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California lawsuits accusing ride-sharing services and Amazon.com of employee misclassification may reach the U.S. Supreme Court, but requiring such companies to provide workers compensation insurance and other employee benefits likely would not stop their growth, a legal expert says.
Lawsuits related to the “on-demand economy” can set national precedent because of the “global reach of these companies and the significance of the issue,” said Tad Devlin, a partner at law firm Kaufman Dolowich & Voluck L.L.P. in San Francisco.
Four drivers filed suit last month in Los Angeles County Superior Court against Seattle-based Amazon.com Inc., Glendale, California-based Scoobeez Inc., Pasadena, California-based ABT Holdings Inc. and up to 10 John Doe defendants, according to a complaint plaintiff attorneys provided to Business Insurance.
Amazon alleges that the online retailer and co-defendants failed to provide the drivers minimum wage and overtime pay as well as workers comp coverage while working for Amazon's Prime Now service.
Attorneys did not respond to requests for further comment.
Meanwhile, separate suits in U.S. District Court in San Francisco allege that Uber Technologies Inc. and Lyft Inc. misclassified drivers as independent contractors while failing to provide workers comp coverage and other benefits.
Amazon, Uber and Lyft theoretically would have to provide workers comp coverage to a larger-than-anticipated workforce if courts rule drivers are employees rather than independent contractors, Mr. Devlin said.
While that coverage would represent a significant added cost for those firms, Mr. Devlin said he believes the companies are “nimble” enough to pass the costs on to customers who he said will continue to use the services.
“They're not going anywhere. Everyone uses Uber from San Francisco to New York and beyond,” Mr. Devlin said.
Shannon Liss-Riordan, a plaintiff attorney in Uber and Lyft and a partner at Lichten & Liss-Riordan P.C. in Boston, said Uber, which has received class action status, is set for trial next June.
A hearing is scheduled Nov. 24 to determine the scope of the Uber plaintiff class, she said.
While the ride-sharing suits have focused attention on how “sharing economy” companies classify their employees, Ms. Liss-Riordan said she's litigated similar lawsuits in industries that include trucking firms, call centers, cleaning services and adult entertainment companies.
“Unfortunately, this is something that many companies in many different industries have done to try to save on labor costs is to call their workers independent contractors so they don't have to worry about wage protections and other employment laws,” Ms. Liss-Riordan said.
The companies being sued did not immediately respond to requests for comment.
A U.S. District Court ruling last week that granted Uber drivers class action status is no surprise in light of current law, which designates workers as either contractors or employees without acknowledging any ambiguity, observers say.