Final hours! Save up to 50% OFF InvestingProCLAIM SALE

California wants judge to classify Uber, Lyft drivers as employees

Published 2020-06-24, 03:24 p/m
© Reuters. The Uber logo is displayed on a mobile phone in this picture illustration

By Tina Bellon

(Reuters) - California plans to ask a state court judge to force Uber Technologies Inc and Lyft Inc to classify their ride-hail drivers as employees rather than contractors, ratcheting up the tension over a new gig worker law.

Shares of both companies fell nearly 8%. A hearing for the matter was set for Aug. 6.

The fight is one of the biggest clashes over the future of the so-called "gig economy" of workers, typically for delivery and other app-based services. California is Uber's and Lyft's biggest U.S. market.

In January, California implemented a law making it tougher for companies to classify workers as contractors rather than employees. The contractor designation is essential to Uber and Lyft, who are exempted from paying drivers overtime, healthcare, unemployment and workers' compensation.

The court fight also comes as the coronavirus has shut down much of the ride-hailing companies' business and gig workers for the first time were able to receive taxpayer-sponsored unemployment benefits under a federal pandemic relief bill.

In a filing in the Superior Court of California in San Francisco on Wednesday, lawyers for California Attorney General Xavier Becerra said their office on Thursday will file a request for a preliminary injunction, which would force the change in status if approved by a judge.

Uber in a statement said most drivers preferred the independence afforded by working as contractors, that it had made changes because of the law, and that it calculated over 158,000 drivers in California would lose work if the reclassification happened.

Lyft in a statement said California should rather let voters decide on the issue during a November ballot initiative sponsored by Uber, Lyft and delivery company DoorDash Inc.

© Reuters. The Uber logo is displayed on a mobile phone in this picture illustration

"If the courts were to grant the Attorney General’s request, it would have a devastating effect on millions of Californians at the worst possible time," Lyft said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.