The California Attorney General has filed a lawsuit alleging that the ride-sharing companies Uber and Lyft misclassify their drivers as independent contractors when they are really employees. The litigation was made possible by California Assembly Bill 5, which changes the way courts determine whether a worker is an employee or independent contractor. The bill, which was signed into law by Governor Gavin Newsom in September 2019, was passed to codify the California Supreme Court Ruling in the wage and hour case Dynamex Operations West, Inc. vs. Superior Court of Los Angeles.

The ruling introduced a strict three-part test to help judges make worker classification decisions that requires independent contractors to be regularly engaged in the same business or trade as the hiring entity while also performing tasks that are outside the scope of that business or trade. Uber and Lyft are among a group of companies pushing for a ballot measure to revise or repeal AB 5.

The ruling and law are seen as a response to the rise of the gig economy, which has left millions of Americans without basic workplace protections. If the lawsuit is successful, misclassified drivers will receive back pay for the hours they worked. They will then be reclassified as employees and entitled to the minimum wage, overtime pay, compensated sick leave and unemployment benefits should they lose their jobs. Payroll taxes would also be deducted from their earnings. Uber and Lyft say the cost of ride-sharing services would rise in California if their drivers are classified as employees.

California attorneys with experience in cases involving wage and hour laws could help workers to determine whether they are employees or independent contractors under AB 5. Attorneys could also take legal action on behalf of workers who have not been paid correctly for the hours they worked or denied overtime pay when they worked for more than 40 hours during a workweek.