A San Francisco judge’s ruling granting class action status to possibly thousands of Uber drivers carries implications that “go well beyond California,” according to an attorney closely watching the case.
U.S. District Judge Edward Chen ruled September 1 that a group of Uber drivers in California can sue as a class as they argue that they should be considered employees instead of independent contractors.
In ruling in favor of granting class status, the judge noted “Uber’s uniform and unilateral right to control its drivers’ compensation” as “important common proof that bears directly on the class members’ work status.”
Mark I. Schickman, the editor of California Employment Law Letter and an attorney with Freeland Cooper & Foreman LLP in San Francisco, said the class status is significant and advances a national issue that isn’t limited to the California case.
“Of course, the issue of control is the key factor,” Schickman said, explaining that Uber requires its drivers to display its sticker on their cars, use its app, keep their cars clean, and comply with other rules. “Every one of these rules exercises control that moves people from independent contractor to employee,” Schickman stated.
Schickman said the issues in the Uber case—Douglas O’Connor et al. v. Uber Technologies Inc.—mirror those in a case in which FedEx Corp. argued that its drivers were independent contractors. On June 12, the company agreed to a $228 million settlement in the class action claims of its California drivers.
The federal government has been focusing on independent contractor status for years, claiming that the practice of misclassifying workers as independent contractors instead of employees deprives workers of the rights and benefits they are entitled to and that it allows employers to avoid paying taxes and premiums on workers who should be considered employees.
On July 15, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued an Administrator’s Interpretation spelling out that it considers most workers employees.
Schickman wrote on business models that use independent contractors, and the Uber case in particular, in the July 27 issue of California Employment Law Letter. He wrote that classifying a worker as an independent contractor “works only if you are willing to vest all methodological control in the worker, caring only about the result.”
“The inherent problem is that these companies thrive on the basis of their brands and consistency,” Schickman wrote. “Uber vehicles must bear the Uber logo, use the Uber app, signal their distance from a fare, use the Uber billing system, and behave according to Uber’s rules. Most of all, the drivers are the backbone of what Uber does, which is a difficult position for those who rely on a stable of independent contractors.”