Law360, San Francisco (April 2, 2020, 8:55 PM EDT) -- Lyft is disregarding California law by misclassifying drivers as independent contractors, a California federal judge said Thursday over an emergency request to require the ride-hailing company to designate drivers as employees, which would make them eligible for sick pay. But he questioned whether drivers were using the COVID-19 pandemic "as a hook to get a court ruling."
"Lyft, under existing law, is obviously obligated to reclassify its drivers," said U.S. District Judge Vince Chhabria said at a video hearing, noting that California's recently enacted Assembly Bill 5, which makes it more difficult for employers to classify workers as independent contractors, clearly applies to companies like Lyft.
Judge Chhabria told the drivers seeking injunctive relief that while Lyft's disregard for the law matters a great deal, "it kind of seems like you are using this to get a court ruling that you haven't gotten yet."
The drivers' case was transferred from San Francisco Superior Court to the federal court in March after they sought an emergency motion for public injunctive relief, citing concerns that Lyft was putting drivers and the public at increased risk during the coronavirus pandemic by not providing workers paid sick leave, as required by state law.
Judge Chhabria told the drivers he's not sure this situation qualifies as a true emergency, given that Lyft ridership has dwindled to almost nothing, given that the majority of Lyft drivers haven't worked enough to accrue paid sick leave under state law, and given that the federal government has passed legislation providing COVID-19 relief benefits that apply to independent contractors.
"Is it fair to say you are using this as a hook to get a court ruling that Lyft needs to reclassify its drivers?" Judge Chhabria asked counsel for the drivers.
The drivers' counsel, Shannon Liss-Riordan of Lichten & Liss-Riordan PC, told the judge an emergency order is critical to safeguarding the drivers and the public during the pandemic, and that because Lyft is expanding its services to include delivering food and medical supplies, Lyft drivers remain on the road.
But Lyft's counsel insisted that the case be compelled to arbitration and said that hundreds of thousands of California residents would lose access to the new federal COVID-19 relief benefits if the judge granted the drivers' emergency request for injunctive relief.
Lyft's counsel, James Slaughter of Keker Van Nest & Peters LLP, told the judge that the emergency federal legislation provides "tremendous, tremendous benefit" to Lyft drivers and other workers who are self-employed.
Granting the injunction would result in "irreparable harm," Slaughter told the judge.
The Families First Coronavirus Response Act benefits are available for those who are self-employed, and if the injunction is granted, Lyft drivers would be entitled only to a couple of hundred dollars under state laws instead of thousands of dollars under federal law, Slaughter argued.
Liss-Riordan said "it is entirely speculative" that drivers' ability to get state law benefits would interfere with them getting federal benefits, arguing that drivers could be employees under state law and remain self-employed under federal law.
"That argument cannot possibly be right," Judge Chhabria told Liss-Riordan, seeking clarification.
Judge Chhabria also appeared to agree with Lyft's argument that the injunctive relief is a private injunctive relief, saying at one point during the hearing that it "seems fairly clear it's not a public injunctive relief."
Earlier this week, Lyft's competitor Uber found itself at a similar hearing before U.S. District Judge Edward Chen, in which Liss-Riordan argued for Uber drivers' emergency request for injunctive relief due to the pandemic.
The hearings on Lyft and Uber drivers' emergency motions for injunctive relief come roughly three months after California enacted A.B. 5, which codifies into law the landmark California Supreme Court decision in Dynamex Operations West Inc. v. Superior Court .
The California statute requires employers to prove, among other things, that the worker performs work outside the employer's main business.
Last week, a Massachusetts federal judge ruled that Lyft can't force its drivers there to arbitrate claims they are being misclassified, saying the workers are exempt from the Federal Arbitration Act.
Liss-Riordan told Law360 on Thursday that even though the California Supreme Court, Legislature, and governor all agree that misclassification has to stop, and that the Dynamex decision and AB-5 serve as strong protections, it's "outrageous and unbelievable how hard it has been — and continues to be — to get the courts to actually enforce this law."
"It is fabulous that a federal court has now said that Lyft (and implicitly other gig economy companies) is disregarding California law by not classifying their drivers as employees," Liss-Riordan said.
Liss-Riordan said both Lyft and Uber "are now drawing on federal resources (deficit spending, which taxpayers will ultimately have to pay) as an excuse to save themselves money. This should not be tolerated."
Judge Chhabria said he plans to get a ruling out sometime next week after he receives supplemental briefing from the parties.
Representatives for Lyft did not immediately respond to requests for comment Thursday.
Lyft is represented by R. James Slaughter and Rachael Elizabeth Meny of Keker Van Nest & Peters LLP.
Rogers is represented by Shannon Liss-Riordan and Anne R. Kramer of Lichten & Liss-Riordan PC.
The case is Rogers et al. v. Lyft Inc., case number 3:20-cv-01938, in the U.S. District Court for the Northern District of California.
--Editing by Bruce Goldman.
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