AB5 Class Action Lawsuit

AB5 Explained

Assembly Bill 5, or AB5, is a controversial piece of legislation that codified the Supreme Court’s 2018 Dynamex decision, making it harder to justify classification of workers as independent contractors. The real world effect is a drastic redefinition of how ridesharing companies classify their drivers. Most notably, the bill changes a ridesharing driver’s status from an independent contractor to a full-fledged employee. AB-5 was first approved by the state Senate on September 10th and was signed by Governor Newsom on September 18th. 

Uber and Lyft both notoriously spent years and millions of dollars actively fighting against the passing of California Bill AB5, or at least inclusion as an exemption, but their efforts have proven to be in vain as it is now understood that ridesharing drivers should be classified as employees. As such, they are entitled to all the rights and benefits which that status entails. 

California is currently in the process of enforcing its AB5 bill and the rules regarding rideshare drivers’ employee classification will change dramatically. According to this new law, many of California’s independent contractors, including everyone from rideshare drivers to exotic dancers, are more accurately classified as employees. 

AB5 will officially take effect on January 1, 2020. According to this law, Uber and Lyft drivers in California will be considered employees if they form part of a company’s essential business, if their bosses determine how their work is done, or if they do not have an independent trade or business. This three-part test, known as the “ABC test”, is used to determine worker status and will be explained in more detail below. 

At its core, AB5 is a revolutionary piece of legislation and the first of its kind, changing the requirements for companies that once relied heavily on contract drivers to conduct their business and providing specificity about which workers can be characterized as employees.

AB5 Class Action Lawsuit

AB5 will primarily serve to address the serious issue of employee misclassification in the ridesharing business, which is in violation of LC 226.8 (intentional misclassification). There is a stark difference between an employee and an independent contractor. Anytime a ridesharing driver is deliberately misclassified as an independent contractor rather than as an employee, a driver will lose out on basic but important worker protections, such as the right to a minimum wage, health benefits, paid time off, and more. 

Naturally, employee misclassification works exclusively in favor of ridesharing companies. Not only have Uber and Lyft avoided the responsibility of providing benefits for their employees by deliberately misclassifying them, but they have also avoided legal responsibility for the misconduct of their employees for years, too. 

The implications of AB5 are groundbreaking and will set off a wave of changes in the ridesharing business. As of January 1, 2020, Uber and Lyft will both become responsible for providing all the benefits that go along with employee status, such as mileage and cell phone reimbursement. Furthermore, these companies will shoulder any liability for the negligent or criminal behavior of their employees. In other words, legal action can be taken against Uber and Lyft for both misclassification and any instances of personal injury caused by their drivers.  

Reclassifying Uber and Lyft drivers as employees changes everything. By law, and in contrast to independent contractors, employees are entitled to health care subsidies, unemployment insurance, paid parental leave, overtime, workers’ compensation, paid rest breaks, certain reimbursements, and an hourly minimum wage. Crucially, ridesharing drivers will also potentially unionize, as well.

Ultimately, Uber and Lyft will have a legal responsibility to change the way they do business, including offering all the back pay owed to their drivers. As of January 1, 2020, both companies will have to abide by worker’s compensation laws and provide the aforementioned benefits and protections. Additionally, the penalties for misclassifying drivers will become severe. Financial penalties may range from $10,000-$25,000 per worker. A public shaming provision is also included to further discourage misclassification.  

Simply put, AB5 allows almost 500,000 aggrieved Uber and Lyft drivers to file lawsuits (as individuals or as part of a class action) for misclassification after being wrongly misclassified as independent contractors. Furthermore, hundreds of thousands of California Uber and Lyft drivers will benefit from basic labor rights for the very first time.

Intentional Misclassification

AB5 is an expansion of Dynamex, a game changing decision that was made by the California Supreme Court just last year. According to Dynamex, all businesses are required to employ the previously mentioned “ABC test” to determine whether or not one of their workers is an actual employee. 

According to Dynamex, in order for a business to hire a worker as an independent contractor, that individual must: 

  • Be subject to employer control and
  • Be engaged in work that is not essential to the employer’s success, and 
  • Must have an independent business within that field. 

A worker who does not meet all three conditions, will be classified as an employee.

Although AB 5 was just signed into law, the “ABC test” has actually been a part of California law ever since April of 2018. Therefore, Uber and Lyft have both been potentially guilty of intentionally misclassifying their drivers for almost a year and a half. Again, not only is employee misclassification in violation of LC 226.8, but other labor codes, including:

These are serious violations. And an aggrieved Uber or Lyft driver may be entitled to recovery for the following: 

  • The cost of cell phone usage
  • The cost of mileage reimbursement for car maintenance
  • Applicable unpaid overtime
  • Meal/rest break penalties
  • Inaccurate wage statements, and
  • More
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What Can West Coast Trial Lawyers Do For You

The Uber and Lyft attorneys at West Coast Trial Lawyers have successfully fought for the rights of Uber and Lyft drivers for years. Our firm has sixty years of collective experience and we have recovered over $1 billion in damages. Our attorneys have worked for the largest firm in Los Angeles and many celebrities, including Carmen Electra and Johnny Manziel, have chosen our firm to represent them. Call us today at (213) 927-3700 or email info@westcoasttriallawyers.com to schedule a free consultation with our experienced, caring and compassionate legal team.

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