California sues Uber, Lyft over misclassifying drivers as contractors

Technology

FILE PHOTO: An Uber sticker is seen on driver Margaret Bordelon’s car in Lafayette, Louisiana, U.S. February 16, 2020. Picture taken February 16, 2020. REUTERS/Callaghan O’Hare

(Reuters) – California’s attorney general on Tuesday sued Uber Technologies Inc (UBER.N) and Lyft Inc (LYFT.O) for classifying its drivers improperly as independent contractors instead of employees, evading workplace protections and withholding worker benefits.

Several California cities joined the state in its lawsuit, saying the companies’ misclassification harms workers, law-abiding businesses, taxpayers, and society more broadly.

Shares in Uber and Lyft dropped briefly but recovered shortly after the lawsuit was announced during a virtual news conference by the attorneys general.

Uber and Lyft did not immediately respond to a request for comment.

The companies in the past have said their drivers were properly classified as independent contractors, adding that the majority of them would not want to be considered employees, cherishing the flexibility of on-demand work.

California Attorney General Xavier Becerra said Uber and Lyft drivers lacked basic worker protections, including sick leave and overtime payment.

“Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences. Uber and Lyft drivers who contract the coronavirus or lose their job quickly realize what they’re missing,” Becerra said.

Reporting by Tina Bellon in New York; Editing by Chris Reese and Bill Berkrot

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