California Judge Questions Lyft’s Refusal to Pay Drivers as Employees

Lyft Inc.’s practice of treating drivers as independent contractors was questioned by a federal judge who said that under California law they may be considered employees who would qualify for minimum wage and other benefits.

A lawsuit by Lyft drivers and a similar case against Uber Technologies Inc. challenges the business model used throughout the U.S. by car services that provide drivers with applications on mobile phones to pick up riders.

The drivers contend in the complaints that they’re employees entitled to minimum wage, reimbursement for expenses, overtime and other benefits. At a hearing on Jan. 28 in San Francisco federal court, U.S. Judge Vince Chhabria pointed to court rulings in California finding that delivery service drivers and other workers employed under similar conditions as Lyft drivers were employees, not contractors.

While the judge said that categorizing employees using historical job descriptions and definitions is “woefully outdated” and doesn’t take into account how technology has changed how workers do their jobs, Chhabria told Lyft’s lawyers “you stuck your head in the sand” when it comes to how courts in the most populous U.S. state have defined employees.

“Those cases point to the conclusion” that under state law, workers who do the kind of thing that Lyft drivers do here are employees, Chhabria said, adding that he has to follow the law established in earlier cases. He didn’t say when he will rule.

A different federal judge in San Francisco is scheduled to hear arguments tomorrow in a similar case against Uber.

Representatives of Lyft and Uber didn’t immediately respond to requests for comment on the lawsuits.

The cases are Cotter v. Lyft, 13-4065, and O’Connor v. Uber, 13-3826, U.S. District Court, Northern District of California (San Francisco).