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Court rules against Uber in wage & hour class action

This week a court in California ruled against the car ride service provider Uber in a class action regarding its classification of drivers as independent contractors.  Some Uber drivers filed the class action because they believe Uber should have classified them as employees, which would entitle them to benefits such as expenses they incurred while discharging their duties and more of the tips that customers paid for the drivers’ services.  In the court’s order, it certified the class and, thus, held that the case could proceed as a class action.

The attorneys representing the class of drivers originally wanted to bring the case as a nationwide class action.  However, the court limited the case to just drivers in California.  The class was also limited by Uber’s practice of asking drivers to agree to arbitration agreements that prohibit them from participating in a class action.  Uber drivers in California began to agree to those arbitration agreements in June 2014.  So, California Uber drivers who have driven for Uber since June 2014 and did not opt-out of the arbitration agreement are not part of the class.  Those drivers would need to bring their own claims in arbitration.  The firm representing the class, however, is also offering to represent these drivers in arbitration.

One of the lawyers representing the class of drivers, Shannon Liss-Riordan, said that the class certification order “will allow thousands of Uber drivers to participate in this case to challenge their misclassifications 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 the drivers.” 

Companies with business models similar to Uber are paying close attention to this case.  In addition to the millions of dollars that Uber would have to pay to the class of drivers if it loses the case, Uber would incur a lot more overhead costs if it had to treat all of its drivers as employees.  That could force Uber to rethink and reform its business model.