Tech

California AG says judge recognized Uber and Lyft's 'bogus argument' that drivers prefer independence

Key Points
  • The California judge who ordered Uber and Lyft to begin classifying drivers as employees recognized the "bogus argument" that drivers prefer being independent workers, said California Attorney General Xavier Becerra.
  • Becerra and three California city attorneys sued Uber and Lyft this year, alleging they broke California's new law that aims to secure benefits for gig workers by classifying them as employees.
  • A judge granted a preliminary injunction Monday, requiring Uber and Lyft to classify their drivers as employees within 10 days. The companies said they would appeal.
California Attorney General, Xavier Becerra.
Mandel Ngan | AFP | Getty Images

The California judge who ordered Uber and Lyft to begin classifying drivers as employees "saw straight through" the companies' "bogus argument" that drivers prefer the flexibility of being independent workers, according to California Attorney General Xavier Becerra, who brought the lawsuit against the ridesharing companies.

In an interview with CNBC's "Squawk Alley" on Tuesday, Becerra agreed with the prior day's decisioin. On Monday, a judge granted a preliminary injunction requiring the companies to reclassify their workers as employees within 10 days.

"What worker doesn't want to have access to paid sick leave?" Becerra said. "What worker doesn't want to have unemployment insurance at a time of Covid-19 crisis? What worker doesn't want to know that they'll get paid for overtime if they work 60 hours in a week or 12 hours in a day?"

Becerra and three California city attorneys alleged Uber and Lyft broke California's new law, Assembly Bill 5, which aimed to secure benefits for gig workers by classifying them as employees. Both companies said Monday they would appeal the court's ruling.

Uber and Lyft's framing of worker classification as a trade-off between flexibility and benefits is a "false choice," Becerra said in the interview.

"You don't have to give up those rights and those benefits to have flexibility," he said. "There's nothing in California law that requires a company to remove flexibility in order for these people to be classified as employees and get those rights."

An Uber spokesperson objected to that argument in a statement Tuesday.

VIDEO1:5401:54
Uber and Lyft respond to California injunction ruling

"It is illogical to presume that if Uber were required to classify drivers as employees, we would not also be forced to set up the exact same structures, like mandatory pre-scheduled shifts, as every other company that depends on an hourly workforce," the spokesperson said. "This is why in nearly every survey over the last decade, gig workers have consistently said they prefer to be independent. And contrary to what the Attorney General said this morning, we don't think what drivers actually want is a 'bogus argument.'"

Lyft did not immediately respond to a request for comment.

Uber CEO Dara Khosrowshahi has recently advocated for what he calls a "third way" to classify workers, allowing them to opt for the flexibility of independent work while having access to benefits commensurate with the amount of time they work. In a New York Times op-ed on Monday, Khosrowshahi suggested companies could pay into a fund that could be used by workers for paid time off or health insurance.

Becerra characterized the push as a convenient policy position for a company that has consistently opposed reclassifying its workers as employees.

"Why is it that it takes more than 10 years and a lawsuit for two innovative companies to come up with a new idea on how to provide their employees with the benefits that they're entitled to?" Becerra said. "There's nothing that's stopping Uber and Lyft from providing these benefits right now."

The way Uber and Lyft classify workers has become an even bigger subject of debate during the pandemic. With ridership down, many drivers who typically earn substantial income from the apps were left without a safety net. Though they were ultimately covered by unemployment benefits for independent workers granted in the CARES Act, Becerra said taxpayers should not be required to foot the bill for unemployment insurance he believes Uber and Lyft should have helped cover for their drivers.

Becerra said he wasn't concerned about the potential for Uber or Lyft to leave the state if forced to pay their drivers as employees.

"Any business model that relies on short-changing workers in order to make it probably shouldn't be anywhere, whether California or otherwise," he said.

Subscribe to CNBC on YouTube.

WATCH: Delivery workers are risking their lives to bring people groceries during coronavirus

VIDEO13:0513:05
What it's like to be a delivery worker during the coronavirus pandemic