Lyft Sued for Unfair Competition and Labor Violations (Update)
Update, 12:45 p.m.: Lyft's response: "The lawsuit is without merit and we look forward to resolving it quickly and effectively."
The rideshare battles that took place outside City Hall a few weeks ago have now moved, unequivocally, into San Francisco district court.
We saw inklings of that when two drivers filed a class action complaint against Uber two weeks ago, alleging that the company had skimmed their tips and misled its clientele. And now its competitor Lyft faces a similarly themed class action, in which plaintiff Patrick Cotter alleges that the company misclassifies its drivers as independent contractors.
That driver-for-hire categorization is a lingua franca for rideshare services, because it helps distinguish them as startups that produce technology, rather than conventional cab fleets with an employed labor force. Lyft, Uber, SideCar, and their other sharing-economy brethren have argued, time and again, that their only products are apps, and that their only function is to refer drivers to passengers. The drivers provide their own cars, their own gas, and even their own insurance policies -- albeit with a promise of million-dollar per-incident excess liability from each company.
Now it's for courts to decide whether that business model truly serves the public interest.
The latest lawsuit, filed Tuesday, argues that drivers like Cotter are in fact employees of Lyft, which means they warrant protection from the California Labor Code. Thus, Lyft should be prohibited from skimming 20 percent from drivers' gratuities, and it should provide wage statements that accurately reflect the number of hours that each driver worked. It should also reimburse drivers for mileage, Cotter argues, echoing charges from the Uber case.
The suit demands $4.5 million in class-wide damages, based on calculations that most drivers average $15 per tip, and Lyft filches 20 percent of that. The plaintiffs and their San Francisco-based lawyer, Matthew Carlson, also have Lyft on the hook for an estimated $2 million in derelict wage statements, and another $4.5 million in mileage costs for the 1.5 million Lyft rides granted so far. Cotter also wants the rideshare service to pay his attorney fees.
We are still waiting for comment from Lyft. Carlson says he's content to allow the allegations to stand for themselves, but he's anxious to hear Lyft's response. But in the meantime, here's the complaint: