Lawsuit accuses Lyft of misclassifying drivers as independent contractors rather than employees
In a recent case, the California Court of Appeal directed a lower court to conduct further proceedings relating to a former Lyft driver’s representative PAGA claim but to compel the arbitration of his individual PAGA claim.
The plaintiff in the case of Seifu et al. v. Lyft, Inc. used to be a driver for Lyft, Inc. In July 2018, he sued Lyft on behalf of California and other Lyft drivers in the state. He claimed that Lyft misclassified its drivers as independent contractors instead of as employees and thus violated multiple provisions of California’s Labor Code. He requested civil penalties under the Private Attorneys General Act of 2004 (PAGA).
Lyft asked the trial court to compel arbitration of the plaintiff’s complaint and to put the court proceedings on pause until the arbitration was completed. Lyft cited the arbitration provision in its terms of service (TOS). The plaintiff had agreed to the TOS and had not opted out of the arbitration provision.
The arbitration provision included a PAGA waiver. Under the waiver, the parties agreed to give up their right to pursue representative PAGA claims in any court or in arbitration and agreed to resolve individual PAGA claims by arbitration.
The trial court denied Lyft’s petition to compel arbitration. It concluded that the PAGA waiver was unenforceable under California law. It relied upon the California case of Iskanian v. CLS Transportation Los Angeles, LLC (2014) to reach this decision. Lyft appealed.
In June 2021, the California Court of Appeal agreed with the trial court’s decision. Citing the Iskanian ruling, the appellate court said that an employment agreement compelling employees to waive representative PAGA claims was unenforceable since it was against public policy. Lyft took the case to the country’s highest court.
Last June, the U.S. Supreme Court ruled in Lyft’s favor. It returned the case to the appellate court so that it could reconsider the issues in light of the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022). The Viking River ruling allowed employers to enforce an employment agreement requiring arbitration of individual PAGA claims.
Lyft’s call for arbitration partly granted
The California Court of Appeal for the Second District reversed the trial court’s decision refusing to compel arbitration relating to the plaintiff’s individual PAGA claim but affirmed its treatment of his representative PAGA claim.
First, the trial court should compel the plaintiff to arbitrate his individual PAGA claim, the appellate court said. The plaintiff conceded that he should submit this claim to arbitration in line with the PAGA waiver, given the Viking River ruling.
However, the trial court should conduct further proceedings relating to the plaintiff’s representative PAGA claim and should decide whether this claim should be put on pause until completion of the arbitration, the appellate court said.
The appellate court found that the plaintiff had the standing to pursue the representative PAGA claim in court because he met the requirements in the California case of Kim v. Reins International California, Inc. (2020).
The plaintiff’s complaint alleged that Lyft committed Labor Code violations against him, as one of its former drivers. Thus, he counted as an “aggrieved employee” with the right to bring PAGA claims on behalf of himself and other employees, the appellate court explained.
The appellate court noted the following:
- The U.S. Supreme Court’s interpretation in its Viking River ruling relating to the PAGA, a California law, did not bind California courts
- California courts could decide the question of standing under the PAGA since it was an issue of state law
- Compelling a plaintiff’s individual PAGA claims to arbitration would not make the plaintiff lose standing to pursue representative PAGA claims in court