Class Action Suit Against Uber Expanded; A Loss on Whether Its Drivers are Employees or Contractors Could be Very Costly

Uber now trying to make its drivers all agree to a new arbitration clause.


U.S. District Judge Edward Chen this week expanded the relevant class of Uber drivers who can be plaintiffs in an ongoing lawsuit in California over whether drivers should be legally treated as employees (with all the legal benefits that come with that categorization) to include even those who had agreed with Uber to deal with disputes with them via arbitration, not class action suit. (I reported on that suit back in March.)

Vice on what what this could mean:

In a statement emailed to VICE News, Uber said it's obvious that drivers do not work for the company, but are independent business people. 

"Drivers use Uber on their own terms; they control their use of the app along with where and when they drive," the company said. "As employees, drivers would lose the personal flexibility they value most."…

Employee classification is decided on a case-by-case basis, and courts draw upon prior lawsuits, as well as regulatory decisions to decide whether a set of workers are contractors or employees. This summer, in a sign that California regulators may favor Liss-Riordan's position, the California Labor Commission ruled Uber driver Barbara Ann Berwick was indeed an employee of the company and not a contractor….

Drawing on the same logic as the labor commission, Liss-Riordan has argued that since Uber can fire its drivers, compel them to accept a certain portion of rides, and enforce workplace standards, it effectively operates as an employer under California law. But Uber has long maintained that since drivers make their own hours, and can use the app whenever they see fit, the role of the company is that of a facilitator, and not an employer….

The case is being closely watched because it could have wide ranging impact on the so-called "sharing economy." Dozens of major tech companies like Taskrabbit, HomeJoy, and Uber competitor Lyft also structure their worker relationships the same way.

As I reported in Reason's November issue, losing the suit would likely add over $200 million in extra costs to Uber.

I hear from an Uber driver pal, Tony Pierce, that as of today Uber is demanding that its drivers agree to arbitration in disputes with the company before they can even start activate the app to hook up with rides, though they have 30 days to change that choice.

I've been supplied with  email from the plaintiffs lawyer Shannon Liss-Riordan which reads in part:

Uber is now trying to avoid the court ruling by sending drivers a new agreement containing a revised arbitration clause.  We are working now on a motion asking the court to block this new agreement.  We believe that Uber's action in trying to limit the class, after the court has certified it, is illegal, and we will ask the court to take measures to stop Uber from doing this. 

In the meantime, if you are a current Uber driver, you should feel free to continue working.  You will need to accept the agreement in order to continue driving for Uber.  But assuming you want to be included in this case, YOU SHOULD IMMEDIATELY OPT OUT OF THE NEW ARBITRATION CLAUSE BY SENDING AN EMAIL TO optout@Uber.com….

Hat tip: the indefatigible Charles W.T.

NEXT: Police Officer Patrick Feaster Shoots Man Crawling From Wreckage of His Truck, Doesn't Tell Anyone Until Circumstances Force Him To; Of Course, Not Criminally Responsible [UPDATED]

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. The violent state at it again. Looking to control, and extort everything. Folks love the state until it directly effects them. The folks who hide behind the state are douchebags, that never face consequenses for their wants and desires.

    1. No. The enemy is greedy business owners and the 1%, you fucking dupe.

  2. Everybody, just heil a cab instead of fiddling with your phone apps.

    1. Ell, Uber has been offering ‘way better service in SF; the drivers act like the passenger is a customer. Cabbies, well…

      1. Bad joke. Last time I drove through Manhattan, I amused myself by mouthing “Heil Hitler” every time I saw somebody hailing a cab.

        1. If cabbies are like Hitler, then I guess they’ll win that strike in Paris, won’t they?

          1. If cabbies are like Hitler

            I was poking fun at the customs of their customers, Notorious. Pay attention.

            1. And it was hilarious, by the way.

    2. I assume the misspelling is intentional. I see what you did there.

      1. I like you. You appreciate the subtleties of my drunkenness.

  3. OT There is a fat, homeless dude sitting at the other end of the train car. The entire car reeks of piss, yet no one in the crowded car is showing an ounce of disgust. Amazing cuz I’m about to puke.

    1. I thought you were in the part of the world that didn’t have fat people.

      1. They have grandurer probrems.

        1. You were on the subway with Kim Jong-Un?

    2. At least there isn’t some horrible oppressive state caring for him!

      God it’s so hard to think like you people.

      1. Fuck off, dbag.

  4. I couldn’t seem to find Judge Chen’s decision, but the Vice article says the judge “called the clause “both procedurally and substantively unconscionable,” since there was no clear way for drivers to opt out.”

    It would be nice if they could at least enforce the arbitration agreements rather than bypass the arbitrators, but I don’t know the judge’s rationale so I can’t say if it makes sense or not.

    Certainly, the laws *ought* to allow a broader resort to arbitration rather than clogging up the courts and forcing on people a dispute-settlement mechanism they specifically rejected.

    1. the dispute-settlement mechanism being the courts, which arbitration agreements bypass.

    2. The argument seems to be that people have no idea that they’re giving up their right to sue in a court of law. But considering that courts hold up contracts of adhesion in most other contexts, I’m not buying it.

      1. Yeah, but you didn’t graduate at the bottom, so you ain’t ‘Your Honor’.

    3. But there *is* a clear way for drivers to opt-out – same as with any other contract – simply say ‘no’.

      Sure, you don’t get to work with Uber, but that’s the price of free-association.

    4. This sure will be helpful when I sue my cable company, credit card issuer, and cell phone company, which are industries with 100% arbitration contracts for service.

  5. They’re contractors. And if the company wasn’t so wildly profitable, it would be celebrated for freeing the worker and all that jazz.

    And I’m surprised there hasn’t been a post about the corrupt sonsabitches in NY banning DraftKings and FanDuel.

    1. Yep. Once Uber drivers are classified as employees, you can bet trial lawyers will be salivating at the prospects of applying

      1. Cut off my last term: respondiat superior.

      2. And unionize. They must unionize. How else will they avoid exploitation?

    2. DK and FD are so obnoxious, they make me consider a libertarian exception.

      Not for long, but the thought pops into my head.

  6. So, either horse-face decided to empty the treasury, or the ‘developing world’ ain’t getting $3.5Tn:

    “Climate negotiators say global accord is close in Paris”

    Or some one is lying again. Where is Jack?

    1. Maybe Jack is Count(ing) De Money ? =)


  7. Once they are classified as employees who will be the first group of true employees to sue over the fact that, like Uber drivers, they should get to determine their own hours and for how long they should be made to work. While of course making sure that they get enough hours to qualify for all government mandated benefits.

    1. This actually underlines one of the issues that this class action is likely to create. Uber doesn’t provide benefits at this point. If “employees” can decide for themselves to be employed and then decide for themselves to work 35 hours per week to become full time employees thereby gaining access to expensive healthcare benefits, how long before the option to set your own hours goes away? Days? Hours?

      Uber might be able to continue in operation while limiting drivers to less than 30 hours per week, but how many drivers will be able to do so? Or will they simply be forced to split time between Uber and Lyft to get their 55 hour work week?

  8. My hat is off to Hazelmead. She totes predicted this,

    1. Yep. And the next stop is to claim that all employees of a single franchise operation like a McDonalds store are really, by extension, employees of the franchisor.

  9. OT: Check your white privilege, Trump.

    1. Wirbel did not respond to a request for comment. He is from Colorado Springs and police there say his post is covered by free speech and they do not intend to investigate.

      Also, Trump didn’t sentence Ross U.

      1. This is beautiful. =D

      2. ACLU Board Member Resigns After Urging People To Kill Supporters Of Trump

        1. “Oh, you meant ‘fire’ as with a gun in a crowded theatre. Yeah, that’s fine.”

          1. Well…Where else can you effectively cause a mass panic ?

            1. Ask Pope Francis. *narrows gaze at self*

  10. Not a single troll to tell us of the sins of Uber and the noble, bronzed, American working man enslaved by them?

  11. Nearly all small moving companies list their employees as contractors though clearly treating them like employees. Margins are typically so thin that owners would have to drastically cut wages were they to cough up payroll tax and workman’s comp insurance (crazy high for moving co’s) and still cut a profit. Employees are happy to earn $12 to $20 an hour plus tips, and most don’t bother filing their 1099s. Was a good gig while in school, making $18 an hour and averaging an extra $60 a day in grats.

    Point is that it was a voluntary agreement and all parties benefited, including the consumer who receives a smaller bill. Labor law, if enforced would screw over everyone.

    1. As a regular here has posted often enough to stick in my thick head, there really is a minimum wage. It is $0.00, and it’s what you get if the government sticks its nose in enough transactions.

  12. I cut the neck of a rainbow and she ate my cock as she bled a billion colors on my stiff ship as she slipped her tongue among the dimensions of a parallel galaxy filled with hard long dongs and sweet muffins…

  13. I’m not the only old fart here, so I’m asking if anyone else remembers and knows how to find a satire on radio auto sales commercials.
    The (San Fran) KSAN morning guy (who was a moderately successful comic) played it in the mid ’70s, but it was not locally produced.
    An obvious riff on Cal Worthington, it started with a guy imploring you to ‘come on down to xxx”; ‘see this dog? I’ll kill it if you don’t buy this xxx’; ‘here’s our credit manager – he wants to know if you can fog a mirror’; (money quote, you can hear the guy pounding on the fender) “Do you want some fine sedan built by brauwnzed American working men, or do you want some kiddee car you need a shoehorn to get into?!”

      1. Not satire, though. These are the real deal.

  14. So if I cut a knife into the whitespace of this place while my giant niggled my nipple and the monkeys slurp his cock lightning o-= and the edges of the eyebrows of love bled millions of little butterflies and ninja kittens. so this is a thing man

    1. Most insightful Reason comment ever.

      1. Fuck off,dbag.

  15. If my foot smashed a comet in the head sparks would make banana ninja pies.

    1. Good to see that you’re doing well Agile!

    2. Why is it that the Death Star isn’t actually a star???

      1. Why do you park in a drive way and drive on a park way?

  16. So has anyone seen Trumbo? Seems the film ignores Johnny Got His Gun (Gee, I wonder why?) and ignores his love of Stalin and Kim-il Sung and portrays Edward G. Robinson for “naming names” when he only claimed to have been “duped” when he found out that there were actual Communists being blacklisted. And apparently there is a scene where he explains Communism to his daughter as “sharing”.

  17. Speaking of Johnny Got His Gun it seems that Carole Lombard and Clark Gable tried to send each Senator and FDR a copy but they didn’t when they were advised to not make a political statement.

    And need I remind you that Lombard was killed in a plane crash while on a War Bonds campaign and Gable served in the Air Force?

    And when Deanna Durbin died Gillespie posted a Cathy Young article about Durbin’s pacifism. And need I remind you that Durbin appeared in war propaganda and served in the Hollywood Canteen?

  18. I’ve been visiting some movie boards and there are seriously people complaining about Trumbo and Spotlight for being about white people. Holy Shit.

    1. That’s actually the funny thing – eventually the left will disown Marx because he was a white guy.

    1. Racial profiling occurs when law enforcement stops a citizen minding his/her own business looking to *find* criminality that wasn’t immediately apparent.
      It is not racial profiling if you stop a citizen in the act of criminality.
      I gather from the article that she essentially blurred the two, so yes she should be called on it. She’s of that vile bunch that wants to police us into *correct* thinking.
      Racial profiling is wrong and should NOT be conflated with the latter.

      1. Huh?

        Racial profiling is profiling a criminal or suspected criminal according to their race; pretty self-evident, and it has nothing to do with whether the crime is in progress, has already been committed, or is suspected to be committed in the future. And no racial profiling is not wrong.

        If three black me break into your house and beat the shit out of you, then leave, the patrol car in the neighborhood will, and should, summarily begin looking for three black men; not Asian men, not hispanic women; black men. And might they inconvenience an innocent black man by shining their flashlight at him to see if he might be one of the perps? Sure, but that’s better than inconveniencing everyone even if they could not possibly be one of the perpetrators.

        Criminals are profiled based on gender, age, height, and expected psychological characteristics. Why should race and ethnicity be excluded?

  19. I would have thought that the Reasonoids would be far more interested in the discovery that Uber has been secretly rent-seeking a legislative solution to their problem.

    Then I remembered that Uber is neat-o? and therefore exempt from any true libertarian analysis.

    1. I didn’t realize that libertarians believed that only perfectly libertarian people have rights.

      Are libertarians who go through the process of getting a concealed carry permit also to be condemned?

      1. Tulpa thinks they should go out of business fighting a million bullshit lawsuits instead. You see, it’s the company’s fault and not the, regulation imposing, politician’s. Cuz we needz teh law and orderz!

        1. If they weren’t exploiting their employees, they wouldn’t have invited regulatory scrutiny. So yeah, it’s their fault.

          1. Fuck off troll.

          2. There’s no such thing as voluntary exploitation genius. Anyone is exploiting uber employees, it’s the uber employees themselves. Though I suppose you read on salon that most uber drivers are bought as chattel in Nigeria and shipped like freight to the US to be drivers, so I can’t act surprised at your delusional nonsense.

      2. Tulpa doesnt understand separation either. Uber can be criticized for rent seeking while also defended in other areas.

    2. Uber is ‘rent-seeking’? Good. They should ‘rent seek.’

      If sociopathic government officials try to shut down my favorite restaurant because he doesn’t give his waitstaff free healthcare, housing, and a fully funded ivy league education or some other entitlement, and the restaurant owner bribes someone to get the issue resolved and stay open, do you think I’d be pissed at the restaurant owner for circumventing unjust laws and power hungry bureaucrats? Do you think I would rather he go out of business because some parasitic dipshits get their rocks off shutting down businesses? Quite the contrary, the thing about this scenario that would bother me most is that the poor restaurateur had to resort to paying out of his own pocket to avoid a problem that shouldn’t exist in the first place.

  20. I own a small biz in SF that consists of me and my wife with occasional help from two of my brothers. I have been getting really busy and for some time could use an employee. The problem is there are some serious start up costs to getting an employee started with the vehicle, equipment, etc that they would need in addition to ongoing costs. What this means is that unless I pay someone close to minimum wage it would be very hard to turn a profit on their labor for some time. Plus, a risk factor as I have the keys to thousands of apartments in the City,

    So, a neighbor from up the street that has kids the same age as two of mine lost his job a few months back and wanted to get out of tech and into something hands on. I told him I couldn’t afford to pay him what he would need to make as an employee but that we could work him as a contractor. I had him come and watch me work for a few days and gave him a bunch on stuff to practice and read up on. He was a quick learner and he liked the terms I was offering him. We both thought it would be a good fit.


    2. Way to fuck over the proletariat you capitalist shitlord!

  21. Then I went out with a buddy of mine and his wife. His wife is a lawyer and unknown to me had changed her focus and was now mostly dealing with contracting and employment law. She was actually working on the Uber case. She told me that what I agreed to with this guy was basically illegal. Firstly, I was training him, secondly I was making it an open ended contract in terms of time, and last I was using him to do work that was a mainstay of my business and not something that I would not normally do. She said the only way I would be nailed was if the guy himself complained or if the IRS ever audited me. That was enough for me. I know I run a clean enough biz that they would need to find something if that happened and back paying years work of payroll taxes and fines would screw me majorly. I had a front row seat to years of my parents getting screwed by the government as a kid and am not really excited about having my kids get a similar experience.

    The next day I told the guy and he was disappointed but understood. I believe he is still out of work. I am on my last day of vacation with my business shut down while away.

    Thread is dead and sorry for long post, but that is my story in relation to this garbage.

    1. You were taking a risk that the guy you were training would respond by complaining to the labor dept. now that he knew he had you over a barrell.

    2. Could you have not let the guy work while you’re on vacation since that had an ending time frame ?

      May I ask what type of business you do ?

      1. It would have been several weeks more minimum to train him and dealing with all the legal bs just to have him work for my two weeks of vacation would not have been worth it to either of us.

        I am a locksmith.

    3. I’m a locksmith as well, it is very hard to expand. When I was living in Vermont I was in the contractor side of that problem. I knew how thin the margin was. They took me in, hoping to expand with another van after a few months, but it never materialized. I was more or less a shop hand for a few months. Now I work outside of Denver. Best of luck, hope you can expand in the future sir!

      1. Thanks for the good words. I think that reason is why you so many single guy operations in this biz. It’s either that or hire several people and really make the jump. I’m still trying to find a way to work the contractor angle while staying on the good side of johnnie law. As my friend’s wife said, “they purposely make it convoluted and complicated so that they can get you if they want.”

        1. Not sure about the CA laws, I know they are tighter there than here. Every shop I’ve worked at has been small family owned, this being the largest with 3 road trucks. If the employee/contractor has a van already does that help at all? There are so many hoops, and all we want is to keep doors functioning properly.

  22. Liss-Riordan has argued that since Uber can fire its drivers, compel them to accept a certain portion of rides, and enforce workplace standards, it effectively operates as an employer under California law.

    By that standard, my grocery store is my employee. Notice that she’s using employment-associated words for actions that also occur in contractor relationships. Refusing to do business with someone becomes “firing”, for example.

    The only strong argument for Uber’s employer status that I see is that the drivers are not able to choose between ride-sharing companies to contract with. If Uber decides it doesn’t want to do business with a driver, the driver has no option to go to a different company. If Uber broke up into several smaller companies, each free to set their own standards and choose which drivers to do business with, they could neuter that complaint.

    1. They cant drive for Lyft?

  23. “(with all the legal benefits that come with that categorization)” should read

    “(with all the legal benefits impositions that come with that categorization)”

    It’s much better to be self-employed than to be an employee.

    1. Self employment taxes do suck, however. Can come out to an extra $600/month.

      1. Seen amd the unseen. Employees pay both halves too.

  24. Cartoonist responds to micro-agression:

  25. What this comes down to is the Tax Code’s widely disparate treatment of employees and independent contractors. It incentivizes companies to treat as many workers as independent contractors as possible because the costs for not doing so are enormous. The government responds by coming up with ambiguous tests to determine who is and who is not an employee…which unbiased lawyers can reasonably disagree on for specific cases. As a result of this ambiguity, far too much power is put into the hands of unaccountable deputy labor commissioners, who are free to effectively punish companies they personally don’t like for whatever reason with little recourse.

    With new services blurring the line between employees and independent contractors even more than before, it makes sense to amend the tax code to provide more flexibility to companies. Germany, I believe, has a third category. I’m not, however, holding my breath; too many people benefit from the current setup: bureaucrats, incumbent players looking to punish competitors with new ideas on managing labor, unions, etc.

  26. (at Reason offices)


    1. Fuck off troll.

  27. Sometimes dude you just have to hit them up man.


Please to post comments

Comments are closed.