Pink-mustachioed ride-share firm Lyft is facing a federal class-action lawsuit from drivers who say they’re being misclassified as independent contractors and that the company improperly takes a cut of the “gratuity” passengers give drivers. Lyft is the second of the new wave ride-sharing services to face a class-action suit. Last month, a suit was filed against Uber, targeting the company’s policy on tips.
Lyft, Uber, Sidecar and other ride-share services argue that, unlike traditional cab companies with an employed labor force, their only products are apps, and their only function is to connect drivers to passengers. Drivers provide their own cars and gas, and their own insurance policies (though the ride-share services provide additional coverage for excess liability).
In its story on the Lyft lawsuit, filed in federal court in San Francisco, SF Weekly reports that plaintiffs argue drivers are company employees and should be protected by the California Labor Code. The story continues:
[The suit says] 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…
The suit demands $4.5 million in classwide damages, based on calculations that most drivers average $15 per tip, and Lyft filches 20 percent of that.
The plaintiffs and their S.F.-based lawyer, Matthew Carlson, are also seeking an estimated $2 million in derelict wage statements, and $4.5 million in mileage costs for the 1.5 million Lyft rides that have occurred so far.
Lyft described the legal action against the company as “without merit.” Uber dismissed the suit it’s facing as “frivolous.”
The ride-share industry has exploded in the last year. Uber alone now operates in 40 cities across the country. It recently raised $258 million in funding from Google Ventures and TPG Capital, valuing the company at $3.5 billion. It also hired away high-profile executives from Google, Facebook and Klout.
The California Public Utilities Commission proposed a set of rules for ride-share companies—insurance requirements, driver background checks and drug tests, among other proposals.. The CPUC also put ride-share companies under a new legal label: transportation network companies, or TNCs—not taxis. It is scheduled to vote on the proposal Sept. 19.