In 2016, Uber agreed to pay upwards of $100 million to avoid trial in a misclassification suit concerning California and Massachusetts drivers. Now that a North Carolina judge has conditionally certified a national class action, the stakes, and the potential reward, are exponentially higher.
All Uber drivers in the United States who opted out of the arbitration clause are eligible to join what will probably be the only nationwide class action lawsuit against Uber. In order to gain a full understanding of the Uber lawsuit, we must examine each piece individually:
To keep costs low and profits high, from its earliest days as a San Francisco startup, the ridesharing company insisted that its drivers were “independent contractors.” Drivers received no benefits, had almost no legal protections, including the right to a minimum wage, and were legally barred from organizing and demanding a greater share of the financial pie. As the company grew, so did the costs that it passed on to its drivers, mostly the gasoline, auto maintenance, and other related expenses that they paid out of their own pockets.
In 2015, in what many consider the legal equivalent of the firing on Fort Sumter, the California Labor Commission ordered the ridesharing company to reimburse San Francisco driver Barbara Ann Berwrick over $4,000 for the aforementioned costs. Essentially, the Commission ruled that Ms. Berwick was an employee, because she performed nonprofessional services which were essential to the company.
The Fort Sumter incident did not work out so well for the Confederacy, but this time may well be different, as the aforementioned $100 million suit is still pending in federal court. Sometime in 2017, the 9th Circuit is expected to rule on it and four other similar misclassification lawsuits.
Incidentally, a federal judge refused to approve the settlement, because it represented only 10 percent of the money necessary to fully compensate the plaintiffs.
Earlier in 2017, the Federal Trade Commission slapped Uber with a $20 million fine for lying to its drivers about their income potential. The agency also claimed that the company misled drivers about the cost of vehicle leases. Uber stated that drivers could get lease payments as low as $140 a week, but the median payment was closer to $200 a week. Furthermore, drivers who leased vehicles through the company lease program received worse rates than other lessees.
Uber denied any wrongdoing and insisted that it had “made many improvements to the driver experience over the last year,” although rather unsurprisingly, company officials declined to give specifics.
The Current Action
Now, a federal judge in North Carolina estimates that 18,000 drivers are eligible to join the class action lawsuit. To prevail, the drivers must establish that they are “employees” under the law. Paul Napoli and his team of commercial litigation attorneys may be able to assist drivers with establishing this status. The IRS uses a three-part test to determine if a worker is an employee or an independent contractor, and all of them pertain to control.
- Behavioral: Uber has the right “to control what the worker does,” because the company can unilaterally remove drivers from the app, and there is usually no appeal.
- Financial: Once again, the company has complete control. Passengers pay through the app and Uber issues all driver payments.
- Type of Relationship: Most judges focus on the “key aspect of the business” requirement, which is obviously present in this relationship.
Drivers who join the class action may be entitled to significant compensation, while those that do not do so are guaranteed to receive nothing.