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City’s Uber and Lyft IC misclassification probe comes after court ruling

San Francisco’s city attorney subpoenaed records from Uber and Lyft in a bid to determine whether they are misclassifying drivers as independent contractors. The move follows a decision by the California Supreme Court in April that made it more difficult to classify workers as independent contractors.

In its decision, the court adopted the “ABC” test [1] for determining whether workers are independent contractors.

“The California Supreme Court has spoken on the definition of ‘employee’ in a way that directly affects San Francisco’s worker protection laws, including our Minimum Wage Ordinance and Health Care Security Ordinance,” San Francisco City Attorney Dennis Herrera said in a statement.

“We don’t know whether these ride-hailing companies are breaking the law until they provide the information we seek in these subpoenas,” Herrera continued. “We are going to ensure that these companies comply with the Supreme Court’s ruling and with San Francisco’s laws.”

The subpoenas were filed on May 29, and the City Attorney’s office said they seek:

“The argument that these companies have tried to use in the past — that they’re just a technology platform — doesn’t pass the smell test,” Herrera said. “People go to Microsoft or Salesforce for software. People go to Uber or Lyft for a ride.”

Both Uber and Lyft are based in San Francisco.

However, the California Supreme Court’s decision has come under fire from business groups, including the US Chamber of Commerce, which filed an amicus letter [2] calling for the court to grant a rehearing that the ABC test does not apply retroactively.

“The court’s decision to adopt the ABC test is a clear break from prior California law, which for decades has determined independent contractor status under a markedly different standard,” according to the letter. “Giving the decision retroactive effect would threaten businesses’ due process rights by putting thousands of businesses at risk for significant liability for past actions they made in good faith compliance with long-standing California law under circumstances where they had no reason to expect their arrangements with California workers would be subject to Massachusetts’s ABC test.”

Meanwhile, the Western States Trucking Association said it plans to challenge [3] the Supreme Court ruling, which it says will effectively end the use of trucking owner-operators in the state.

While this happens in California and San Francisco, concerns over drivers have cropped up elsewhere. Seattle passed a law allowing drivers to organize with unions, although the law is currently facing legal headwinds [4].

In other independent contractor news: