On May 5, 2020, the State of California filed a Complaint for Injunctive Relief Restitution, and Penalties in California Superior Court against both Uber and Lyft claiming violations of the California Labor Code and Business & Professions Code. The California Attorney General, and city attorneys of Los Angeles, San Diego, and San Francisco are claiming the rideshare companies misclassified its drivers under Dynamex Operations W., Inc. v. Superior Court, 4 Cal. 5th 903 (2018) and Assembly Bill AB 5 (California Labor Code section 2750.3); thus, depriving them of worker protections and benefits such as minimum wage and unemployment insurance.
The lawsuit demands injunctive relief pursuant to the California Labor Code, and restitution in the amount of $2500, for each violation, pursuant to the Business & Professions Code (Section 17200 et seq., Unfair Competition Law). The suit claims that Uber and Lyft have received an unfair market advantage by misclassifying its drivers. One aspect which remains to be determined is how the court will view the “for each violation” standard in Business & Professions Code sections 17206 and 17206.1. Some courts have determined the existence of thousands of violations, depending on the nature of the activity. If, for example, the Superior Court finds Uber and Lyft have violated the law, and each instance of misclassification of a single driver is a “violation,” this could result in many thousands of “violations.” Add to this, should the court determine that each failure to provide an accurate, itemized paystub under Labor Code section 226 is a separate violation, the “violations” would increase exponentially.
We will keep apprised of any developments in this lawsuit. If you have any questions regarding worker classification, state or federal payroll taxes, or wage and hour and employment issues, please contact us.