Lyft Is Facing Wage and Hour Class Action Lawsuit

A group of drivers have filed a wage and hour class action lawsuit in a California federal court against the on-demand ride-sharing company, Lyft.

The drivers contend that they are misclassified as independent contractors and should be reclassified as employees as opposed to independent contractors, according to their wage and hour class action lawsuit.

As independent contractors for Lyft, drivers pay all their expenses out of pocket: gas, maintenance, insurance, and detailing, just to name a few. The Lyft drivers contend that they should be reimbursed for expenses such as gas and car maintenance that they currently pay out of pocket.

The drivers, should they win this California workers rights lawsuit, could be entitled to either hourly wages or a regular salary, as well as reimbursement for the money they’ve spent on things like gas and insurance as drivers for Lyft.

Lyft is seeking to have the California employee rights class action lawsuit dismissed, arguing that drivers are independent contractors because they can choose when and how much they work. However, drivers contend that because they can be fired or deactivated without any notice, and because they are told how to behave and interact with passengers and risk termination if they don’t follow those guidelines, then they should be treated as employees.

Requiring Lyft to consider drivers as employees would deal a major blow to the company. Under California wage and hour laws, the company would be forced to pay drivers for overtime, unemployment insurance, workers compensation and, perhaps most importantly, they would have to foot the bill for drivers’ expenses, including gas and vehicle wear and tear.

At the recent Lyft wage and hour class action lawsuit hearing in a California federal court in San Francisco, U.S. District Judge Vince Chhabria said that current employment categories are “woefully outdated” when applied to app-enabled firms such as Lyft, according to media reports.

Judge Chhabria indicated that previous California workers rights class action lawsuits found that other workers performing similar work to that of Lyft drivers were considered to be employees, rather than contractors.

CA Labor Law — Employees v. Independent Contractors

The difference between the employees and independent contractors, according to California Labor Law, is that for common-law employees, employers “must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid.” The same is not necessarily true for an independent contractor.

Health insurance and 401(k) benefits are another aspect often extended to employees under California employment law but not to independent contractors. And employers have the right to control how a worker behaves — how to dress, for example, or specific customer-interaction protocol. In addition, there are more labor protections for employees.

Current California labor law recognizes two types of workers: employees in traditional work relationships and independent contractors. Employees are generally covered by California wage and hour protections such as minimum wage and anti-discrimination statutes, workers’ compensation, and union-organizing rights, while the latter have no such protections.

More firms rely on thousands of contract workers to serve as drivers, run errands or do data-entry at the swipe of an app. Firms often prefer independent contractors, because they are not subject to certain tax and legal liabilities and can cost firms less in pay and benefits.

The Lyft California Wage and Hour Class Action Lawsuit is Case No. 3:13-cv-04065 in the U.S. District Court for the Northern District of California, San Francisco Division.

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