Business Maverick

Business Maverick

Uber, Lyft Face California Suit in Crackdown on Driver Benefits

Lyft Inc. and Uber Technologies Inc. signage are displayed on the windshield of a vehicle at Los Angeles International Airport (LAX) in Los Angeles, California, U.S., on Wednesday, Sept. 11, 2019. Uber Technologies Inc. drivers in California sued the company for violating a new state law they say is specifically designed to end Uber's practice of classifying the drivers as independent contractors, rather than employees. Photographer: Allison Zaucha/Bloomberg

Uber Technologies Inc. and Lyft Inc. face a lawsuit by California and three of its biggest cities for allegedly violating a new state law designed to give ride-share drivers and other gig-economy workers the benefits of employees.

While expected, the lawsuit against Uber and Lyft that officials said is being filed Tuesday marks a serious threat to the business model of an array of companies that save on labor costs classifying workers as independent contractors. If the companies ultimately lose the suit, they could be forced to pay for overtime, health care and other benefits.The complaint “asserts that Uber and Lyft gain an unfair and unlawful competitive advantage by inappropriately classifying massive numbers of California drivers as independent contractors,” California Attorney General Xavier Becerra said during a virtual press conference. The cities of Los Angeles, San Francisco and San Diego are joining the legal action.Uber spokesman Matt Kallman didn’t immediately respond to an emailed response for comment. Lyft also didn’t immediately respond.

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