The “GIG Economy” once referred to a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. However, that description is out of date. Today, more and more people are turning to companies like Lyft or Grub Hub as their primary employment. Moreover, the GIG companies are exercising more and more control over those employees, which has greatly diminished the number of instances when the individual can properly be classified as an independent contractor.
With more and more GIG companies treating workers as employees rather than independent contractors, claims of unlawful wage and hour practices have skyrocketed.
In March 2018, the ride sharing company Lyft, Inc. (“Lyft”) agreed to pay $1.95 million to a class of nearly 246,000 drivers. The settlement class consists of any driver that provided at least one ride in California at peak busy times from August 2014 to April 2017, when the app had allegedly incentivized drivers to drive prime-time hours by telling customers the premium “goes entirely to your driver.” That turned out not to be true. Lyft was still taking a commission surcharge.
The preliminary approval papers submitted by the parties urged the court to approve the settlement as it resulted from arm’s-length negotiations between the parties. The settlement provides $10,000 as an incentive award for the named plaintiffs and up to $650,000 in attorney fees for class counsel. To receive a settlement payment, class members must submit a claim form and calculate the number of non-refunded commissions on prime-time rides they are eligible to receive back.
Many states, such as California, have very strict laws about deductions from employees’ pay. The California Labor Code also requires employers to provide employees with accurate wage statements.
It is suspected that as new GIG companies form, wage and hour violations will persist in the industry. The ever changing employment landscape continues to uncover new violations of state and federal wage and hour laws.
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