California sues to make Uber and Lyft drivers employees

Enlarge / California Attorney General Xavier Becerra. (credit: Justin Sullivan/Getty Images)

California's attorney general-as well as attorneys from three of the state's largest cities-have sued Uber and Lyft, accusing the companies of violating the labor rights of thousands of drivers. The plaintiffs argue that state law requires Uber and Lyft to treat their drivers as employees, which would make them eligible for minimum wage protections, overtime pay, expense reimbursements, and other benefits they don't currently receive.

The legal status of ride-hail drivers has been a controversial issue for years. We've written about several legal cases over proper driver classification. But so far, those lawsuits have been filed by individual drivers. Uber and Lyft have effectively neutered many of the lawsuits by forcing them into arbitration, denying them class-action status in the process. These lawsuits by individual drivers simply weren't big enough to make a real impact on Uber and Lyft's overall business.

A lawsuit from the state of California is a totally different scenario. Attorney General Xavier Becerra and the city attorneys of San Francisco, Los Angeles, and San Diego have enough combined legal resources for a fair fight against the ride-hailing giants. And if Uber and Lyft lose, they could not only owe hundreds of millions of dollars in back wages and other costs, they could also be forced to fundamentally rethink how they do business in the most populous US state.

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