A THORN IN UBER’S SIDE
Lawyer fights for the little guy in the on-demand economy
SAN FRANCISCO — Shannon Liss-Riordan made a name for herself defending workers against FedEx, American Airlines and Starbucks in wage and hour lawsuits.
If you’re an executive and she’s knocking at your door, it means your company has been accused of doing something few Americans have much tolerance for: ripping off the little guy.
So, if you’re an executive in Silicon Valley — where you’re lauded for disrupting the old way of doing things, tearing down the hierarchies of the past, making the world a better place — you’d think you’d get a pass, right?
Hardly. After slapping on-demand transportation company Uber with a class-action lawsuit over driver misclassification in 2013, Liss-Riordan has been busy, filing a dozen similar lawsuits against California tech firms.
Silicon Valley companies may think they’re a breed apart. But to Liss-Riordan, too many of them are too similar to the big corporations she’s fought in the past, companies she says flout labor laws for profit at the expense of low-wage workers.
Where some see Silicon Valley innovation, Liss-Riordan sees an old power struggle, wrapped in an app.
Liss-Riordan hasn’t kept track of how many miles she’s logged between Boston and San Francisco since she started litigating against companies in the on-demand economy. But she’s now treated as a regular at the federal courthouse in San Francisco, where she’s often seen dragging a roller bag of legal documents in and out of the towering gray building.
An opposing attorney in one of her cases saw her around so much he challenged whether she should be allowed to file so many lawsuits in California, where she isn’t a member of the State Bar of California.
If he’d hoped to deter her, it didn’t work. Liss-Riordan responded by registering to take the California bar exam in February. Once admitted, she plans to open an office in San Francisco.
‘I think she just doesn’t like people taking advantage of other people.’
—LISS-RIORDAN CLIENT JOE TRAVERS, a skycap who was fired for joining a class-action suit
Liss-Riordan carries herself more like an activist than a lawyer. At first, she comes off as approachable, friendly even. But her partner at Boston law firm Lichten & Liss-Riordan, Harold Lichten, describes her as having the heart of a grassroots organizer with the tenacity of “a pit bull with a Chihuahua in its mouth.”
She knows her stuff and can get really academic, but without making people feel dumb.
The cases she’s filing in California over worker misclassification aren’t about semantics, she says. They’re about people getting ripped off.
The on-demand economy — driven by smartphone apps, where people can instantly hail a ride, order a meal, or book a house cleaner through an app — is booming in California.
Ride-hailing companies such as Uber and Lyft have achieved multibillion-dollar valuations from a business model that uses independent contractors to fulfill a core function of their businesses. Although they compete directly against the taxi industry, they’ve labeled themselves “technology companies” — intermediaries that simply connect willing workers with paying customers.
Which would be fine, Liss-Riordan said, if they were also treating their workers as independent contractors.
In the lawsuits she filed against Uber, Lyft, food-delivery companies DoorDash and GrubHub, and on-demand laundry service Washio, she alleges these firms exert the kind of control employers would have over employees, without any of the benefits employees, by law, are entitled to.
In response, these companies have hired legal big guns. Uber hired Gibson Dunn, a global law firm routinely recognized by industry groups as one of the top litigators in America.
There’s a good reason they’re fighting so hard. A Liss-Riordan victory could put companies such Uber and GrubHub on the hook for costs that would eat deeply into their profit margins. Labor experts estimate their cost of doing business would increase by 30% to cover payroll taxes, unemployment insurance and workers’ compensation. Costs would rise even more with overtime payments and — particularly in the Lyft and Uber cases, where drivers use their own vehicles and pay for their own gas — expense reimbursements.
Could big firms like Uber and Lyft afford it? Liss-Riordan believes so. But in Silicon Valley, where sky-high profit margins lead to enormous company valuations that could translate into staggering returns on investment, any increase in the cost of doing business poses a threat. After all, Uber didn’t become the world’s most highly valued private company by paying for its drivers’ gas.
If the companies are to be believed, any significant changes to their business model would fall on the drivers. The Ubers and Lyfts of the world argue that recognizing workers as employees would come at the cost of flexible working hours, which is the reason many people sign up to drive for an on-demand service.
Liss-Riordan huffs at the notion. Smaller companies such as Shyp (on-demand shipping), Munchery (ondemand meal delivery) and Luxe Valet (on-demand valet parking) have been able to do it while retaining some flexibility, although their workers now have scheduled shifts.
“These companies just don’t want to do it because it’s going to cost more,” she said. “And there’s nothing stopping them from giving their workers flexible schedules.”
She almost has to fight back an eye roll when she hears the on-demand economy’s defense.
“It just doesn’t make a lot of sense to me why we should throw all these worker protections out the window to help a $50-billion company like Uber when the workers who are actually doing the work are struggling and need those protections,” she said.
She speaks with the urgency of an activist. As she delivers each statement, one can imagine a concurrent thought bubble floating above her head in which she grabs people by the shoulders and shakes them: “Can’t you see? Can’t you see why this matters?”
Liss-Riordan has brought this kind of fight to big and small players alike. She’s taken on Starbucks and American Airlines (both were accused of skimming tips from workers) and sued a Massachusetts strip club and pizza chain (the former classified their dancers as independent contractors but expected them to share their tips with managers and bouncers. The latter was a case in which kitchen staff members were forced to give back their overtime wages or lose their jobs).
Her track record is strong: In Massachusetts she’s won worker misclassification and tip cases against Starbucks and FedEx. Her lawsuit against the strip club triggered a wave of similar lawsuits across the state. And after her lawsuit drove the pizza chain out of business, she bought one of the restaurants herself and turned it into a profit-share pizza joint.
“I think overall she really cares about workers and advancing the law for workers,” said Lichten, who has known her for 20 years. “She’s very good about rolling up her sleeves and meeting with clients to explain to them what’s going on.”
There’s big money to be made in this area, of course. Class actions can lead to hefty payouts, of which lawyers can walk away with up to a third of what their clients are awarded.
In a recent class action over worker misclassification involving FedEx Ground (Liss-Riordan was not the plaintiff attorney), the company announced a $228-million settlement with 2,300 California-based drivers.
On the flip side — for lawyers like Liss-Riordan who don’t charge an upfront fee — if she doesn’t win, she gets nothing.
Some of her cases have taken more than a decade to resolve. In 2011, she took on a case representing a skycap who was fired in retaliation for participating in a classaction lawsuit; that was a five-year process.
“She kept fighting without getting paid,” said her former client in the skycap case, Joe Travers, 50. According to Travers, LissRiordan continued to represent him even when the court reversed his victory. She recently won an appeal on his behalf.
“It’s amazing someone would continue to fight for you even when there might not be anything for them in the end,” he said. “I think she just doesn’t like people taking advantage of other people.”
Many of Liss-Riordan’s past legal opponents declined to comment about her for this article. But attorney Robert Hale, who has had experience litigating against her in worker misclassification cases, had to give her credit.
“She is quite knowledgeable and highly experienced in the wage and hour area,” Hale said. “I think she’s the best-known wage and hour litigator in Massachusetts.”
In the battle against Silicon Valley’s heavyweights, he said he wouldn’t count her out.
Liss-Riordan herself doesn’t seem fazed by the size of the industry she’s taking on. No company, in her eyes — innovator, disruptor, whatever else they want to call themselves — deserves a free pass. And judging by her past successes with taking Starbucks and FedEx to task, it seems no company is too big for the law.
When asked whether she’s been known to be intimidated by anyone — a company, an industry, another law firm — Liss-Riordan’s former colleague, attorney Nicole Horberg Decter, had this to say: “Ha-haha!”
Then, after a moment: “I don’t think of Shannon as someone who is intimidated by anything. When she takes on an issue, she’s not taking on a company, she’s taking on an industry. I think that’s very powerful. So, no, she is not intimidated at all.”