California sues Uber and Lyft over classification of workers

California has slapped Uber and Lyft with a lawsuit, alleging they have unlawfully misclassified workers as independent contractors, The New York Times reports.

California Attorney General Xavier Becerra and city attorneys in a lawsuit say Uber and Lyft are violating the state's new law, Assembly Bill 5, that says workers are considered employees if their performance is under the control and direction of the company and is part of the "usual course" of its business.

"California has ground rules with rights and protections for workers and their employers," Becerra said. "We intend to make sure that Uber or Lyft play by the rules."

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Uber and Lyft have been fighting to be exempt from California's law and assert that the independent contractor classification for its drivers is correct. Uber has also said it would need to "fundamentally change our business model" if it were to reclassify its drivers as employees, who would be entitled to benefits.

In a statement, Lyft said, "We are looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California's innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable healthcare and other benefits is more important than ever." An Uber statement said "we will contest this action in court, while at the same time pushing to raise the standard of independent work for drivers in California, including with guaranteed minimum earnings and new benefits."

California's lawsuit is seeking civil penalties and back wages, which the Times reports could amount to hundreds of millions of dollars.