Judge deals Uber a blow

California drivers’ suit granted class-action status, could go nationwide

A lawsuit that threatens Uber’s business model gained significant momentum on Tuesday when a federal judge granted it class-action status.

U.S. District Judge Edwin Chen ruled that California drivers seeking to be reclassified as employees could proceed as a class-action case, with some limits. A decision against the ride-hailing company could apply to many of the 160,000 contract employees who have driven for Uber in California. Employee status could require Uber to pay unemployment, workers’ compensation, minimum wage and overtime, as well as give the drivers the right to unionize.

The case could set a precedent nationwide that could radically upend Uber — as well as many other companies that rely on independent contractors. As U.S. workers increasingly patch together freelance jobs, a fierce nationwide debate has raged about whether such

workers should receive protections and benefits granted to traditional employees.

Uber said it “most likely” will appeal the decision, saying it is based on “several key legal errors.”

“The mountain of evidence we submitted to the court — including the declarations of over 400 drivers from across California — demonstrates that two plaintiffs do not and cannot represent the interests of the thousands of other drivers who value the complete flexibility and autonomy they enjoy as independent contractors,” Ted Boutrous, Uber’s chief outside counsel, said in a statement.

While Uber sought to downplay the order as applying to only a subset of the potential class, not the “mega-class” plaintiffs had sought, attorney Shannon Liss-Riordan, who represents the drivers in the case, hailed the decision as a major victory.

“It will allow thousands of Uber drivers to participate in this case to challenge their misclassification as independent contractors, as well as to attempt to recover the tips that Uber advertised to customers are included in the fare, but are not in fact distributed to drivers,” she said in a statement.

Seeking tips, expenses

The drivers in O’Connor et al vs. Uber Technologies want reimbursement for tips and expenses, such as gas, maintenance and wear and tear. Chen granted class-action status on the tips portion, but said expenses are trickier because they can vary substantially and it’s harder to prove why they were incurred. While the order didn’t grant class-action status to the expenses portion of the lawsuit “at this time,” Chen left the door open for the plaintiffs to make another stab at requesting it, something Liss-Riordan said she will do.

Although the decision doesn’t directly address the case’s merits, Chen outlined the various ways Uber oversees its drivers and said they were uniform, the key test for classaction certification.

“The court said in these various factors, Uber treated all workers in a consistent manner. The rules they had to follow and expectations they had to meet, were across the board,” said Maggie Grover, an Oakland employment attorney. Uber’s star rating system, its ability to terminate drivers without cause and its “unilateral” ability to set rates were among the specifics that Chen cited.

In deciding whether workers are employees, courts look at how much control the company exerts over them, and how integral the workers are to the company’s business, she said.

“Obviously, you can’t have Uber without drivers,” Grover said. “The court really hit on that.”

Many drivers affected

The 68-page ruling said that many drivers for UberX, Uber Black and Uber SUV who have driven for Uber in the state at any time since Aug. 16, 2009, can band together in their quest. It excluded those who agreed to a specific binding arbitration clause, which Uber has had in its contracts since June 2014. Some drivers who signed up after that date may have opted out of arbitration and could still be included in the case, although Uber said that was only a small number. Chen also excluded drivers who worked for Uber through thirdparty transportation companies. The decision excludes one of the three named plaintiffs in the case from class-action status, Uber said.

If she prevails in California, Liss-Riordan said she will seek to expand the case as a classaction suit on behalf of Uber drivers nationwide.

The Uber case is the furthest along of a rash of lawsuits against on-demand companies such as Postmates, Instacart, Caviar and Handy in which “gig workers” argue that they deserve the protections and rights of employees. On-demand cleaning company Homejoy, which closed its doors this summer, said the workers’ lawsuits contributed to its decision to shut down.