What You Need to Know About Uber Independent Contractor Lawsuits in California
More than two dozen misclassification lawsuits have been filed against rideshare companies in California. Here’s what you need to know about Uber independent contractor lawsuits in California.
Numerous misclassification lawsuits have been filed against various gig companies in California since it decided to pass Assembly Bill 5. This law, also referred to as “AB 5”, placed most independent contractors or “gig” workers as employees, thus classifying them as open to benefits and other perks set aside for full-time employees. Assembly Bill 5 was signed into law by California governor Gavin Newsom in late 2019, and upon becoming law in January 2020, was faced with immediate challenges over misclassifying workers. However, earlier this year a U.S. District Court Judge ruled that Uber can argue a classification suit over Proposition 22, a campaign that would exempt rideshare drivers from AB 5.
Impact of Assembly Bill 5
The main issue surrounding recent lawsuits with rideshare companies is the debate over whether to classify drivers as independent contractors or employees with respective benefits. The California state legislature passed a law known as AB 5 in 2020, which would require companies such as Uber to provide its gig-work employees with legally mandated benefits, including health insurance and sick leave for its drivers. However, both Uber and Lyft were met with a lawsuit from the California Attorney General after they failed to classify their drivers as employees. A driver advocacy group known as Rideshare Drivers United claims that Uber and Lyft owe more than $1.3 billion to drivers pursuant to Assembly Bill 5. In November of 2020, a court passed Proposition 22 and held that rideshare companies such as Uber would continue treating their workers as independent contractors rather than employees deserving of benefits.
Misclassification: Employee or Independent Contractor?
Many workers felt that corporations like Uber should not have the final say in determining whether they receive benefits. With the enactment of Proposition 22, or “Prop 22”, Uber would be one company amongst other corporate giants relying on putting profits before worker safety and rights. However, these rideshare companies have also argued that many of their drivers enjoy the flexibility and freedom that comes with being an independent contractor, which includes the ability of workers to set their own hours and work as much or as little as they want. Uber, Lyft, and other rideshare companies allegedly spent hundreds of millions of dollars on the campaign to pass Proposition 22, and succeeded in exempting their rideshare and delivery drivers from the requirements set out in AB 5.
What is Underway for Gig Workers
Presently under the Biden administration, democratic lawmakers have continued to push a union-supported labor bill called the PRO Act. The Protecting the Right to Organize (PRO) Act is partly modeled after the AB 5 law, and aims at enforcing meaningful penalties against companies and executives that violate workers’ rights. AB 5 currently is no longer a California law for rideshare and food delivery workers, but still remains in effect for other freelance workers. Companies such as Uber, Lyft, and DoorDash have spent over a combined million dollars to lobby the Biden administration and members of the U.S. House and Senate. These companies banded together to form the App-Based Work Alliance, a Washington-based advocacy group that promotes drivers and food-delivery workers’ desire to remain independent contractors rather than employees. This advocacy group has publicly shared surveys arguing for these types of statements, but it has been shown in a recent study by the National Bureau of Economic Research that at least one of these surveys was paid for by Uber.
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