Uber Battles Employer Designation in Class-Action Lawsuit

Uber fights back against a class-action lawsuit by filing a motion in a California court on July 9, 2015 claiming Uber drivers in California have “little or nothing in common.” The lawyers for Uber hope to prove the three plaintiffs in the lawsuit are not representative of all, or even most, Uber drivers.

Ted Boustrous, a partner with the law firm representing Uber, said, “There’s a conflict between the people who brought the lawsuit and the people they’d like to represent.”

Boustrous understands this legal defense well, having successfully argued a similar case, Wal-Mart v. Dukes, in the 2011 U.S. Supreme Court. He convinced the U.S. Supreme Court to strike down a proposed claim on behalf of 1.5 million female Wal-Mart employees by showing the employees lacked a common complaint.

The issue at the heart of the lawsuit is whether or not Uber drivers should be considered independent contractors or employees. The three drivers in the lawsuit want to be considered employees so they may be reimbursed to expenses, including gas and vehicle maintenance.

The decision of the lawsuit could set a binding precedent and affect more than 160,000 California drivers. In addition, the suit would likely affect other companies which use the contractor model including Lyft, TaskRabbit, Etsy and more.

If Uber is forced to classify the drivers as employees, the company may be required to pay payroll taxes, worker’s compensation, unemployment insurance and more. Uber argues this decision “could force Uber to restructure its entire business model.”

Uber claims such a decision would damage the flexibility that provides the drivers with greater independence.

Uber said in a statement, “As employees, drivers would drive set shifts, earn a fixed hourly wage, and lose the ability to drive using other ridesharing apps as well as the personal flexibility they most value.”

A previous California Labor Commission ruling classified an Uber driver as an employee partly because Uber was, “involved in every aspect of the operation.” Uber appealed the decision and notes that the decision only applies to one particular driver and not all drivers in the state.

The final verdict of the lawsuit is likely to set an interesting precedent for cases to come. The case is in U.S. District Court, Northern District of California and is Douglas O’Connor et al vs. Uber Technologies Inc, 13-3826.


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