California in settlement negotiations with Uber, Lyft in massive wage-theft case

OAKLAND - Uber and Lyft drivers rallied at three California city halls today, calling attention to a long-running lawsuit against the companies over thousands of wage-theft claims that could be worth billions of dollars.

The rallies come as court documents show public agencies are now in mediation and negotiations to possibly settle the suit. Filed jointly by the state’s Justice Department, the cities of San Francisco, Los Angeles and San Diego, and other parties, it seeks back pay and damages for Uber and Lyft drivers who worked for the companies from 2016 to 2020 — before the passage of a ballot initiative that classified app-based gig workers as independent contractors rather than employees. 

"We’re asking the state to stand strong, the cities to have a backbone, and not let these companies off the hook," said Nicole Moore, president of Rideshare Drivers United, in an interview with CalMatters ahead of the rallies.

The lawsuit asserts that Uber and Lyft drivers were covered under Assembly Bill 5, a law that took effect in January 2020 that would have required the gig companies to classify their workers as employees. Under that law, which was meant to be retroactive, the drivers would have been entitled to minimum wage, meal and rest breaks, unemployment benefits and more.

Gig companies never complied with AB 5. Instead, they spent more than $200 million to put Proposition 22 on the ballot, promising higher pay and better benefits for gig workers. It passed in November 2020 with 58% of the vote, allowing the companies to continue to classify their ride-hailing drivers and couriers as independent contractors with some benefits, but not full employment rights. 

Lost Wages

The backstory:

The lawsuit is an effort to hold Uber and Lyft accountable for the pre-Prop. 22 era. Rideshare Drivers United, a gig workers group, organized 5,000 drivers to file individual wage claims with the labor commissioner’s office in 2020. That led to the lawsuit, which consolidated those claims with those by the city attorneys of San Francisco, Los Angeles and San Diego, and with other plaintiffs who had filed similar claims under the Private Attorneys General Act. 

Rideshare Drivers United estimates that the  drivers who filed the claims are owed at least $1.3 billion, based on unpaid wait time and reimbursement for expenses, not meeting basic hourly minimum wage standards, and damages. The group further estimates that about 250,000 drivers could be eligible during the period covered by the lawsuit, and if so, the companies could owe tens of billions of dollars.

Uber and Lyft would not comment on the settlement negotiations nor on the driver group’s estimates of what they owe drivers. Uber spokesperson Zahid Arab said California voters "have spoken," and that "we look forward to putting these years-old matters behind us."

It is unclear how many of the drivers who filed the claims are still working for Uber and Lyft; there is high turnover in gig work. But Moore said she regularly talks to drivers who have been driving for the past decade. 

"What’s devastating is hearing where they are in their lives because of these policies," Moore said. "Nobody has held (the companies) accountable. This is the state’s opportunity to do that."

Legal protections

By the numbers:

Moore added that Prop. 22 has largely failed to improve drivers’ wages and conditions, and that she hopes any settlement would include new benefits her group has championed. Those include a rate card that pays drivers a minimum of $1.75 a mile and 60 cents a minute, similar to what New York City drivers have, plus establishing a system that requires just cause for "deactivations," or kicking drivers off the apps.

"Voters were presented with Prop. 22 as good policy for drivers and passengers," Moore said. "It was the biggest fraud." One example she cited: Prop. 22 promised to pay gig workers 120% of  minimum wage, but that is based on "active" time and does not include time they spend waiting for a ride or delivery. 

The companies have said the law has increased gig workers’ pay to an average $34.46 an "active hour" in California, but research last year from the UC Berkeley Labor Center, which took into account drivers’ expenses over their entire shift, found that the average pay for drivers, with tips, was $9.09, and for delivery workers was $13.62.

After the California Supreme Court upheld Prop. 22 last year, CalMatters wrote about how the industry-backed law has affected gig workers and examined hundreds of their persistent complaints to the state about wages, benefits and working conditions. The biggest difference since before the measure passed: Now there is no state agency responsible for gig workers’ complaints, because their independent contractor status means the Labor Commissioner doesn’t have jurisdiction. 

The road ahead

What's next:

The rallies organized by Rideshare Drivers United today — the biggest of which was in front of Los Angeles City Hall, where drivers chanted "we want fair wages and we want them now" — come ahead of a scheduled Uber mediation session on Monday. Lyft’s next mediation session is scheduled for April 8. 

The San Francisco city attorney’s office said only that mediations are confidential. The San Diego city attorney’s office said it "is not able to participate in the story." The Justice Department said it could not comment on ongoing litigation, but that it "remains unwavering in our commitment to stand up for the rights of workers to receive the benefits and protections to which they are legally entitled." 

The other plaintiffs in the case — the city attorney of Los Angeles and the state labor commissioner — did not respond to requests for comment.

If no settlement is reached and the case goes to trial, the state expects it to begin in 2026, according to information about the lawsuit on the labor commissioner’s website.

Veena Dubal, a law professor at UC Irvine who studies the effects of technology on workers, said the alliance between the state and cities is notable because in her research, she has come across state enforcement officials who have been "scared" to take on Uber and the other gig companies. "I imagine these are very tough negotiations (between) a resource-strapped government agency against a very well-resourced team representing Uber," she said. 

Dubal also said the labor commissioner and other public officials are probably weighing the possibility of a long legal battle with Uber and Lyft vs. agreeing to a settlement. 

"The reality is that these are immigrant workers who need money in their pockets sooner rather than later," Dubal said.