Uber & Lyft Denied Chance To Contest California Labor Law. Here’s What That Means

The Supreme Court has declined to hear Uber and Lyft’s arguments contesting California’s labor law. This move has opened the two rideshare companies to a myriad of lawsuits. Let’s take a look at what that means in the long term.

Uber & Lyft Drivers Can Now Sue

Reuters reported that on Monday, Oct. 7, the U.S. Supreme Court declined to consider Uber and Lyft’s appeal to cases filed by the state of California on behalf of drivers who agreed to settle legal problems with the ride-hailing businesses out of court in an ongoing legal battle over their contractor status.

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The Democratic-led state’s attorney general and labor commissioner were allowed to pursue claims that the two ride-share companies owed money to drivers who were mistakenly classified as independent contractors instead of employees. After this ruling, the justices denied the companies’ appeals to the state appeals court’s decision.

The corporations contend that states cannot file a lawsuit on behalf of anyone who agreed to take their legal problems to private arbitration instead of court under federal law. This encompasses almost 60 million American workers as well as almost every customer who signs up for a subscription service, agrees to a business’s terms of service, or registers a product.

Uber attorney Theane Evangelis argued in an email that the California court’s decision was wrong and that the Supreme Court might address the matter in a later case.

In June, the two businesses consented to settle a lawsuit brought by the Democratic-led state’s attorney general, who claimed the corporations had unfairly treated drivers as independent contractors, by adopting a $32.50 hourly minimum pay standard for Massachusetts drivers and paying a $175 million settlement.

Thousands of American drivers who feel they should have been treated like employees have also filed lawsuits against Uber and Lyft. However, as the majority of the drivers for the firms sign arbitration agreements, few of those cases have resulted in decisive verdicts, and many of them have been sent to arbitration.

Another Settlement for Uber and Lyft

Back in November 2023, the ride-sharing giants were ordered to pay a total of $328 million to workers. The action follows claims that the drivers’ pay was withheld by both businesses. Attorney General Letitia James of New York announced the settlement, which is the largest wage theft remedy her office has ever achieved.

As per the arrangement, Lyft contributed $38 million and Uber paid out $290 million. The multimillion-dollar settlement guaranteed that the impacted drivers would receive the required paid sick leave and other benefits in addition to back pay. The unprecedented settlement emphasized the value of equitable compensation and benefits for all employees, sending a strong message to businesses in the ride-hailing space and beyond. It also established a precedent for future labor practices in the industry.

According to the New York Attorney General’s office, Uber withheld sales taxes and Black Car Fund fees straight from drivers’ pay between 2014 and 2017. Passengers were supposed to be responsible for paying these fees.

Uber reportedly misrepresented these deductions in their terms of service, which further complicated issues. The business promised drivers that the only amount deducted from their charges would be Uber’s commission, and drivers could charge clients for any tolls, taxes, or other expenses they paid. However, the Uber driver app never provided a means for drivers to impose these costs.

According to reports, Lyft shortchanged drivers between 2015 and 2017. In order to reflect the amount of sales tax and Black Car Fund fees that drivers were expected to pay, the business withheld an 11.4% “administrative charge” from the payments sent to New York drivers.