Court Rules Uber's worker misclassification lawsuit must proceed as a class action: Uber Claims it's Drivers are Not Employees

by Sean Riley


BizJournal

In a closely watched fight over whether Uber drivers should be considered employees, Uber's lawyers have argued that its 160,000 drivers in California are too different to be considered a single class. U.S. District Judge Edward Chen has rejected that claim, approving partial class-action status for the lawsuit proceeding in San Francisco.

Class-action status would raise the number of plaintiffs in the Uber trial to 160,000, representing the total number of drivers in California. In the ruling, the class is defined as "UberBlack, UberX, and UberSUV drivers who have driven for Uber in the State of California at any time since August 16, 2009."

Prior to today's ruling, the case had been limited to four driver plaintiffs who are seeking reimbursement for fuel, mileage and other expenses associated with employee status.

Chen's partial approval means that the motion was granted for one claim - that drivers owed tips - though not necessarily that they are unfairly denied compensation for things like mileage and taxes. However, the ruling marks a setback for Uber in what will likely be protracted and costly defense of their current business model, which relies on drivers to pay all of their own expenses, including gas, vehicle maintenance and some insurance coverage. The worker misclassification trial can proceed even if the class-action certification remains in dispute, and Uber has insisted that it will appeal a class-action certification.

For Uber, an adverse jury trial could deeply undermine a business model that has allowed it to expand rapidly with minimal overhead. But the legality question around Uber’s approach - relying on hundreds of thousands of ‘partners’ the company classifies as independent contractors - has already served as a threat to the many smaller companies who launched with a similar model. A growing number of startups - including Instacart, Sprig, and Shyp - have already moved to reclassify some workers as employees in the face of legal challenges. Others, like Homejoy, were forced to shut down owing to legal costs. [MORE]