Prominent on-demand companies Lyft Inc. and Postmates Inc. are unlawfully classifying their workers as independent contractors, according to new lawsuits that mark the beginning of an anticipated flood of cases tethered to a California Supreme Court ruling that upended employee classification schemes.

Shannon Liss-Riordan, a Boston-based lawyer who has long challenged how gig economy companies classify their workforces, filed two separate lawsuits this week on behalf of workers for Postmates, an on-demand delivery service, and the ride-hailing company Lyft.

The lawsuits come just days after the California Supreme Court ruling in Dynamex Operations West v. Superior Court set a more rigid standard for how a company can deem a worker as an independent contractor. The court reversed a more flexible standard, preferred by the business community, that gave companies more room for interpretation. Employment attorneys have said the new standard could make it difficult for gig economy companies to argue their workers are contractors and not employees.

The distinction between independent contractor and employee is a key tension in the growing gig economy and has been the source of high-profile trials, settlements and ongoing lawsuits. Many on-demand companies build their workforces around independent contractors, who are not entitled to the same benefits as employees.

The lawsuits filed in California Superior Court on May 8 argue on behalf of workers for minimum wage requirements and work expenses. The complaints both cite the “ABC” classification test adopted by the California Supreme Court ruling, and they argue the two companies are willfully ignoring that decision.

Lyft and Postmates representatives did not immediately respond to requests for comment.“It is going to be very difficult for these companies to justify independent contractor status for their drivers,” Liss-Riordan told the Recorder on Thursday. “After Dynamex, we believe that the companies' continued classification of the workers as independent contractors in California is a willful violation of the law.”

Because many new gig economy workers sign arbitration agreements that preclude class actions, Liss-Riordan said the cases may have to be pursued on an individual basis. The lawfulness of class action waivers in employment agreements is at the heart of a U.S. Supreme Court case this term.

“It remains to be seen, however, whether it will be possible to pursue these cases on a class basis, given the companies' arbitration clauses,” Liss-Riordan said. “We are waiting for the U.S. Supreme Court to answer that question.”

Lyft and Postmates are not alone in facing new issues after the Dynamex ruling. The ruling could impact a Grubhub Inc. worker classification dispute that's pending in the U.S. Court of Appeals for the Ninth Circuit.

Liss-Riordan, who represented a Grubhub employee at trial in California, recently asked the Ninth Circuit to return the worker classification dispute back to the district court. In February, a federal trial judge ruled Grubhub had properly classified a driver as an independent contractor and not an employee.

“Notably, the Dynamex decision makes clear that California's adoption of the ABC test is a reinterpretation of existing law, and thus the decision will apply retroactively, including to plaintiff in this case,” Liss-Riordan wrote in a court filing on May 4. She said the Dynamex decision “upends” how the trial court had resolved the dispute in favor of Grubhub.

Grubhub Inc.'s lawyers at Gibson, Dunn & Crutcher plan to file a response to the remand request by May 18, according to court filings in the Ninth Circuit.

Liss-Riordan has previously sued Lyft and Postmates. In the Lyft case, the parties reached a settlement in federal court for $27 million, which released claims only up until the date of settlement.

Management-side employment attorneys have said the Dynamex ruling would likely inspire new misclassification litigation. Among other things, according to the ruling, a contractor is someone who is performing work outside the company's main business. A ride-hailing company might argue, however, that it is not a transportation company but rather is a technology company.

The new cases against Postmates and Lyft come as Lichten & Liss-Riordan closes its San Francisco office two years after opening there. “I am still in California myself frequently and expect to continue to be there often,” Liss-Riordan told The Recorder last month.

Instant Insights /

A new era for the gig economy? 2 new suits challenge gig worker classification

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