LYFT, the “ride-sharing business” and Uber competitor, has settled a class action lawsuit by its drivers for over $12 million. Lyft drivers had accused the company of misclassifying its drivers as independent contractors (ICs), when they should have been classified as employees. It is important for workers to be correctly classified as employees and not as ICs because ICs do not have the same rights and protections afforded by law to employees.
ICs are not entitled to minimum wage, to overtime pay for working more than 8 hours per day or 40 hours per week. Without employee status, they are denied reimbursement for business expenses, and workers’ compensation coverage, and denied protection from unlawful deductions, unlawful discrimination and harassment. They are not entitled to additional benefits such as sick pay, health insurance, retirement and profit-sharing plans.
There are several factors that determine whether a worker has been correctly classified as an independent contractor. The most important factor is the employer’s right to control the worker’s manner and means of performing the job. If the employer dictates how the worker should do the work, what tasks to accomplish and how to accomplish them, then the worker is an employee and not an independent contractor.
In the case against Lyft, the drivers alleged that Lyft exercised control over drivers in the following ways: The company retained the right to terminate drivers at any time, and at its own discretion. Lyft drivers must identify themselves with a large pink mustache provided by Lyft. Drivers are not allowed to set rates of pay for their services, Lyft dictates the rates. Drivers must undergo training session where they are instructed how to interact and talk to customers. Drivers’ vehicles are evaluated for aesthetic purposes and must pass an appearance evaluation. The company has the right to discipline or fire drivers who do not work hours they are signed up to work.
Rather than continue with litigation, Lyft agreed to settle and pay a total of $12.25 million to over 100,000 drivers in California (a majority of which worked only a total of 50 hours or less). The company also agreed to first warn drivers before deactivating them from the system, and provide a reason for the deactivation, such as low ratings from passengers. However, Lyft will not be re-classifying its drivers as employees, and drivers will continue to be classified as independent contractors.
Technology, mobility, and better communications systems have dramatically changed the way that people work and earn a living in the 21st century. The creation of new industries has also given rise to new business models that attempt to do away with the traditional employer-employee relationship but instead tap into the practice of “outsourcing” or “crowdsourcing” – where companies who need services obtain them from the general public, rather than from traditional employees or suppliers. This has led to the “on-demand economy” or “gig economy,” and has boosted the rise of alternative employment arrangements, which include “free lancers”, on-call workers, temporary help agency workers, and workers provided by contract firms. More often than not, workers in the gig economy are not considered “employees” in the traditional sense. Although many of these workers are bona fide self-employed or contractual workers, many more may be misclassified as “independent contractors” and are denied the rights and protections afforded to employees.
Misclassified employees may be owed back wages such as overtime pay, wages for missed breaks, and reimbursements for business expenses. If the misclassification occurred for several years, the back wages and reimbursements owed may be significant.
* * *
The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com.
* * *
C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully recovered wages and other monetary relief for thousands of employees and consumers. He is named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a member of the Million Dollar-Advocates Forum.
(Advertising Supplement)