California's attorney general and a group of city attorneys on Wednesday escalated their lawsuit targeting the business model of ride-hailing giants Uber and Lyft, announcing they will request a judge immediately compel the companies to hire their drivers as employees.
The maneuver comes after the state and three cities sued the companies in May, accusing them of wrongly classifying their workers in California as independent contractors — in the process depriving them of benefits full-time employees enjoy.
The companies continue to argue they can use their drivers as independent contractors. If the state and cities prevail, they say it would upend the work of 900,000 drivers as the companies would scramble to comply with the order.
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“We're seeking a court order to force Uber and Lyft to play by the rules,” state Attorney General Xavier Becerra said in a statement.
The future of the gig economy also rests at the ballot box in November, when voters will decide on an initiative funded by the industry to enact a law keeping drivers of Uber, Lyft and DoorDash as independent contractors with flexible schedules and some new benefits. The state and city attorneys said their request for a preliminary injunction would be sought in San Francisco Superior Court on Thursday, also the deadline for finalizing ballot initiatives for the November election.
“The vast majority of drivers want to work independently,” said Davis White, a spokesman for Uber. "When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry.”
Despite pressure from lawsuits and California regulators, the companies backing the initiative are waiting for November, hoping voters will approve their proposal to carve out their drivers from the state's labor requirements. Critics say the companies exploit workers, while ride-hailing and food delivery services say drivers prefer the independence.
“We believe the courts should let the voters decide,” said Julie Wood, a spokeswoman for Lyft.
The companies have resisted putting their drivers on payroll even as the toughest labor law in the country took effect this year in California. Praised by labor groups, the sweeping law enacted strict provisions for when an employer can use a worker as an independent contractor, while controversially exempting some industries from its rules.
The companies want the power to keep their workers independent, pouring at least $90 million into their November ballot measure campaign. If approved by voters, drivers who work at least 25 hours a week would get full health coverage and benefits if they are injured on the job. Drivers would be able to work across any app and earn a base of 120% of minimum wage plus more based on miles driven.
Labor advocates have denounced the referendum as an effort by big business to write laws that suit them, and they cheered the state's request for a preliminary injunction in the lawsuit against Uber and Lyft. Joining the California attorney general in the lawsuit are city attorneys of Los Angeles, San Diego and San Francisco.
“Today’s action by the Attorney General is another strong signal to voters that these companies will do anything — including breaking the law -- in order to boost their profits,” Bob Schoonover, president of SEIU California and SEIU Local 721, said in a statement.