California Uber Drivers Seek Class Action Certification

Law360 just announced that California Uber drivers asked a federal judge to grant certification for their class-action lawsuit. The plaintiffs allege that the ridesharing company incorrectly labeled them as independent contractors rather than employees. In doing so, Uber avoided providing traditional employment benefits such as health insurance, paid sick time, workers’ compensation, and most notably, mileage reimbursement and overtime, thus violating the labor rights of thousands of drivers. 

A class action certification and a subsequent favorable ruling could mean that drivers would be eligible for back pay for hours worked when they didn't receive at least minimum wage in addition to tips, and reimbursement for all mileage expenses and vehicle maintenance incurred working for Uber. Uber argued that it isn't in the business of providing rides to passengers. Rather, they provide a technology platform that connects drivers with riders.

And just a few weeks ago for the same reason regarding the legal work status of drivers, The Washington Post reported that California Attorney General Xavier Becerra, along with city attorneys of San Francisco, Los Angeles, and San Diego, filed a lawsuit against ride-hailing companies, Uber and Lyft. Many gig-economy companies like Uber, Lyft, and DoorDash save millions of dollars annually by not classifying drivers and delivery people, the foundation of their workforce, as employees. Uber uses the phrase “driver-partners” to refer to most of its workers. In a tweet, Becerra said, "They take the workers’ labor, but they won’t accept the worker protections—so taxpayers end up having to help carry the load."

Uber and Lyft

Uber and Lyft

The legal status of ride-hail drivers has been a controversial issue for years. O’Connor v. Uber, which was filed in 2013 in San Francisco, initiated lawsuits in other states and "argued that thousands of drivers had been misclassified as contractors and were improperly denied business expense reimbursement." In 2018, a 9th Circuit Court denied thousands of drivers class-action status and ruled that they must arbitrate their claims individually. Ultimately, Uber drivers reached a $20 million settlement in 2019. 

However, the California State Assembly passed Assembly Bill 5  (“AB 5”), the controversial new law that codifies the three-factor “ABC” test, raising the bar in determining how a company may classify its workers. Effective January 1, 2020, under the “ABC” test, a worker will be considered an employee unless the company hiring the worker establishes all of the following three prongs:

1. the worker is free from the control and direction of the company in connection with the performance of the work, both under the contract for the performance of such work and in fact; 
2. the worker performs work that is outside of the “usual course” of the company’s business; and 
3. the worker is customarily engaged in an independently established trade, occupation, or business that is of the same nature as the type of work performed for the company.

If Uber and Lyft drivers fail to meet all three criteria, they will be classified as employees. 

The Washing Post article reported that "In response to the law, Uber has implemented mechanisms attempting to prove workers are independent and free from its control." Lyft, on the other hand, seems to be taking a more collaborative approach. Company spokesman C.J. Macklin said, “We are looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable healthcare and other benefits is more important than ever.”

The outcome of this case will be watched closely as several gig-economy companies who operate similarly to Uber and Lyft may have to start rethinking their business models. It may also affect the language in other states' legislation regarding independent contractor versus employee status and labor laws.