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Companies accused of misclassifying drivers as contractors

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Uber ( UBER ) and Lyft ( LYFT ) appealed lower court ruling against them

By Daniel Wiessner

Oct 7 (Reuters) - The U.S. Supreme Court declined on

Monday to hear a challenge by Uber ( UBER ) and Lyft ( LYFT ) to

lawsuits by the state of California on behalf of drivers who

signed agreements to keep legal disputes with the ride-hailing

companies out of court in a legal fight over their status as

contractors.

The justices turned away appeals by the two companies of a

lower court's ruling that let the Democratic-led state's

attorney general and labor commissioner pursue claims that Uber ( UBER )

and Lyft ( LYFT ) owe money to drivers who were misclassified as

independent contractors rather than employees.

The companies have argued that federal law bars states from

suing on behalf of anyone who signed agreements to bring legal

disputes in private arbitration rather than court. That includes

more than 60 million U.S. workers and virtually any consumer who

joins a subscription service, accepts a company's terms of

service or registers a product.

California filed separate lawsuits against the companies in

2020. A state appeals court in 2023 ruled against the companies

in their challenge to the lawsuits. The California Supreme Court

subsequently declined to hear their appeals.

California is one of several Democratic-led states that have

accused Uber ( UBER ) and Lyft ( LYFT ) of depriving drivers of minimum wage,

overtime pay, reimbursements for expenses and other protections

by labeling them as independent contractors. Most federal and

state wage laws apply only to employees, making it much cheaper

for companies to hire contractors.

Uber ( UBER ), Lyft ( LYFT ) and other app-based services have denied that

they are employers of "gig workers" who may benefit from the

flexibility of contracting.

The industry has advocated for state ballot measures

allowing companies to treat workers as contractors in exchange

for providing certain benefits. California's top state court in

July upheld such a measure backed by Uber ( UBER ) and Lyft ( LYFT ) and

overwhelmingly approved by voters in the state in 2020.

Uber ( UBER ) and Lyft ( LYFT ) in June agreed to adopt a $32.50 hourly

minimum pay standard for Massachusetts drivers and pay $175

million to settle a lawsuit by the Democratic-led state's

attorney general alleging they improperly treated drivers as

independent contractors.

Uber ( UBER ) and Lyft ( LYFT ) also have been sued by thousands of U.S.

drivers who have said they should have been treated as

employees. But few of those cases have yielded definitive

rulings and many of them have been sent to arbitration, since

most of the drivers for the companies sign arbitration

agreements.