Court of Appeal unanimously denies Uber and Lyft attempt to evade driver misclassification suit

Uber and Lyft unsuccessfully argued that individual driver arbitration agreements should prevent governments from seeking relief for illegal worker misclassification

SAN FRANCISCO (October 2, 2023) — City Attorney David Chiu issued a statement today after the First District Court of Appeal affirmed a lower court decision denying Uber and Lyft’s motion to force San Francisco and other public sector Plaintiffs into arbitration in the lawsuit against the rideshare companies for misclassifying their drivers and denying them the wages and benefits afforded to employees.

City Attorney David Chiu speaks at a press conference in June 2022

“Uber and Lyft have gone to great lengths to avoid paying workers what they are owed,” said City Attorney David Chiu. “We are glad the Court saw through Uber and Lyft’s flawed argument and shut down yet another attempt to shirk accountability. This victory will allow us to get to the heart of this case, which is the inconvenient fact that, for years, Uber and Lyft denied their drivers basic workplace protections, such as minimum wage and sick leave, and illegally shifted that burden onto taxpayers.”

In 2020, the San Francisco, Los Angeles, and San Diego City Attorneys, and the California Attorney General’s Office brought a lawsuit on behalf of the People of the State of California against Uber and Lyft. The People’s lawsuit alleges Uber and Lyft violated California’s Unfair Competition Law by misclassifying their drivers as independent contractors and denying them the wages and benefits owed to employees. This misclassification harms workers, other law-abiding competitors, and the public at large.

Uber and Lyft require their drivers to enter into arbitration agreements, which obligates drivers to arbitrate most disputes they have with the rideshare companies. Uber and Lyft sought to force the People’s lawsuit into arbitration, arguing that remedies due to drivers, such as reimbursements for business expenses and unpaid wages, should be covered by the individual driver arbitration agreements.

However, the trial court and now the Court of Appeal reached the obvious conclusion: “the People… are not bound by arbitration agreements they did not enter.” On September 1, 2022, the trial court denied Uber and Lyft’s motions. The companies appealed that decision, and the Court of Appeal unanimously affirmed the trial court decision last week.

The People’s lawsuit along with several other similar cases were coordinated and consolidated into Uber Technologies Wage and Hour Cases. A copy of the Court of Appeal’s decision is available here. A copy of the People’s operative complaint is available here.