San Francisco-based ridesharing company Lyft faces a class-action lawsuit in New Jersey due to driver complaints they have not been properly compensated. The suit alleges Lyft violates state labor laws in how it classifies drivers. The complaint was filed in the U.S. District Court in New Jersey on November 21, 2019.
Minimum Wage, Overtime and Expenses
The lawsuit contends that Lyft has failed to pay its drivers minimum wage, overtime or business expense reimbursement. The state has organized a task force appointed by Gov. Phil Murphy that has determined Lyft has underpaid drivers by over $462 million in wages. Another report has indicated that competing rideshare service Uber has also underpaid drivers by millions of dollars.
New Jersey driver Renier Gonzalez, who has worked for Lyft since October 2017, was paid $1,068.80 in 2017, according to the suit, without expense reimbursement. This amount was in spite of 92 trips transporting passengers between New Jersey and New York City, covering about 763 miles. The fact that a good percentage of Lyft drivers regularly cross state lines means they are engaging in interstate commerce, which further complicates the relationship between the company and its drivers.
Pickup and destination locations for Reiner Gonzalez included airports and train stations, while out-of-pocket expenses included tolls, fuel, insurance and vehicle maintenance, totaling over $400. His net earnings of 660.63 fell far short of the state’s minimum wage of $10.00 per hour.
In 2018, a similar situation occurred with Gonzalez, who claims he drove 334 miles for Lyft and was paid $879.98. But his expenses of $178.81 were not reimbursed, according to the complaint.
Gig Economy Classification
Drivers allege that Lyft has intentionally misclassified their jobs to avoid paying them minimum wage, overtime and reimbursements. According to the attorney representing Gonzalez, Roosevelt N. Nesmith, Lyft is able to get away with minimum wage violations by intentionally misclassifying its drivers as independent contractors instead of employees. A Lyft spokesperson has stated that about 94 percent of the company’s drivers work less than 20 hours per week and consist of parents, retirees, students or others who need supplemental income and flexible schedules.
The aim of this class action lawsuit, according to Nesmith, is to make Lyft accountable to its drivers, who have turned the company into a multi-million dollar business.
The suit further claims the state has been cheated out of tax revenue. Meanwhile, California recently passed a law requiring Lyft and Uber to classify drivers as employees instead of independent contractors.