The legal issues against rideshare companies Uber and Lyft keep mounting in California, as we have discussed before on this blog.
Although Baker & Associates is not involved in these cases, the developments highlight critical issues of which employers must be aware. Many of the legal concerns began when California lawmakers passed Assembly Bill 5, which established new requirements for the classification of employees versus independent contractors.
However, new lawsuits now pose trouble for these companies as well.
New lawsuit added to others against large rideshare companies
Both Uber and Lyft are now facing a new lawsuit. Recently, the California Labor Commissioner filed a lawsuit claiming these companies engaged in wage theft.
These allegations of wage theft may relate to the legal matters over AB5 compliance, but the companies could face even more consequences. The Labor Commissioner aims to recover payment for misclassified drivers. The risk of repaying lost wages, as well as the legal penalties for wage theft, could be steep for these companies.
Employers beware: Wage theft claims cast a wide net
Most employers make sure they take great care when it comes to the financial aspects of their business – especially their income and wages. They know that even the smallest mistakes in finances can lead to serious legal issues.
However, employers must be especially careful to avoid wage theft claims. And according to the California Department of Industrial Relations, wage theft can encompass many actions, including but not limited to:
- Failing to reimburse employees for business costs;
- Not providing or allowing meal breaks or other required breaks;
- Failing to pay bonuses or promised vacation time;
- Deducting pay or paying workers less than minimum wage; and
- Taking employee tips.
It is even more important for employers to be conscious of these matters now, in the complex circumstances created by the COVID-19 pandemic. For example, employers must still reimburse employees for business expenses even if they are working remotely. Failing to do so could result in considerable financial penalties for the employer.
Maintain financial documentation
The best way employers can proactively protect themselves in these cases is to keep a detailed record of all financial matters. Many accounting and pay systems are automated nowadays, but employers should still ensure they keep track of all payments through these systems to mitigate the risks of potential legal claims.