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

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3 weeks ago

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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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Customers Have Mixed Opinions About COVID-19 Surcharges

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2 weeks ago

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May 15, 2020

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  • Customers have begun noticing “COVID-19 surcharges” on their bills at some restaurants across the U.S.
  • Those outraged by the fees have been calling and harassing restaurants that are adding them, meanwhile, others argue that it’s a small price to pay to help keep these businesses open. 
  • Business owners have said the temporary fees are adjusted weekly to help cover the increased costs of meat, protective gear, and take-out packaging. 
  • They have also stressed that they are not trying to “get rich” off these charges but are just trying to take care of their staff and businesses during the pandemic.

Negative Reactions to Surcharges 

Several customers across the country have noted a coronavirus “surcharge” attached to the bottom of their restaurant bills, prompting a flood of different reactions online.

A $2.19 charge spotted at a restaurant in Missouri sparked a ton of frustration. “Scuse me … what? A covid surcharge…?” a woman posted on Twitter after she found the viral photo online and shared it.

That was met with loads of comments from users saying they would never pay such a charge, while others called it a small price to pay to help support the business.  

Billy Yuzar, the owner and manager of the Japanese steakhouse and sushi lounge, told Fox News that the surcharge was advertised online, as well on the store’s front door and register. He also added that he hadn’t heard any complaints from customers but was bombarded with negative reviews from people who haven’t ever visited his establishment. 

The restaurant eventually took to Facebook to defend itself after employees began facing harassment over the photo. “Please understand we are not doing this to take advantage of you guys!” it said.

“We are doing this hoping we can adjust the surcharge weekly rather than just raise all of our prices on our menu due to increase prices from our supplier on meat, poultry, seafood & produce.”

The restaurant also noted that businesses in the community, which use the same suppliers,  were also adding similar fees. “So why are we the one that [is] being harassed??!! Stop calling names to my employees!!” the post continued.  

In the end, the restaurant apologized, saying it will remove the charge and instead increase prices. It also linked out a CNBC report about changes in the meat supply chain related to the pandemic.

It is true that other restaurants in the area have implemented similar policies. Bootleggers BBQ, another West Plains restaurant, announced it was adding a 5% charge starting on May 8, and customers were initially supportive.

However, the restaurant was later met with several calls and messages accusing it of ripping off customers. “Sadly, these calls were from people out of our area and mostly out of state, not even our customers,” the owner Brian Stacck told NBC’s TODAY.

It too eventually decided to increase prices and remove certain items from its menu in place of the surcharge, promising to print new menus at least once a week to reflect its current limitations and changes. 

Staack told TODAY, “I have 26 employees that we have managed to keep at the same hours, or more, throughout this.”

“All I was trying to do was cover our added food cost and keep them working. But people who wouldn’t take the time to listen to me on the phone, or read our explanation on Facebook, would rather make threats.”

Not Just in Missouri, Not Just Restaurant 

Though most of the reported outrage seems to be coming from Missouri, there are other businesses across the country that have been implementing the fees and price increased for coronavirus related circumstances. 

In San Diego, one Mexican restaurant added a $1 extra charge for carne asada due to meat shortages.

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Covid carne asada surcharge: $1.

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A Texas BBQ joint also noted a price increase for brisket until the “market stabilizes.” 

And it doesn’t just end with restaurants. A dentist’s office in Jacksonville Florida reportedly started charging an extra $10 per appointment to cover personal protective equipment. Meanwhile, in Texas, some hair salons have started adding a $3 sanitation charge, according to KTRK-TV Huston. 

While many might be upset by these extra charges, they are legal, according to Gregory Frank, a New York City-based attorney.

“Generally, restaurants are allowed to structure their pricing however they like,” Frank told TODAY. “The important question is whether the restaurants are disclosing to consumers what they are paying before they pay it, so they can make their own informed choices.”

It’s also important to note that the cost of adjusting and reprinting menus might not make the most economic sense for every restaurant, especially if it hopes that the increased prices will only be short term. 

By adding the added fee to the final sale, Frank says business can also make customers feel more comfortable because they’ll know the temporary charge is related to the current circumstances. 

Positive Reactions to Surcharges 

Still, not every business has faced as much hate for their surcharges. At Goog’s Pub & Grub in Holland, Michigan, the response to surcharges was much more positive.

The store’s general manager and co-owner Palmer White told The Daily News Thursday that it recently increased prices by $1 per order from 86 cents before. “We’ve received overwhelming support. People have been very understanding,” White said.

Like at other businesses, this change is in response to increase meat prices, but its also aimed at covering the large amount of packaging take out orders require. 

“Takeout averages about 82 cents more per meal just to put that meal out cause you’re not just putting it on a plate or tray and washing that again. It’s the silverware, the boxes,” the pub’s other co-owner, Brad White, told Fox 17. 

“When this started, we were running about $50 for a case of burgers and then it was up to $55, $62, $66, $72 last week and they just told me next week it’ll probably be up to $88 a case, so almost double what we were paying.”

The pub also noted that it had given its remaining servers raises “so they can maintain a consistent income.” 

“They’re still getting tips. Actually, we’ve been blown away by people’s generosity. But tips are based on percentages, and sales just aren’t as high without all the alcohol and desserts,” Palmer added. “We’re trying to make sure they’re being taken care of.”

Both have said they plan to remove the extra charge once the damage from the virus settles.

“We’re not doing this to get rich,” said Palmer. “We just want to see our staff is taken care of, make sure people are fed, make sure our lights are on.“

See what others are saying: (The Daily News) (Fox News) (TODAY) 

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Red Lobster Apologizes After Long Mother’s Day Wait Times and Viral Brawl

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2 weeks ago

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May 13, 2020

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  • Several Red Lobster locations were overwhelmed with orders on Mother’s Day, causing crowds of people to wait up to three hours for their food. 
  • One Pennsylvania store had to shut its doors and police were called to keep angry customers calm. 
  • At another restaurant in the state, a woman demanding a refund sparked a physical fight with employees who were forcing her out of the building. 
  • Red Lobster apologized for the delays and promised to issue refunds to those who did not receive orders. It also said it expects both customers and staff to treat each other with respect. 

Long Waits at Red Lobster 

Apparently Red Lobster was the restaurant of choice on Mother’s day because images shared on social media showed massive lines of people waiting to pick up orders at several different locations. 

Many customers reported waiting between two to three hours for their orders while others walked away empty-handed and asked for refunds. 

Though there were angry diners at restaurants in New York, Illinois, and other areas, Pennsylvanians seemed to be the angriest of them all. At one location in the state, police were even called to try and keep things calm after the restaurant decided it had to shut down. 

Viral Video 

As you might have already seen online, a woman at one East York restaurant became so angry that she sparked a pretty violent incident with staff. 

“Call 911 somebody,” a person can be heard saying at the opening of the video. “Get Out!” a store employee repeatedly yells as she forces the angry customer out of the building. 

The woman continues to try and push her way in, demanding a refund. “Get my mother fucking money back,” she shouts and a worker responds “you will get it.”  

“Get this bitch off me,” the customer yells.

Employees start talking about finding the key to lock the door as she continues to demand a refund. At this point, there are several workers at the front trying to keep for entering. When they tell her that all they need is her name to process the refund, she shouts “Kathy Hill,” which, sidenote, has just made it even easier for people on the internet to start doxing her. 

The customer starts asking when exactly she’ll get her refund and the staff continues to tell her they won’t let her in. One employee says “no, you gotta go,” then seems to nudge her away from the door and try to close it. 

So then Karen, I mean Kathy, escalates things even further when she smacks that employee in the face. The employee starts fighting back and others step in to try and separate them. 

Once the fight breaks up, Kathy somehow feels confident enough to say, “I was assaulted and I have a whole crowd to see it.” 

That, of course, prompted a bunch of voices to respond with, “You hit her first! ”

“She’s been shoving up on me the whole time! Who has my glasses!?” she shouts back. She’s given her glasses back as all the employees are ordered inside and the door close. 

“A paying customer. You got people out here waiting for three hours for food!” someone off-camera shouts at the end of the video.  

Red Lobster Apologizes

Under Pennsylvania Governor Tom Wolf’s orders, restaurants in the state must either remain closed or operate with a take-out or delivery system to minimize social contact during the pandemic. 

Obviously, that isn’t going so well at some Red Lobster locations, so naturally, people have been demanding refunds and an explanation. 

Red Lober’s CEO issued a statement on Tuesday apologizing to disappointed customers. He noted that the chain had received significantly more orders than they’ve gotten on a single day and were unable to keep up. 

He also stressed that Red Lobster was working to make sure this never happens again. 

In another statement to local news outlets, a company spokesperson attributed the issues to operational and staffing changes as a result of the coronavirus pandemic. 

As far as the brawl at the East York restaurant, the company said: “We do not tolerate violence for any reason in our restaurants. We expect our team members treat our guests with respect, and we expect our guests to treat our team members with respect in return. We are grateful our Manager and the guest involved were not seriously injured in the incident on Sunday.”

So circumstances related to the coronavirus paired with the holiday rush lead to these insane situations, but still, many on social media are reminding people not to take their frustrations out on employees. Of course, we can’t see what exactly led up to the viral fight, but the majority of social media users seem to be taking the employees’ side.

One Red Lobster employee even took to Twitter to share what it was like to work for the chain on Mother’s day.

See what others are saying: (PennLive) (Fox Business) (Market Watch)

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Tesla Sues California County Over Factory Closure, Starts Production Without Approval

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3 weeks ago

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May 11, 2020

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  • Tesla is suing Alameda County in an effort to resume operation at its Fremont factory, claiming that it is considered “national critical infrastructure” and should be able to restart under the governor’s guidance for reopening some businesses with safety modifications.  
  • Musk even threatened to move Tesla’s headquarters out of California, noting that it is the last major carmaker in the state as well as one of it’s largest manufacturing employers.
  • Though a move would be costly and difficult, some believe the tensions could further push Musk to look elsewhere for the manufacturing of other projects.  
  • Fremont’s Mayor urged the county to work with businesses trying to reopen after expressing concern about the potential implications for the regional economy. The county says it is communicating with Tesla and hopes to reach an agreement soon, but Tesla has already started ordering employees back to work.  

Musk Threatens To Move Tesla HQ 

Tesla has filed a lawsuit against Alameda County in Califonia, arguing that its Fremont factory should be allowed to operate during the coronavirus pandemic under the governor’s new guidance for reopening some businesses. 

The factory has been shut since March 23, after the county called for its closure as part of social distancing measures and stay-at-home orders, but the company has been pushing to resume production.

Then on Thursday, Gov. Gavin Newsom announced that he is allowing for sectors like retail, manufacturing, and logistics to reopen with “modifications that reduce risk,” however, he stressed that local officials still have the authority to speed up or slow down reopening at the county level. 

On Saturday, Tesla CEO Elon Musk expressed frustration about local resistance Tesla has faced.

“Tesla is filing a lawsuit against Alameda County immediately,” Musk announced in a tweet. “The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!”

Musk even threatened to move Tesla’s headquarters to Texas or Nevada as a result of the shutdown.

Musk’s frustration seems to have been building because late last month, he ranted about stay-home orders in the company’s April 29 first-quarter earnings call. In it, he called the restrictions fascist and a violation of people’s constitutional rights. 

Tesla Releases Blogpost Explaining Lawsuit and Restart Plans

The same day Musk tweeted his threat, Tesla released a blog post about how it will get it’s employees back to work safely. In the post, the company noted that it is the last major carmaker in the state as well as one of it’s largest manufacturing employers with more than 10,000 workers at its Fremont factory and 20,000 statewide. 

Tesla again argued that its Fremont plant should be allowed to reopen under Newsom’s recent guidelines, but it also said it should have always had permission to continue production because the state and federal government classifies vehicle manufacturing as “national critical infrastructure.”

It company even noted that, “Alameda county, where our factory resides, and Santa Clara County next door, have stated in their return to work order FAQs that the manufacturing of distributed energy resources (which is defined in state law to include electric vehicles, solar and battery storage) is permitted to resume.”

Along with these points, the company explained that it has worked hard on a “robust” restart plan, saying, “It was modeled after the comprehensive return to work plan we established at our Shanghai Gigafactory, which has seen smooth and healthy operations for the last three months.”

“Contrary to the Governor’s recent guidance and support from the City of Fremont, Alameda County is insisting we should not resume operations,” Tesla’s leadership added in the post. 

“This is not for lack of trying or transparency since we have met with and collaborated on our restart plans with the Alameda County Health Care Services Agency.” 

The company claims that the County Public Health Officer making decisions about reopening has not returned its calls and emails listing out detailed restart plans, factory layouts, and more. 

“We will continue to put people back to work in a safe and responsible manner. However, the County’s position left us no choice but to take legal action to ensure that Tesla and its employees can get back to work,” it said before noting that it is asking the court to render the shutdown order invalid.

Alameda County Responds  

Fremont Mayor Lili Mei responded to Tesla Saturday afternoon saying, “As the local shelter-in-place order continues without provisions for major manufacturing activity, such as Tesla, to resume, I am growing concerned about the potential implications for our regional economy.”

“We know many essential businesses have proven they can successfully operate using strict safety and social distancing practices. I strongly believe these same practices could be possible for other manufacturing businesses, especially those that are so critical to our employment base.”

She then encouraged the county to work with local businesses to reopen with acceptable guidelines.

Shortly after, Alameda County’s Health Department released a statement saying it has been working with Tesla to develop a safety plan allowing the Fremont plant to reopen while protecting workers. 

“This has been a collaborative, good faith effort to develop and implement a safety plan that allows for reopening while protecting the health and well-being of the thousands of employees who travel to and from work at Tesla’s factory,” the county said.

“We look forward to coming to an agreement on an appropriate safety plan very soon.″

However, it stressed that “It is our collective responsibility to move through the phases of reopening and loosening the restrictions of the shelter-in-place order in the safest way possible, guided by data and science.”

Scott Haggerty, supervisor for the Fremont district of Alameda County, told the New York Times on Saturday, “We were working on a lot of policies and procedures to help operate that plant and quite frankly, I think Tesla did a pretty good job, and that’s why I had it to the point where on May 18, Tesla would have opened.”

“I know Elon knew that. But he wanted it this week,” he added.

Criticism and Support 

It seems like Tesla could be getting the green light it was hoping for, though it’s unclear when. However, Tesla apparently isn’t waiting for approval. According to a report from The Verge, some employees were called back to work at the facility over the weekend and others are scheduled to report to work later this week.

Then on Monday, Musk acknowledged that he was restarting against orders.

Still, some lawmakers don’t seem to happy about Tesla’s attempts to reopen. California State Assemblywoman Lorena Gonzalez (D-San Diego) added fuel to the flames after Musk’s threat when she tweeted, “F—- Elon Musk.”

“California has highly subsidized a company that has always disregarded worker safety & well-being, has engaged in union busting & bullies public servants,” wrote Gonzalez in a follow-up tweet on Sunday. “I probably could’ve expressed my frustration in a less aggressive way. Of course, no one would’ve cared if I tweeted that.”

On the other hand, Tesla has seen some support from those like U.S. Treasury Secretary Steven Mnuchin. Mnuchin backed Musk on Monday, telling CNBC that California should help Tesla reopen its plant.

“I agree with Elon Musk. He’s one of the biggest employers and manufacturers in California, and California should prioritize doing whatever they need to do to solve those health issues so that he can open quickly and safely,” Mnuchin said on “Squawk on the Street.”

“They’re going to find that if he’s threatened he’s going to move his production to a different state,” Mnuchin added.

As some have pointed out, moving Tesla’s headquarters, especially during the pandemic, would be a difficult and costly move for the company.

“Moving away from Fremont would take at least 12 to 18 months and could add risk to the manufacturing and logistics process in the meantime,” Wedbush Securities analyst Daniel Ives wrote in a note to investors.

However, Musk has previously hinted that he’s eyeing other places to build his Cybertrucks and expand production of his Model Y crossover, so some believe Musk’s frustrations with the state and county could further push him to launch more operations elsewhere.

The lawsuits come as competing automakers are gradually starting to reopen factories in the U.S. Toyota will restart production on Monday, while General Motors, Ford, and Fiat Chrysler all plan to restart their plants gradually on May 18. 

See what others are saying: (Huffington Post) (Axios) (CNBC) 

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