California Negotiating Settlement with Uber and Lyft

The California Labor Commissioner is now suing Uber and Lyft for committing wage theft by willfully misclassifying drivers as independent contractors instead of employees, and depriving drivers of basic rights under California labor law. The lawsuits are pending in San Francisco Superior Court before Judge Ethan Schulman, in a coordinated proceeding along with lawsuits that were filed against those defendants by the Attorney General and the SF, LA and San Diego City Attorneys, and related actions by PAGA plaintiffs.

 
Over 5,000 Rideshare Drivers United (RDU) members filed individual wage claims with the California Labor Commission in 2020 before Proposition 22 — the industry-backed gig worker law — took effect. That led to the California Labor Commissioner’s lawsuit, which consolidated those claims with those by the city attorneys of San Francisco, Los Angeles and San Diego, and with other plaintiffs who had filed similar claims under the Private Attorneys General Act. 

AB 5 and Prop 22

The lawsuit argues that Uber and Lyft drivers were covered under Assembly Bill 5, a law that took effect in January 2020 that likely would have required the gig companies to classify their workers as employees. The drivers would have been entitled to minimum wage, meal and rest breaks, unemployment benefits and more. Uber, Lyft and other gig companies pretty much ignored AB 5. According to CalMatters, these companies instead spent over $200 million to put Prop 22 on the ballot, by promising higher pay and better benefits for gig workers. It passed in November 2020 with 58 percent of the vote, which abled the companies to continue classifying their drivers as independent contractors with some benefits, but not full employment rights. 

Nicole Moore, president of RDU, told CalMatters that Prop. 22 has basically failed to improve drivers’ wages and conditions. She hopes any settlement would include new benefits her group has championed, including a rate card that pays drivers a minimum of $1.75 a mile and 60 cents a minute, similar to what New York City drivers have, plus establishing a system that requires just cause for “deactivations,” or kicking drivers off the apps. “Voters were presented with Prop. 22 as good policy for drivers and passengers…It was the biggest fraud,” Moore added. She noted that Prop. 22 promised to pay gig workers 120% of minimum wage, but that is based on “active” time and does not include time they spend waiting for a ride or delivery. 

Accounting for drivers’ hours in the car, unpaid wait time, expenses, overtime, plus damages for the theft of pay, RDU calculated that together, they are owed $1.3 billion. RDU, an independent association of US rideshare drivers founded in Los Angeles, is demanding for its drivers:

• Financial Remedy: ensuring all drivers fair recompense for the wage theft conducted between 2016 – 2020 (including unpaid expenses, mileage and earnings).
• Sustainable Driver Pay: employ data-backed rate cards starting at $1.75/mile & 60¢/minute (adjusted annually for inflation and local minimum wage ordinances)
• Consumer Price Protection via Commission Cap: protect passengers from price gouging by guaranteeing that drivers receive at least 80% of the gross fare paid by the rider (and 100% of the tip).
• Protection from Unfair Deactivation: protect drivers from unfair deactivations by ensuring full transparency in why drivers are deactivated and what rules were broken, and giving every driver the right to a fair hearing, with back pay when the company has made the mistake in deactivating.

The negotiations are in tandem with ongoing advocacy from drivers and their representatives for better working conditions. Uber spokesperson Zahid Arab said California voters “have spoken,” referring to passing Prop 22, and that “we look forward to putting these years-old matters behind us”. If a settlement is not reached, the case could go to trial, likely sometime next year.