Back in August, a California judge granted class action status to an employee status lawsuit which was filed against the taxi company Uber. This 68-page long court ruling is bound to set the stage for a fierce legal battle that has potential to upend the taxi firm’s business model. Here’s everything that you need to know.
What does the lawsuit allege?
Simply put, the lawsuit against Uber states that the taxi firm has misclassified its taxi drivers as contract workers. In short, Uber treats their drivers as if they were employees of the company, however they fail to provide any of the requisite benefits of employment such as health insurance and reimbursement for expenses.
Who brought the case?
Originally, the case was brought by three Uber drivers, however, a California judge has ruled that the case now applies to all Uber drivers in the state, which has given it class action status. However, any drivers who have waived their right to class action arbitration are unable to take part in the lawsuit meaning that out of the 160,000 Uber drivers in California only a minority are able to participate. This is due to the fact that most drivers waived their right to class action lawsuits after an update in the Uber contract last year, including one of the original drivers who brought the case.
What this means for Uber
Since this is a high-profile legal battle, it could result in Uber having to pay out a significant amount of compensation to their drivers. Along with this, it also puts Uber’s business model under a large amount of pressure. Uber has continually stressed that it is not a taxi service which hires drivers directly, but rather a technology platform which connects drivers with passengers. However, if the taxi firm is to lose the class action lawsuit, they may have to compensate their drivers as employees, which will mean the need to pay out costs such as health insurance, workers’ compensation, and reimbursements for fuel and repair costs.
What happens next?
The current class action news surrounding this particular lawsuit is that Uber has plans to appeal the California judge’s decision to grant class action status. An Uber spokesperson was reported to have told Fortune that the firm will ‘most likely appeal the decision as partners use Uber on their own terms, and there really is no typical driver – the key question at issue.’
In a recent decision, the California Labor Commissioner ruled that a particular Uber driver was indeed an employee of the company, and ordered Uber to reimburse the driver in question for her work-related expenses. However, Uber also appealed this decision, and as a result the driver has not yet received compensation and is waiting until the outcome of further court proceedings. However, the decision in this case has gone in favor of drivers taking part in the class action lawsuit.
What are your views on the class action lawsuit against Uber? We’d love to hear your opinion – leave your response in the comments.