc. and Lyft Inc. were sued by California for allegedly violating a new state law designed to give gig-economy workers the benefits of employees.
While expected, the lawsuit filed Tuesday in state court marks a serious threat to the business model of an array of companies that save on labor costs by classifying workers as independent contractors. If the companies ultimately lose the suit, they could be forced to pay for overtime, health care and other benefits.
The complaint “asserts that Uber and Lyft gain an unfair and unlawful competitive advantage by inappropriately classifying massive numbers of California drivers as independent contractors,” California Attorney General Xavier Becerra said during a virtual press conference. The cities of Los Angeles, San Francisco and San Diego joined the legal action, which was filed in San Francisco.