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California Lodges Lawsuit Against Uber and Lyft for “Misclassifying” Drivers as Gig Workers, Not Employees

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  • California Attorney General Xavier Becerra filed a lawsuit on Tuesday against the ride-sharing companies Uber and Lyft.
  • The lawsuit alleges that the companies are violating state law by classifying drivers as contractors, not employees.
  • Notably, employee status could give drivers access to minimum wage and health benefits.
  • Uber and Lyft have argued that their business model is in technology, not rides. They have also argued that their drivers enjoy the independence given to them by being classified as contractors. 

California Sues Uber and Lyft

After passing a law aiming to reclassify over a million independent contractors as employees, California is taking that mission one step further by suing Uber and Lyft for their defiance to do so. 

California Attorney General Xavier Becerra filed the lawsuit on Tuesday. He was joined by a coalition of city attorneys, including those for San Francisco, Los Angeles, and San Diego.

In the lawsuit, Becerra alleges Uber and Lyft violated state law by classifying their drivers as independent contractors (AKA, “gig” workers) when they should actually be classified as employees.

“…Uber’s and Lyft’s misclassification of drivers deprives workers of critical workplace protections such as the right to minimum wage and overtime, and access to paid sick leave, disability insurance, and unemployment insurance,” the coalition said in a statement

The statement goes on to say that they are seeking “restitution for workers, a permanent halt to the unlawful misclassification of drivers, and civil penalties that could reach hundreds of millions of dollars.” 

If found guilty of violating the law, the riding-share companies could be forced to pay driver backwages, as well as fines for not paying state payroll taxes. Becerra has accused the companies of harming California taxpayers by avoiding “hundreds of millions of dollars in social safety net obligations.”

According to the lawsuit itself, Uber and Lyft utilized “…the illegitimate savings they gain from depriving their Drivers of the full compensation and benefits they earn as employees to offer their ride-hailing services at an artificially low cost, decimating competitors and generating billions of dollars in private investor wealth off the backs of vulnerable Drivers.”

Part of the reason Becerra and those other attorneys are saying these companies’ actions are illegal is because last year, California passed a law known as Assembly Bill 5. Notably, that law requires companies to treat their workers as employees instead of contractors if those companies control how workers perform tasks, or if their work is a routine part of the company’s business.

When A.B. 5 was drafted, it specifically targeted companies like Uber and Lyft. Since it went into effect on Jan. 1, both companies have resisted adhering to it. In fact, both Uber and Lyft, as well as DoorDash, have pumped $90 million into a campaign for a ballot initiative to exempt them from that law. 

Uber and Lyft Respond to Lawsuit

For its part, Uber has argued that its business lays in its technology, not its rides. Because of that, it has argued that drivers are not a routine part of its business. 

Both it and Lyft have also argued that their drivers prefer being independent and deciding when they work. 

According to a spokesperson, Uber plans to contest the lawsuit, saying that at the same time, it will push “to raise the standard of independent work for drivers in California, including with guaranteed minimum earnings and new benefits.”

“At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning,” the spokesperson added.

In its own statement, Lyft seemed to be less critical of lawsuit, saying the company is “…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.”

Could Ride-Sharing Drivers Be Classified in the Future?

Even though these companies are resisting this lawsuit, labor experts say other states with similar laws may also start to take action against them.

“Uber and Lyft have lived a kind of charmed life in terms of escaping law enforcement generally, and particularly with regard to employment law, Stanford law professor William B. Gould IV told The New York Times. “The attorney general’s action can’t help but have a positive influence on law enforcement generally against them.”

Despite Uber and Lyft saying their drivers like the independent model, California’s lawsuit still claims that those companies have enough control over drivers to classify them as employees.

“They hire and fire them,” it reads. “They control which drivers have access to which possible assignments.” 

“Uber and Lyft are transportation companies in the business of selling rides to customers, and their drivers are the employees who provide the rides they sell,” the lawsuit goes on to say. “The fact that Uber and Lyft communicate with their drivers by using an app does not suddenly strip drivers of their fundamental rights as employees.”

While the idea of independent hours and extra money is likely true for some of the companies’ drivers, for others, the work is a vital source of income. 

Facts like that have been made all the more evident since the coronavirus lockdown as many gig workers have struggled to claim unemployment or sick pay. In March, Congress included special provisions in the CARES Act to help gig workers receive unemployment benefits.

Still, even if a company like Uber doesn’t want to go all the way by classifying its drivers as employees, it does seem to agree that some level of change needs to be made on behalf of its drivers. 

In March, CEO Dara Khosrowshahi penned a letter to President Donald Trump asking for a new, third classification. Notably, that would mean drivers would be neither employees nor contractors. Under that potential classification, drivers would not see full employment benefits, though they would be provided with some health benefits.

The news of California’s lawsuit comes as Uber announced it was laying off 3,700 people on Wednesday, roughly 14% of its jobs. Additionally, Khosrowshahi has pledged to waive his base salary for the rest of the year.

That’s also on top of Lyft last week saying that it was cutting 17% jobs, putting hundreds of workers on unpaid furloughs, and trimming salaries.

See what others are saying: (The New York Times) (CNN) (NPR)

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Instagram Testing New Tools To Verify Users Are Over 18

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The new tools include AI software that analyzes video footage of a person’s face to verify their age.


Instagram Cracks Down on Underage Users

Instagram is testing new features in the United States to verify the age of users who claim to be over 18 years old. 

According to a statement from Instagram’s parent company, Meta, the tools will only apply to users who seek to change their age from under 18 to over 18. The platform previously asked for users to upload their ID for verification in this process, but on Thursday, it announced there will be two new methods for confirming age. 

One of the strategies was referred to as “social vouching.” Using this option, people can request that three mutual Instagram followers over the age of 18 confirm their age on the platform.

The other method allows users to upload a video selfie of themselves to be analyzed by Yoti, third-party age verification software. Yoti then estimates a person’s age based on their facial features, sends that estimate to Meta, and both companies delete the recording. 

According to Meta, Yoti cannot recognize or identify a face based on the recording and only looks at the pixels to determine an age. Meta said that Yoti “is the leading age verification provider for several industries around the world,” as it has been used and promoted by social media companies and governmental organizations. 

Still, some question how effective it will be for this specific use. According to The Verge, while the software does have a high accuracy rate among certain age groups and demographics, data also shows it is less precise for female faces and faces with darker skin tones. 

Issues With Kids on Instagram

Meta argues that it is important for Instagram to be able to discern who is and is not 18, as it impacts what version of the app users have access to.

“We’re testing this so we can make sure teens and adults are in the right experience for their age group,” the company’s statement said. 

“When we know if someone is a teen (13-17), we provide them with age-appropriate experiences like defaulting them into private accounts, preventing unwanted contact from adults they don’t know and limiting the options advertisers have to reach them with ads,” it continued. 

These changes come as Instagram has been facing increased pressure to address the way its app impacts younger users. 

Only children 13 and older are allowed to have Instagram accounts, but the service has faced criticism for not doing enough to enforce this. A 2021 survey of high school students found that nearly half of the respondents had created a social media account of some kind before they were 13.

The company also recently came under fire after The Wall Street Journal published internal Meta documents revealing that the company knew that it harmed teens, including by worsening body image issues for young girls and women.

See what others are saying: (The Verge) (The Wall Street Journal) (Axios)

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Elon Musk Threatens to Fire Employees Unless They Work in Person Full-Time

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The world’s richest man in the world previously suggested that the popularity of remote work has “tricked people into thinking that you don’t actually need to work hard.”


“If You Don’t Show up, We Will Assume You Have Resigned”

On Wednesday, Electrek published two leaked emails apparently sent from Elon Musk to Tesla’s executive staff threatening to fire them if they don’t return to work in person.

“Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla,” he wrote. “This is less than we ask of factory workers.”

“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he continued.

Musk then clarified that the “office” must be a main office, not a “remote branch office unrelated to the job duties.”

“There are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while,” he wrote in the second email.

Later on Wednesday, a Twitter user asked Musk to comment on the idea that coming into work is an antiquated concept.

He replied, “They should pretend to work somewhere else.”

The Billionaire Pushes People to Work Harder

Musk has a history of pressuring his employees and criticizing them for not working hard enough.

“All the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound,” he tweeted last month.

Three economists told Insider that remote work during the pandemic did not damage productivity.

“Most of the evidence shows that productivity has increased while people stayed at home,” Natacha Postel-Vinay, an economic and financial historian at the London School of Economics, told the outlet.

Musk is notorious for criticizing lockdown mandates and went so far as to call them “fascist” during a Tesla earnings call in April 2020.

Not long before that, Tesla announced that it would keep its Fremont, California plant open in defiance of shelter-in-place orders across the state.

In an interview with The Financial Times last month, Musk blasted American workers for trying to stay home, comparing them to their Chinese counterparts whom he said work harder.

“They won’t just be burning the midnight oil. They will be burning the 3 a.m. oil,” he said. “They won’t even leave the factory type of thing, whereas in America people are trying to avoid going to work at all.”

That same day, Fortune published an article detailing how Tesla workers in Shanghai work 12-hour shifts, six days out of the week, sometimes sleeping on the factory floor.

See what others are saying: (CNBC) (Electrek) (Business Insider)

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Apple Raises Worker Pay as Unions Gain Ground

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The company’s vice president of people and retail was caught trying to dissuade employees from unionizing in a leaked video.


Labor Squeezes Apple into Submission

Apple announced Wednesday that its U.S. corporate and retail employees will see a pay increase later this year, with starting wages bumped from $20 per hour to $22, though stores in certain regions may get more depending on market conditions.

Starting salaries are also expected to increase.

“Supporting and retaining the best team members in the world enables us to deliver the best, most innovative, products and services for our customers,” an Apple spokesman said in a statement. “This year as part of our annual performance review process, we’re increasing our overall compensation budget.”

Some workers were told their annual reviews would be moved up three months and that their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. Furthermore, they were told the increased compensation budget would be in addition to pay increases and special awards already received within the past year.

Feeling squeezed by low unemployment and high inflation, tech companies like Google, Amazon, and Microsoft have changed their compensation structures in recent weeks to pay workers more, and Apple is the latest to bend to market pressure.

Unions Gaining Traction

On Wednesday, The Verge received a leaked video of Apple’s vice president of people and retail, Deirdre O’Brien, explicitly dissuading employees from unionizing.

“I worry about what it would mean to put another organization in the middle of our relationship,” she said. “An organization that does not have a deep understanding of Apple or our business. And most importantly one that I do not believe shares our commitment to you.”

She vocalized more anti-union talking points, like the idea that the company will not be able to make important decisions as quickly with a collective bargaining agreement.

O’Brien has been personally visiting retail stores over the past few weeks in an apparent bid to combat budding union activity.

Apple stores in three locations — New York, Georgia, and Maryland — are currently pushing to unionize, with the latter two set to vote in elections on June 2 and 15, respectively. In response to these efforts, Apple has hired anti-union lawyers, given managers anti-union scripts, and held anti-union captive audience meetings.

In the United States, unionized workers make about 13.2% more than non-unionized workers in the same sector, according to the Economic Policy Institute.

As of Wednesday, Apple’s shares had fallen 21% since the start of the year, but sales grew 34% last year to almost $300 billion.

See what others are saying: (The Wall Street Journal) (CNBC) (The Verge)

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