The California Labor Commissioner’s Office has today filed two separate lawsuits against Uber and Lyft, alleging that both companies have committed wage theft* due to their intentional misclassification of employees as independent contractors.
The lawsuits come in the wake of the California Supreme Court’s 2018 Dynamex ruling that eviscerated California’s formerly flourishing independent contractor workforce. The Dynamex decision established the “ABC test” for determining whether a worker is an employee under various California labor laws. On January 1, 2020, Assembly Bill 5 took effect, codifying the Dynamex ABC test as applying to all California labor laws. Under the ABC test, workers can be independent contractors only if they are free from the hiring entity’s control, perform work outside of the hiring entity’s usual business, and engage in an independently established trade or occupation.
Uber and Lyft now face the possibility of having to provide backpay for regular, overtime, and holiday hours worked, missed meal and rest break premiums, and numerous penalties and premiums for other violations of the labor code.
These cases could have a significant impact on the last vestiges of the independent contractor workforce in California. Given the continually changing legal landscape, we strongly encourage employers to reach out to Raimondo & Associates with questions regarding specific situations. We are closely monitoring these developments. Because of these frequent developments, and the need to adapt the general guidance below to specific circumstances, employers should consult counsel regarding specific circumstances. There are many nuances and fact-specific elements that make individualized legal counsel on these questions of critical importance.
*“Wage Theft” covers a variety of infractions that occur when workers do not receive their legally or contractually promised wages. Common forms of wage theft are (1) non-payment of overtime; (2) not giving workers their last paycheck after the worker leaves the job; (3) not paying for all hours worked; (4) not paying minimum wage; and (5) not paying a worker at all. This is not an exhaustive list and is intended only for demonstrative purposes.