Uber drivers granted class action status in lawsuit over employment

U.S. Judge Gives Uber Drivers Class Action Status

Uber drivers are entitled to class action status in litigation over whether they are independent contractors or employees, a U.S. judge ruled on Tuesday, in a case that could have wide implications for the sharing economy.

Three drivers sued Uber in a federal court in San Francisco, contending they are employees and entitled to reimbursement for expenses, including gas and vehicle maintenance. The drivers currently pay those costs themselves.

In the ruling, U.S. District Judge Edward Chen in San Francisco said drivers could sue as a group on the question of whether they are employees or contractors, and over their demand for payment of tips that were not passed on to them. Drivers' attorneys must submit more evidence to sue as a group for reimbursement of other expenses.

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Uber drivers granted class action status in lawsuit over employment
Indian drivers for Uber show mobiles phones given to them by the company during a one-day hunger strike against the US-headquartered transportation service in Hyderabad on August 28, 2015. The drivers allege they were not making as much money as promised by Uber. India counts as Uber's second biggest market after the United States and the company claims around 35 percent of Indian market share with 150,000 'driver entrepreneurs.' AFP PHOTO/NOAH SEELAM (Photo credit should read NOAH SEELAM/AFP/Getty Images)
The Uber app is seen on a smartphone past cabs waiting fro clients near the Sagrada Familia in Barcelona, on December 9, 2014. A judge on December 9, 2014 banned the popular smartphone taxi service Uber from operating in Spain, court officials said, following similar prohibition action in several other countries. AFP PHOTO/ QUIQUE GARCIA (Photo credit should read QUIQUE GARCIA/AFP/Getty Images)
Baidu Chairman and CEO Robin Li speaks at a ceremony at the Baidu headquarters in Beijing on December 17, 2014. Baidu, China's leading search engine, and ride sharing company Uber announced a strategic investment and cooperation agreement on December 17. AFP PHOTO / Greg BAKER (Photo credit should read GREG BAKER/AFP/Getty Images)
The Uber app is seen on a smartphone past cabs waiting for clients near the Sagrada Familia in Barcelona, on December 9, 2014. A judge on December 9, 2014 banned the popular smartphone taxi service Uber from operating in Spain, court officials said, following similar prohibition action in several other countries. AFP PHOTO/ QUIQUE GARCIA (Photo credit should read QUIQUE GARCIA/AFP/Getty Images)
The Uber app is seen on a smartphone past cabs waiting for clients near the Sagrada Familia in Barcelona, on December 9, 2014. A judge on December 9, 2014 banned the popular smartphone taxi service Uber from operating in Spain, court officials said, following similar prohibition action in several other countries. AFP PHOTO/ QUIQUE GARCIA (Photo credit should read QUIQUE GARCIA/AFP/Getty Images)
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Class action status means the 2013 suit could cover more than 160,000 California drivers, according to court filings, and could give plaintiffs more leverage to negotiate a settlement.

Uber had argued that the drivers should not be allowed to sue as a group because they have little in common and relate to the company in different ways.

However, Chen wrote that there is an "inherent tension" in Uber's argument.

"On one hand, Uber argues that it has properly classified every single driver as an independent contractor," Chen wrote.

On the other, Chen wrote, Uber argues that individual drivers are so unique that the court, "unlike, apparently, Uber itself," cannot make its own determination.

Representatives for Uber and the drivers could not immediately be reached for comment.

The results of Uber's legal battle could reshape the sharing economy, as companies say the contractor model allows for flexibility that many see as important to their success.

An ultimate finding that drivers are employees could raise Uber's costs beyond the lawsuit's scope and force it to pay Social Security, workers' compensation, and unemployment insurance.

In June, a California labor commissioner ruled that an Uber driver was an employee, not a contractor. Uber has appealed that decision.

In arguing against class action status, Uber had submitted sworn statements from hundreds of drivers supporting the company. However, Chen rejected this evidence because the statements could have been the product of biased questions.

There is simply "no basis," Chen wrote, to support Uber's claim "that some innumerable legion of drivers prefer to remain independent contractors rather than become employees."

The case is Douglas O'Connor et al v. Uber Technologies Inc, U.S. District Court, Northern District of California, No. 13-3826.

(Reporting by Dan Levine; Editing by Tom Brown)

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