Judge: Making Lyft Follow California Labor Law Is Not an Emergency

SAN FRANCISCO (CN) — At a Thursday hearing on a motion to make Lyft give sick pay to drivers, a federal judge said the company blatantly violates state labor laws but making it provide a meager three sick days to a small portion of eligible drivers does not qualify as an emergency.

“In the grand scheme of things is it fair to say you’re just kind of using this as a hook to finally get a court ruling that Lyft needs to reclassify its drivers,” U.S. District Judge Vince Chhabria told a lawyer representing a proposed class of about 300,000 California Lyft drivers.

A Lyft car crosses Market Street in San Francisco. (AP Photo/Jeff Chiu, File)

Lead plaintiff John Rogers filed an emergency motion on March 19 to make Lyft start classifying drivers as employees instead of contractors so they can obtain sick leave as required by state law. The plaintiffs say many drivers who are sick or ordered to self-quarantine will choose to keep giving rides so they can earn money and in doing so risk spreading the Covid-19 virus.

California law only requires employers provide a minimum three sick days per year to employees. To qualify, employees must be on the job at least 90 days and have worked at least 30 days during that period.

In opposing the emergency motion, Lyft notes that more than half of its California drivers would not qualify for sick pay because they worked less than 30 days. According to Lyft, 67.4% of drivers also worked less than 120 hours over the last 12 months, meaning they could only earn up to four hours of sick leave under California law.

Judge Chhabria questioned how the paltry amount of sick leave would provide much benefit to drivers or the public when a recently passed federal law gives independent contractors up to $511 per day for 10 days of sick leave and up to $200 per day for 12 weeks of family leave.

Plaintiffs’ attorney Shannon Liss-Riordan said an extra three days of paid time off can be significant in helping to keep sick drivers from going to work and spreading the highly contagious Covid-19 virus.

“Though it may not seem like much, allowing thousands of drivers to get off the road even if it’s a short period of time is going to help us battle this virus,” Liss-Riordan said.

She also argued drivers can be considered employees under California law but independent contractors for federal tax purposes, a suggestion the judge rejected.

“That argument cannot possibly be right,” Chhabria said.

However, the judge agreed with Liss-Riordan that Lyft is not complying with California labor laws.

In 2018, the California Supreme Court established a new labor standard in its Dynamex ruling that makes it harder for employers to classify workers as independent contractors. The tougher standard was written into law last year by Assembly Bill 5.

“I’ll give you that Lyft under existing law is obviously obligated to reclassify its drivers,” Chhabria said. “The question is whether there’s an emergency that requires me to act now and disregard the arbitration provision and class waiver.”

Lyft and other gig companies have for years used arbitration clauses and class action waivers to evade lawsuits that might force them to reclassify workers as employees. The agreements force workers to resolve labor disputes through individual arbitration and bar them from participating in class actions.

On Thursday, Chhabria also heard arguments on Lyft’s motion to compel arbitration. The plaintiffs argue Lyft drivers are exempt under the Federal Arbitration Act because they are engaged in interstate commerce.

Liss-Riordan cited an April 2019 ruling by a federal judge in the Western District of Washington, who found Amazon drivers who deliver packages locally are exempt from arbitration because they transport goods that come from different states. That decision is currently under review by the Ninth Circuit.

The attorney said Lyft drivers also transport people to and from out-of-state and international destinations.

“Lyft drivers drive people to bus stations, train stations and airports,” she said.

Despite that argument, the judge said he was leaning toward granting Lyft’s motion to compel arbitration based on the 1947 Supreme Court ruling U.S. v. Yellow Cab Co., which found cab drivers are not engaged in interstate commerce.

Liss-Riordan insisted that case specifically pertained to antitrust laws, not labor laws or the Federal Arbitration Act.

Both sides also argued whether an arbitrator should decide the plaintiffs’ request for a public injunction, a court order primarily designed to benefit the public rather than an individual plaintiff.

Lyft attorney R. James Slaughter of Keker Van Nest claimed the motion is a request for private relief masked as a motion for public benefit. He urged Judge Chhabria to send it to arbitration.

The judge ordered both sides to submit 5-page supplemental briefs by Monday and said he would issue a ruling next week.

Lyft has also launched a program to provide financial assistance to drivers who can prove a Covid-19 diagnosis or quarantine order. Lyft says it will pay drivers based on their ride volume over the prior four weeks. It does not specify how much or for how long drivers will be paid.

At a hearing on Wednesday, Liss-Riordan argued that a similar program offered by Uber is too restrictive because some drivers cannot get doctor’s notes or letters from public health agencies. In that case, a federal judge on Wednesday ordered Uber to negotiate the terms of its temporary financial relief program for drivers.

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