Uber, Lyft could owe CA $413M, UC Berkeley study finds

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Leonie Leonida/Senior Staff

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A study released Thursday by the UC Berkeley Center for Labor Research and Education found that $413 million in additional funding could be in California’s Unemployment Insurance Fund if Lyft and Uber classified their drivers as employees from 2014 to 2019.

The study alleges that Uber and Lyft misclassified their drivers as independent contractors, which are not employees of the companies, days after the state attorney general filed a lawsuit against the companies. Companies are legally obligated to pay a percentage of payroll into the state and federal tax funds, which Lyft and Uber have not had to do for their drivers’ incomes.

In a statement, Lyft questioned the study’s validity, the UC Berkeley Labor Center’s motives and the outcome of the study. Uber was contacted for comment but did not respond as of press time.

“This is especially important at a time when a large share of drivers have lost work as a result of the COVID-19 crisis,” said Ken Jacobs, UC Berkeley Labor Center chair and co-author of the study, in an email. “Workers’ compensation insurance protects workers if they become sick or are injured on the job.”

Because unemployment insurance funding is collected on the first $7,000 each employee makes, the researchers used existing literature to estimate the number of Lyft and Uber drivers making more than $7,000 and the number of those making less, according to Jacobs.

Stacey Wells, spokesperson for the Protect App-Based Drivers and Services coalition, also questioned the motives of the study and the UC Berkeley Labor Center.

“This latest flawed ‘study’ further demonstrates the Berkeley Labor Center’s well documented lack of academic rigor and misguided advocacy of policies that would ultimately take away Californians’ ability to choose to work as independent contractors,” Wells alleged in an email. “They use faulty assumptions to draw faulty conclusions.”

Jacobs, however, maintains that the study has a “solid” research methodology that “stands on its own.”

On Tuesday, California Attorney General Xavier Becerra and city attorneys across the state sued Lyft and Uber for allegedly “misclassifying” their drivers as independent contractors pursuant to the 2019 AB 5.

Lyft and Uber’s classification of these workers prevents them from qualifying for the benefits of unemployment insurance, according to a press release from the attorney general’s office.

“Sometimes, it takes a pandemic to shake us into realizing what that really means and who suffers the consequences,” Becerra said in the press release. “It’s not just these workers who lose. American taxpayers end up having to help carry the load that Uber and Lyft don’t want to accept.”

Contact Robson Swift at [email protected] and follow him on Twitter at @swift_robson.