A handful of Uber drivers sued the ride-share giant in 2013 alleging that they were functioning as company employees but improperly treated and underpaid as independent contractors. Instead they are contractors responsible for their own gas, vehicle upkeep and if anything happens to the driver or auto while they are searching for a passenger, it’s on them.
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The suit filed against Uber Technologies argues that drivers qualify as Uber employees as opposed to independent contractors.
But a federal judge in California has allowed some drivers to proceed with a class-action lawsuit against the ride-hailing service. The question in this case is whether Ubers business model is lawful or unlawful.
In June, the California state labor commission ruled in favor of an Uber driver in a non-precedent setting case, granting that the driver was an employee and that Uber is responsible for compensating them for mileage and other expenses. This new decision by the US District Judge is one of the biggest and most harmful moves against Uber, as it marks an end to the company’s most powerful argument when defending itself from accusations of not demanding any kind of commercial driver’s licence.
A lawyer for drivers, Shannon Liss-Riordan, said Uber’s characterisation of the size of the class is “not correct”, and that “many thousands” will be part of the lawsuit.
Uber’s lawyer Ted Boutrous, from the firm Gibson Dunn, said the company is likely to appeal Chen’s decision because it’s “based on several key legal errors”. “Despite Uber’s argument to the contrary, there are numerous legally significant questions in this litigation that will have answers common to each class member that are apt to drive the resolution of the litigation”, Chen wrote. In a separate statement, Uber said Chen allowed only a “tiny fraction” of the 160,000-member class to go forward.
Three drivers are seeking reimbursement from Uber for their daily expenses, including gasoline, which they buy themselves, and tips that they claim the company did not pass along from customers.
Chen also said Uber drivers who have worked for the service since May 2014 must specifically opt out of an arbitration agreement in order to sue the company.
‘This decision is a major victory for Uber drivers, ‘ Liss-Riordan said. In July, the company provided the court with 400 written declarations from drivers who say they prefer to be independent contractors because of this flexibility. It’s unclear whether Uber would be forced to pay employment taxes and other levies.
An important factor in determining whether the Uber case could proceed was a determination that Uber exercises control over its drivers.
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On March 11, 2015, Judge Chen had also denied Uber’s motion for summary judgment.
