State of California sues Uber and Lyft

In Los Angeles, April 16.
In Los Angeles, April 16. MARIO TAMA / AFP

If the tech giants are doing well, despite the Covid-19 pandemic, this is not the case for "unicorns" in the transport sector, like Uber or Lyft, whose activity has collapsed due to containment . On Tuesday May 5, the California government was not afraid to add to their difficulties: the state attorney general, Xavier Becerra, announced the opening of proceedings against the two companies of passenger vehicles with driver (VTC) ) for their refusal to reclassify their drivers as employees.

However, since 1er January, and the entry into force of the law known as AB5, the companies of the “gig economy” (the economy of the work with the card) are required to consider their contractual as employees – and to discharge paid vacation and unemployment insurance – if they exercise control over the tasks performed, in particular pricing. One million self-employed workers are affected by the legislation.

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Uber and Lyft refused to apply the law. On the contrary, they launched, with the delivery person DoorDash, a counter-offensive in the form of a popular referendum which must be submitted to the voters during the general elections of November 3. This initiative proposes to create a third statute. The drivers would continue to be independent, but the platforms would offer minimum guarantees, notably in terms of salary and health insurance.

The cities of San Francisco, San Diego and Los Angeles joined the complaint filed by the Attorney General. He placed the state’s decision in the context of the pandemic. " Companies shirk their obligations and shift the burden on drivers and taxpayers when they are most vulnerable ", He emphasizes.

Disadvantaged competitors

The complaint accuses Uber and Lyft of offering races for a maintained price "artificially low " because of savings made on employee contributions and non-compliance with the minimum wage, which puts competitors who respect the law at a disadvantage. The arrears claimed by the state could amount to several hundred million dollars. " California has rules. We want to make sure Uber and Lyft respect them Added Mr. Becerra.

The pandemic has highlighted the risk posed to public health by the precarious situation of the self-employed. They are tempted to continue working even if they are contaminated, and risk being infected by a client when they do not have health insurance. "This shows the danger of the work that these essential workers do "Said San Francisco prosecutor Dennis Herrera. With confinement, thousands of them found themselves without activity. For the first time, they were included in the recovery plan adopted on March 27. The "gig economy" has gained recognition: its employees have been entitled to apply for unemployment benefits.

The complaint against Uber and Lyft comes just days from the two companies' quarterly results. Analysts expect a sharp decline. Lyft has already announced the layoff of 17% of its workforce, or nearly 1,000 jobs. Uber, which had lost $ 1.1 billion (€ 1 billion) in the last quarter of 2019 alone, had promised to finally break even in the last quarter of 2020. A promise that may be postponed somewhat. ..

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